Yossi Beinart does not rejoice at other people's misfortunes, even when it comes to Tel Aviv Stock Exchange (TASE) chairman Amnon Neubach, who pushed Beinart out of his position as TASE CEO several months ago, and is now being sent packing himself.
Beinart, 60, is deeply sad. He feels that he has failed and disappointed - mainly himself. "I won't mince words - sometimes I wake up in the morning with a feeling of uselessness," he says. "I came to do something, and I didn't finish it. I came to make a change, and I didn't succeed. I don't want to accuse others; that's not my character. I myself feel frustrated and hurt. What will others do? They'll have to live with that themselves, and eat their hearts out. I feel that things didn't go my way. I'm worried about the TASE."
In early 2014, following a night of the long knives engineered by Israel Securities Authority Shmuel Hauser, Neubach replaced Sam Bronfeld as chairman, and Beinart replaced Esther Levanon as CEO. They lasted for three years, in which the TASE fell into a downward spiral, until the poor relations between Neubach and Beinart became public knowledge. Beinart fell ill, and his illness was the grounds for his removal as CEO.
"I have a tumor. The result of it is unclear. I'm taking time to take care of myself. Yes, that was the trigger for my replacement. Work at the TASE, as I experienced it, involves an insane level of tension, work and heavy pressure between everyone: professional and personal pressure."
"Globes": You and Neubach
Beinart: "Yes, relations were tense. Quite early, I saw that things were difficult, and from the beginning, it was difficult to do what had to be done."
He pushed you out, and now the board of directors does not really want him in charge.
"I didn't know it would end this way. I didn't know that this would happen to me, or what's happening with him now. Relations between us became unbearable when I was overseas. When I returned, I was informed that I was in line to be fired. When I landed, I learned from the newspaper headlines that my head was on the chopping block. That's a typical Bolshevik-style office politics trick - to invent stories about people. I called him and told him, 'I don't understand what's going on here - please explain it to me.' He said nothing. I understood that I was wasting my time. According to the principles of good corporate governance, the chairman can fire the CEO, and that's what he did."
Did Hauser intervene? Did you call him?
"No. He's not in the loop."
What do you know about the state of the TASE today?
"It's falling apart completely. Several good, essential people left as soon as I did. Amnon took over the TASE. He took the authority into his own hands. He wanted more and more authority. He wanted to be both chairman and CEO, saying that it was only until the appointment of a new CEO, but the board of directors was absolutely opposed. The result was that all sorts of things that should be done by professional management were done by him."
Is he professional enough to know what is right for the TASE now, at this time of distress?
"Not in my opinion."
"So why is he doing this?
"Because he wants to take over the business. It's as simple as that."
"I believed in my ability to repair the situation"
The TASE has become a cheap soap opera. Neither you nor Neubach had an adequate professional background or the ability to deal with an internal organizational crisis, a capital market in the midst of an upheaval, and a fading stock market.
"I assume that's true, that there's truth in it. It's a great pity. He and I never spoke about these things."
But you still took the job.]
"Yes, I believed in my ability, my investment. I believed that everyone wanted to solve this crisis. I believed that the connection with Nasdaq would develop beyond the sale of a trading system. I believed in our ability, all of us, to repair the situation, and it didn't work."
Now that you are outside, what are the main problems of the TASE?
"First of all, there are severe objective problems. We look at the world and see a decline on all the world's stock exchanges. There are difficulties in offerings and in raising capital."
With negligible interest rates in the banks and the institutional market, who needs to raise money on the stock exchange? Is this the end of the era of the stock exchanges?
"That could very well be the case, but anything can happen. No one has a crystal ball here. No one knows what will happen when interest rates start to rise, but it's clear that what's happening on the TASE in Israel is also happening on most of the world's stock exchanges. With us, though, it's deeper and more critical, because the economy is extremely over-concentrated."
And the paralyzing code word is "regulation."
"That's true, but it's not the main problem. When you look at the question of regulation, the conclusion is that there are many things in regulation that are hard, expensive, onerous, and repelling. Everywhere you look, there's a problem. Whenever an obstacle is removed, more are added in its place. For example, they allowed us to conduct compulsory trading - trading in securities of companies that did not list their securities for trading if the company was listed for trading overseas and its market cap was over $50 billion. Keep in mind, though, that when the dual-listed companies are excluded, the entire Israeli market is worth $50 billion. You're left with the absurd situation of trading in a share that's worth more than your entire market."
What did you want?
"I wanted trading in all the Israeli securities, all the Israeli-oriented companies: Amdocs Ltd. (Nasdaq: DOX), Check Point Software Technologies Ltd. (Nasdaq: CHKP), and Mobileye(NYSE: MBLY). I believe that the Israeli investor realized the Israeli bias of these companies, even if they are listed for trading elsewhere, and wants to buy and trade in them here. Furthermore, there will be exchange traded funds on them, which will greatly increase the demand. That's what I asked for from the Securities Authority. I explained it again and again, but they didn't grant it. They approved trading in shares of companies with a market cap of $50 billion, but in view of the current situation and the size of the TASE, it's not very practical."
What about the structural change?
"I support it, and still do. It's a positive step, but it's not enough. Meanwhile, under pressure from the workers committee, it's developing in the direction of a community interest company, and that's not right. The TASE has to be a completely public company in every sense of the term."
The fact that the plan gives banks NIS 500 million after they enjoyed many years of many fees is not a problem for you?
"Why do you say 'gives'? It's not giving. The practical and legal situation is that as TASE members, the banks invested money over the years, for example in computer systems, and therefore have the right to get their money back when the structural change comes."
Exactly a year ago, Hauser said that the banks were charging NIS 2.5-3 billion a year in trading fees and paying the TASE only NIS 130 million.
"That's what he said, but I think it's nonsense. The banks did invest. There wasn't anyone else to invest in this business. It's true that they made a profit, but that's how it's structured from the beginning, and no one has changed it since."
It looks like the workers are milking the country
While the TASE has beren in a prolonged decline, it appears that the workers committee is still the belle of the land. "They went too far, they definitely went too far," Beinart says. "The TASE workers have a contract that includes an automatic 5.5% pay rise, and that's unreasonable, both in the amount paid and today's salary terms, and certainly when the TASE is in its current state, with deficits and concern about a loss for the year."
You were the CEO. Why didn't you change it?
"The last thing I did before I became ill was an agreement to waive the bonus. The collective work agreement states that the workers receive, in addition to their automatic pay hike, a bonus of 2.9 months' salary. The company is in trouble, however, so what is the bonus for? From what - from the losses? It's time to do away with all these financial arrangements of automatic pay hikes and an automatic bonus, as if they workers were divorced from reality.
Who can stop it?
"Only the Histadrut (General Federation of Labor in Israel)."
Why should it? What is bad for Histadrut chairman Avi Nissenkorn in supporting workers who give him power and money each month? So what if they are tearing the business to pieces?
"The Histradrut has a duty to the economy and a duty to the public as a whole. The way it looks to me at the TASE, and just like I see what's happening in many other places, it's as if they are milking the country, and the Histadrut has a hand in it. It's not nice to say, I'm in favor of defending workers, but the way it happens here, and the TASE is a good example, that's how it looks."
You ran up against the workers committee. Did you get backing from the board of directors and the chairman?
"There was no intervention by the board of directors in the problem of the workers during my term. To their credit, I'll say that it wasn't clear until mid-year that the TASE would finish the year with a loss. Furthermore, it must be said that this is what goes on in these sectors in Israel. They've got an agreement in hand, and no matter how crazy it is, you need power to change it. Even had the chairman and board of directors worked hand in hand with me, it wouldn't have changed this weird automatic pay-hike mechanism. It involves the state, the Histadrut, and the government."
When you entered the job, you checked the TASE trading and clearance systems. You are a professional, and you thought they fulfilled the needs. Then you changed your opinion, and supported buying the expensive system from Nasdaq.
" I support it - but. The Nasdaq system offered to us meant replacing the existing system with their system as is, but I think it's unsuitable. Some said we should take it as is in order to be the same as other stock exchanges that bought it, and it makes it easier to gain recognition for the system. It's not suitable for us, however, and it made things significantly more expensive; furthermore, we didn't know the exact cost of the differences. I did want to replace the TASE system with a new system that would provide solutions and be suitable for Israel, not accept something automatically, so the price we calculated was eventually very high. So I'm in favor, but not of the Nasdaq system as is, but with changes, and provided the price doesn't skyrocket."
"The board of directors didn't take responsibility"
The board of directors brought the chairman to his knees - the same chairman who brought you to your knees. What do you feel about it now?
"In principle, I'm very, very disappointed with the result. I regret that good people left, and terribly sad that we've reached this moment, this situation."
Are you angry at Neubach?
"Obviously I am. He ruined the place. But it doesn't make me happy to see him in this situation. His misfortune doesn't make me happy."
Are you angry at the board of directors for not stepping in in time?
"There's a problem with the board of directors. It's not a board that takes responsibility, and excuse my candor, but it's a combination of a country sitting on the board of directors of Israel's only stock exchange, but takes no responsibility; representatives of the banks who aren't really interested in it; and the Securities Authority, which has two observers who speak, but don't take responsibility."
What did you expect?
"That they would really care. That they would take responsibility, say something, pay attention to what's happening, set the direction, do what a board of directors is supposed to do. But they didn't do that."
Are they doing it now?
"I think so. I'm not sure, but maybe. We'll see what happens there. What's good is that they have finally realized that there's no choice."
Other than removing Neubach?
"I don't know. That something has to happen."
You were taken off the job. You're out of it, but you're still polite.
"Not because I'm polite, but because I don't know. I really don't know what the best thing to do now is. The TASE is in an impossible situation. If he leaves, if they make him leave, the TASE will be at the last extremity: without a CEO, without a chairman, and the way it works in Israel, it will take a long time to change the situation."
Shouldn't Hauser take responsibility?
"I don't know."
You're being polite again.
"You can write whatever you want."
Have you ever met the minister of finance? Did you speak with him about the situation?
"No. At certain points, I wanted to, but as they say, it didn't work out."
How are you now during the Sukkot holiday?
"I'm healthy. I'm getting well, hoping, and trying not to think about the enormous suffering that the TASE has caused me."
In response to Beinart's remarks, Neubach's office said, "We regret that Beinart, who served as CEO until the end of June this year, is lashing out at the TASE chairman, instead of taking responsibility. We remind everyone that the reason for Beinart's resignation, as he himself declared, was medical. The other matters are not worth comment."
Published by Globes [online], Israel business news - www.globes-online.com - on October 19, 2016
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