Nochi Dankner
Embattled tycoon Nochi Dankner. Photo by David Bachar
Text size
related tags
Ofer Vaknin
Moti Ben-Moshe. Photo by Ofer Vaknin

Nochi Dankner’s ouster from IDB, Israel’s biggest conglomerate, is no less than an earthquake for Israeli business.

For the first time, a court has stipulated that creditors may take control of a concern from its holder of power and money, and hand that control over to someone else, because the concern failed to pay its debts. For the first time, creditors got organized and taught the man in control a lesson he will remember forever: Loans must be repaid.

From now on, every businessman will know he can’t take out huge loans from provident funds, pension funds and banks, and gamble with them on all kinds of wacky investments without paying a personal price. This awareness will change this country’s business culture and make business people less reckless.

The second lesson is for bank managers. From now on they’ll understand that they must stop funding purchases financed by excessively large loans secured by too little collateral. The institutional investors that lent Dankner billions of shekels without any collateral at all have learned their lesson. From now on it will be much more difficult to take loans from institutional investors or banks on the basis of personal contacts and exertion of power, i.e. the Dankner method. All transactions will be conducted, it must be hoped, in a more professional, cautious manner.

The directors’ board members also ought to learn a lesson. They were Dankner’s yes men and did not stop his reckless, arrogant spree, which ended in heavy losses. They approved the taking of excessive loans for the purchase of a significant part of Credit Suisse, land for a Las Vegas hotel and the Maariv newspaper. They even authorized buying Israir, which had previously been owned privately by Dankner.

It is only regrettable, in view of these important lessons, that the court missed a golden opportunity to change the economy’s structure. Instead of looking for a new buyer for the entire concern, the court should have appointed a receiver for it. IDB is Israel’s largest and most prominent economic pyramid. It is principally responsible for the economy’s main problem: over-concentration. A receiver would have sold each company separately, to the economy’s considerable benefit.

Different ownerships for large companies such as Supersol, Clal Insurance, Cellcom, Koor Industries, Property and Building Corporation, Makhteshim Agan and Discount Investment would increase competition, reduce prices and increase employment and growth.

If it transpires in the forthcoming examination that the money sources of IDB co-investor Moti Ben-Moshe are not entirely kosher, the court will have another opportunity to take the right direction and dismantle the concern.