Shipping baron Sami Ofer, 89, passes away amid Iran scandal
Israel's wealthiest man has been in the spotlight for two weeks since the U.S. State Department accused one of his shipping companies of doing business with Iran, thus violating sanctions, though the Ofer Brothers Group denies any wrongdoing.
Sami Ofer, one of the world's leading shipping barons and believed to be Israel's richest person, died in his Tel Aviv apartment on Friday after a long illness. He was 89.
Ofer found himself in the spotlight two weeks ago after the U.S. State Department accused one of his shipping companies of doing business with Iran, thus violating sanctions. The Ofer Brothers Group has denied any wrongdoing.
Ofer had built up his shipping empire over the past 50 years, and used his profits to buy control of Bank Mizrahi-Tefahot and the Israel Corporation.
Many of the Ofer family's companies are privately held, and the family does not publicize which members hold which assets, making it difficult to estimate Ofer's personal wealth. This year, Forbes put the figure at $10.3 billion, making him the 79th wealthiest person in the world and the wealthiest man in Israel. TheMarker estimated $4.85 billion.
Ofer's main residence was in Monaco, but he also had a home in Tel Aviv's Akirov Towers and donated generously to Israeli institutions, particularly hospitals.
He is survived by his wife Aviva, his sons Eyal and Idan, eight grandchildren and one great-grandchild.
Ofer was born in 1922 in Galati, Romania, and moved to Haifa with his family when he was 2 years old. In 1930, his father, Josef Hirschkowitz, launched a shipping supply company. Ofer was drafted into the British army during World War II, and after the war, he joined his father's company. Later, during Israel's War of Independence, he served in Israel's navy.
He bought his first ship in the 1950s, naming it after his son Eyal. He later expanded into shipping around the eastern Mediterranean. At the end of the 1960s, the family Hebraicized its name to Ofer, and named its company the Ofer Brothers Group. Ofer Brothers merged with the national shipping company Zim in 1969.
Ofer later moved to Europe with his family to launch a new international shipping company, while his brother Yuli stayed in Israel to manage the family's affairs. Based in London, Ofer's new company would become a global shipping empire, with more than 200 ships by 2000.
In the 1980s, the Ofer group expanded into tankers via the company Tanker Pacific, as well as into offshore gas and fuel production. It also entered the cruise business, purchasing Royal Caribbean Cruise Lines in partnership with the American Pritzker family.
Meanwhile, Eyal launched the group's global real estate business, which now accounts for a sizable portion of the conglomerate's activities.
Around that time, Ofer began acquiring a large collection of impressionist, post-impressionist and modernist works of art. While much of the collection has never been made public, it is considered to be of great value.
The family stepped up its investments in Israel in the 1990s, at the initiative of Ofer's son Idan. The group bought part of Bank Mizrahi Tefahot's controlling core in 1994 and control of the Israel Corporation in 1999. The Israel Corporation controls companies including Israel Chemicals, Oil Refineries Ltd., Tower Semiconductors and Zim.
In the past few years, the group invested in Shai Agassi's electric car initiative Better Place.
A history of controversy
Sami Ofer, as well as his sons Eyal and Idan, have been considered the family's most powerful, wealthy members. The family divided up its assets about 10 years ago, and while it refused to divulge who received what, Idan is believed to have received control of the Israel Corporation and Eyal his father's share of Mizrahi Tefahot.
Plenty of the family's money came from acquisitions from the government and exploitation of the country's natural resources, arousing sharp criticism. For instance, the Israel Corporation had owned Oil Refineries and Zim jointly with the government, and the state sold its stake in Zim to the Israel Corporation in 2004 at about 25% of its actual valuation.
The Government Companies Authority investigated the matter and found that the valuation had been based on figures from Zim. The deal was orchestrated by attorney Ram Caspi in what was later termed the Shakshuka System; it became the focus of a critical documentary by that name.
The Ofers had aggressive expansion plans for Zim, but they ran into trouble due to the global financial crisis in 2008, forcing the company to strike a multibillion-dollar creditor arrangement.
In 2006, the government sold off its holdings in Oil Refineries at a market valuation that was deemed accurate, having learned from the Zim affair. As part of the sale, the state was to buy the Ofer family's stake in Oil Refineries as well, in order to resell it during the tender process. The Finance Ministry and the Ofers clashed over the valuation, and Sami Ofer carried a grudge for years over the affair.
Another affair arose in 2010 when it came to light that Israel Chemicals was receiving an average NIS 400 million in tax benefits a year, even though the company was extremely profitable. The company had paid dividends of NIS 10 billion over the previous decade, of which NIS 3 billion went to the Ofer family.
Israel Chemicals mines potash from the Dead Sea - both the potash and the Dead Sea are state assets. The company invests minimally in the mining, as opposed to its competitors abroad. Yet the company staged an aggressive protest to keep its tax benefits, a move that failed.
In addition, Israel Chemicals pays only minimal royalties on its potash sales, and has fought aggressively to keep those rates. Last year, the Finance Ministry accused the company of arranging its books in a way that denied the state NIS 100 million in royalties. Israel Chemicals denied the claims, and the parties are currently in arbitration.
The Ofer family and the government are also arguing over who will finance a rehabilitation project for the Dead Sea. Israel Chemicals' extraction pool is expected to flood the hotels along the Dead Sea's banks in 2017, and solving the problem will cost an estimated NIS 4.5 billion. The government expects Israel Chemicals to pay most of that sum, but the company is fighting to reduce its portion of the burden, citing past agreements.
On the U.S. blacklist
The Ofer group found itself embroiled in a new affair two weeks ago, when the U.S. State Department announced that Tanker Pacific was on a list of companies that had violated sanctions on Iran. The company was accused of selling a tanker to Iran, an allegation it denied.
Shortly afterward, the Ofer family was accused of docking its ships in Iranian ports, thus violating Israeli legislation against commerce with an enemy state. The group hinted that it had received permission from defense officials, but the Prime Minister's Office rejected the claims. (Ora Coren)