Haaretz Editorial || An unacceptable write-off
Instead of injecting money and writing off debts, Bank Leumi's and Bank Hapoalim's CEOs can take control of IDB Holding Corporation and replace the management and the control core. The public significance of such a move is worth its weight in gold.
This week, for the first time, important details were revealed of the business ties between Nochi Dankner, the controlling shareholder of IDB Holding Corporation, and his creditor banks.
It was disclosed that Dankner’s personal debts amount to nearly NIS 1 billion: Around NIS 600 million is owed by Ganden Holding, IDB Holding’s parent company, mainly to Bank Leumi. The remaining NIS 400 million or so are owed by the Dankner family’s privately-owned Tomahawk Investments, mainly to Bank Hapoalim.
It was also disclosed that Bank Leumi CEO Rakefet Russak-Aminoach was in talks with Dankner and others over an arrangement under which Leumi would forgive NIS 150 million of Dankner’s debt while at the same allowing him to retain the controlling interest in the concern.
The disclosures prompted public protest, including a call to boycott Bank Leumi, close accounts and scrutinize the deal under discussion. Leumi’s management claims the deal is not a problem because it is better than dismantling the company and putting it into receivership.
This argument ignores numerous considerations, first and foremost the significance of rewarding a person who borrows money but manages his business badly and in a corrupt manner. Such a decision is indefensible from the public-administration aspect.
The concern is that the deal between Russak-Aminoach and Dankner is one between stakeholders. The two travel in the same social circles. Dankner once hired Russak-Aminoach’s sister as a board member and he currently employs the son of Leumi’s previous CEO, Galia Maor. In addition, Dankner was presumably behind Russak-Aminoach’s promotion to CEO.
A similar situation obtains among Dankner, Bank Hapoalim CEO Zion Kenan and Tomahawk’s debts. Although no debt write-off talks are known to be underway there, Kenan and Dankner also have a close personal relationship. Kenan was appointed to his position due to the decisive influence of Danny Dankner, Hapoalim’s then-chairman and Nochi Dankner’s cousin. (The assumption is that the cousins did not eschew coordinating their moves regarding Bank Hapoalim).
Kenan channeled funds to Tomahawk even after the difficulties of IDB Holding, the company’s only asset, became known and he forgave debts Dankner ran up when he controlled Ma’ariv.
Instead of injecting money and writing off debts, Russak-Aminoach and Kenan can take control of the company and replace the management and the control core, which have proven themselves failing and wasteful, and bring in investors, appoint directors and try to get a higher return.
The public significance of such a move is worth its weight in gold. The intention to keep Dankner at his post and give him new loans − an intention the bank has suspended due to public pressure − appears to be influenced by connections and personal interests.