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The buying of Berger Holdings by the Histadrut Ha'ovdim Haleumit labor federation's pension fund contravenes regulations by exposing the pension fund members to risk. Last month, Hod Yuvalim, controlled by the pension fund, bought out control of Berger Holdings, and now controls some 88 percent of one of the country's largest private brokerage firms. However, if this has broken regulations, the pension fund would have to sell its control of Berger.

Regulations stipulate that pension funds cannot hold more than 10 percent of any real company, and furthermore, that any pension or provident fund that does hold more than this 10 percent threshold could lose its license, and all its accompanying tax benefits.

Berger Holdings, traded on the Tel Aviv Stock Exchange, also controls the DS Investment company, which is also publicly traded. The pension fund may be planning to become a major player in the financial markets, and this was demonstrated yesterday by Berger's announcement of an option to buy Apax investment house.

Sources in the capital markets reported that the regulations regarding Berger and the fund were being investigated.

The Histadrut Ha'ovdim Haleumit is a labor federation linked to the Likud political party, and Michael Zoller, a close colleague of Knesset Finance Committee chairman Avraham Hirchson (Likud), has sway over the organization.

Hod Yuvalim, together with businessman Amit Berger, gained control of the brokerage firm at the end of 2002. In January, Hod Yuvalim bought out stakes held by Michael Strauss, Haim Sakal and Amit Berger, resulting in Hod Yuvalim being a controlling shareholder in its own right.

Option on Apax

Berger Holdings announced yesterday that it had reached an option agreement with the private investment house, Apax. The deal permits Berger to buy the company for NIS 34 million up to February 2005, but stipulates that if it does not exercise the option, then the profits from its activities in 2004 will be divided between Berger Holdings and Apax.

Two major shareholders of Apax, Ido Neuberger and Victor Shimrich, were both appointed joint CEO of Berger Holdings yesterday. Other Apax shareholders include Avi and Mozie Wertheim and the Bolotin insurance agency. Apax manages funds of over NIS 2 billion in trusts, mutuals and provident funds.