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How did Michael (Miki) Zoller, a senior official in Histadrut Ha'ovdim Haleumit (National Workers' Federation) and right-hand man to Knesset Finance Committee chair Abraham Hirchson, become the strongest man at Berger Holdings - the largest private brokerage firm in the Israeli economy?

This question troubled many market players in Tel Aviv Tuesday after Hod Yuvalim - which is owned by the federation, which is identified with the Likud Party - completed the hostile takeover of Berger Holdings, which manages assets of over NIS 7 billion.

For an investment of NIS 23 million over a two-week period, Hod Yuvalim purchased 53.4 percent of Berger Holdings shares, from Amit Berger, Michael Strauss and Haim Sakal. These acquisitions came a few months after Berger Holdings acquired the controlling stake in DS Investments from the Shrem Fudim Kelner group.

Before selling his holdings in the company, Amit Berger led the merger of the money management operations of Berger Holdings (Capital Berger) into DS. Berger appointed Dan Lalouz and Kobi Levinson - formerly of Migdal Capital Markets - as co-CEOs at DS. The group controlled by Berger - and now by Zoller - is responsible for the monies in pension funds, provident funds, continuing education funds, mutual funds and portfolios totaling NIS 10.5 billion.

Zoller, 49, is the chairman and strongman of the Hod Yuvalim holding company, and the man who led the takeover of the company that he built together with Berger. Zoller holds another important management position: He is the chairman of Bank Yahav, the state employees' bank. Yahav is the third largest bank in provident fund management, and even though it has only 100,000 clients, its funds manage some NIS 16.5 billion.

Market sources say that the Finance Ministry, which holds 25 percent of the shares in Yahav, promoted Zoller's appointment as bank chairman. Bank Hapoalim owns the controlling stake in Yahav, with 50 percent of the shares.

A regular at the Knesset

Zoller has been a familiar figure in the corridors of the treasury and the Knesset for many years and is considered Hirchson's right-hand man and the strongest man around him. Even though he has no official position in the Knesset, Zoller participates in meetings of the Finance Committee. Zoller was also considered a protege of the late Yitzhak Moda'i, who appointed Zoller to head the Israel Government Coins and Medals Corp. Zoller also belonged to a group known as "The Young Likudniks," which included Silvan Shalom and Michael Eitan, both of whom became cabinet ministers.

Zoller's third current position is chairman of the Leumit health maintenance organization, which has 700,000 members. Zoller replaced Hirchson in this position after Leumit ran into difficulties with a deficit of NIS 1 billion and was in danger of collapsing. Leumit, which is also identified with the Likud, was helped out of its crises in 2002 by the intervention of Prime Minister Ariel Sharon and former finance minister Silvan Shalom.

One of the more astonishing deals made by Zoller (together with Hirchson) in the mid-1990s was the transfer of the Hod Hamidbar hotel on the Dead Sea to the federation's pension fund. The hotel had belonged to Leumit, but was sold to the federation following the HMO's cash flow problems. The comptroller's report published by the treasury in 1997 noted that the sale of the hotel, without a tender, violated the recovery plan agreement between Leumit and the treasury.

"The affiliation of the two bodies," wrote the treasury's deputy director of budgets, "strengthens the suspicions and the wonder at the deal."

After the hotel was renovated, the heads of the pension fund invited 120 Likud members to spend a weekend there. Zoller's explanation of this largesse was that those invited for the weekend were people who had participated in the renovations, as well as federation officials, including members of the Likud Central Committee. The federation's pension funds are considered to have an actuarial balance, so when the veteran pension funds were nationalized Yuvalim remained in the hands of the federation and was not taken over by the government.

At Hirchson's beck and call

Zoller's style is considered quite aggressive.

"Officially," says one of Zoller's close associates, "Zoller is the chairman of the board at both Leumit and the Yuvalim pension fund, one of the largest of the new pension funds, but his power goes beyond the definition of his positions."

The associate explained that Zoller is at Hirchson's beck and call. When he was appointed to the chair of the Knesset Finance Committee, Hirchson realized there could be a conflict of interests in his remaining at the helm of the Leumit HMO, so he resigned and appointed Zoller in his stead. Leumit is the fourth largest HMO in Israel.

"Leumit's management needs to be improved as does the way the HMO functions," says a senior federation official. "Zoller is a man who is very strict about following proper procedures and is quite capable of cleaning up the stables he has been given."

The extent of Zoller's influence on Hirchson is evident in Zoller's ousting, with no real objections, of Ehud Nachtomi from his position as CEO of Yuvalim. Nachtomi, formerly a professional in the capital market department of the treasury, was considered an asset to Yuvalim, but Hirchson - who had always valued Nachtomi's qualifications - did not prevent his dismissal.

To this day Nachtomi and his associates do not know the reason for his ejection from the pension fund.

"The connection between Hirchson and Zoller is more than friendship," said someone who knows them both. "They share a wonderful camaraderie and close understanding. Hirchson would not make any significant economic move without first consulting Zoller."

Even those who dislike his stern character admit his is gifted with creativity, initiative and activity. He is capable of anticipating how events will unfold, and he has a well-developed business sense. One acquaintance recently said of him, "When he sets his mind on a goal, he reaches it."

A potential counterbalance

The only one - apart from Hirchson - who might serve as a counterbalance to Zoller is Yitzhak Russo, the general manager of the National Workers Federation. The two share a balance of terror and mutual suspicion. Russo manages the federation to Hirchson's liking, and enjoys Hirchson's backing. Federation sources say that Hirchson will not let anyone touch Russo, not even Zoller.

Even so, people who know them both say that Zoller has the upper hand. If he decides to fire workers of the Leumit HMO, which he controls, will they be able to appeal to their union boss and ask for protection from the layoffs? Of course not.

Zoller was a member of the team that set up Bezeq in 1983 and as part of his job handled the transfer of 8,000 engineers at the Communications Ministry to the new company. Two years later Zoller was appointed deputy commissioner of the civil service, with the help of his political patron - Moda'i. Although Zoller's tenure as deputy commissioner was characterized by productivity, it was no less marked by a tough personal struggle between Zoller and commissioner Avraham Natan. Zoller enjoyed a more relaxed term as chairman of the Government Coins and Medals Corp, during which he tried to promote the privatization of the company.