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At the end of 2005, Africa Israel raised NIS 500 million through a new series of bonds, series B9. It wasn't a regular public offering; rather, it was open only to institutional investors. One of the most enthusiastic was the Migdal group, then run by Izzy Cohen. Cohen is now CEO of Africa Israel Investments.

Migdal purchased about NIS 50 million of the bonds, about 10% of the offering.

Almost four years later, in June and July of 2009, it sold most of its holdings in the B9 bonds, just after the series was listed for trading and also the day when Africa Israel's first-quarter earnings report was released.

Cohen was already somewhere else by then - working as CEO of Africa Israel, where he had been for almost a year. On that day the bonds were listed for public trading, Cohen declared: "The first quarter profits are a show of strength .... I don't see they company having any problem in meeting obligations at the moment."

Investors from the general public who saw the financial report and heard Cohen's optimistic statement decided to buy the B9 bonds, which had the shortest time to redemption - November.

On the other hand, Migdal, which in the past had been run by Cohen, apparently was not terribly impressed by Cohen's statement. Migdal decided to sell its series B9 bonds, reducing its holdings from NIS 50 million to about NIS 10 million.

Midgal's timing in selling the Africa Israel bonds was remarkable. After only three months, it was already apparent that Migdal had acted wisely while the "regular" public investors went wrong - big time.

In August, Africa Israel announced that it was seeking to reschedule its debt, as it could not meet its obligations, and last week, it paid interest but not the NIS 557 million in principal due on its B9 bonds, which were supposed to come due.

The B9 bonds were not, however, Migdal's only investment in Africa Israel bonds during Cohen's tenure there. According to a Finance Ministry report for 2008, Migdal had been among the five largest holders of seven series of Africa Israel bonds. It held between 5% and 48% of each bond series, amounting to hundreds of millions of shekels.

In response to Cohen's activities at Midgal, Africa Israel issued a statement saying: "Izzy Cohen, [while] CEO of Migdal Insurance, was not involved in deciding which stocks or bonds Migdal Insurance would buy or not buy. The matter ... was handled by the company's investment staff, in accordance with recommendations of the committees operating within regulatory laws. To our regret, we don't understand the connection between Migdal Insurance's investments made by investment committees in accordance with the law, and Cohen's position as CEO of Africa Israel."