Rosenthal: Leviev's Moscow assets are worth less than said

Real estate baron Lev Leviev may own quality companies in Israel. "But in Russia there's a big gap between what he says and what he actually has," claims Channel 10 journalist Miki Rosenthal of "Shakshuka System" fame, who investigated the activities and assets of Leviev's group Africa Israel.

Among other things, Rosenthal went to Russia to look at the properties Africa Israel owns there and to see its construction projects for himself. His investigative piece on Africa Israel will be shown on Channel 10 tonight, on "Hamakor" ("The source" - a show featuring commentators Ofer Shelach and Raviv Drucker.

The state of Africa Israel's assets is of acute public interest because the international real estate company is negotiating a debt arrangement with its bondholders, to whom it owes NIS 7.5 billion.

"I went to see the state of the projects of AFI Development, the company through which Leviev operates in Russia," Rosenthal says. "In an interview Leviev said that construction of the big underground mall he's building in Russia should be completed in 2011. I was there and saw: There's no way construction will be done by then." AFI is embroiled in disputes with the municipality and bureaucratic obstacles, he said.

"There is a big problem with Leviev's promises," Rosenthal continued. "Out of 30 projects that AFI promised to carry out in Russia, half don't exist. They have no permits, were not carried out, or were suspended. For instance there's another project, City of Moscow, a big mall that's supposed to open in 2010. There's no chance it will open by then. I was there on the spot. All you see is poured concrete."

Rosenthal also visited Moscow's city hall and talked with local real estate experts, he says: "They're talking about completely different timetables and different valuations than what Leviev said."

The impetus behind his investigation is Leviev's debts to the Israeli public, Rosenthal explained: "He's supposed to return our money based on his assets."

Africa Israel responded that as a public company that meets all the public criteria required in Israel and abroad, it publishes comprehensive, transparent financial statements including the state of its projects around the world.

The company went on to state that it has recently been examined in depth by Amir Barnea, an economist of international renown, who used his findings to formulate an arrangement between Africa Israel and its creditors (which its bondholders have rejected, by the way). Africa Israel is diligent about basing its actions on professional economic data, it said, "not the impression of passersby."

Because of the global economic crisis, Africa Israel said, it had to "adjust its investments" and in some cases, to stop projects that were in early stages, with one thing in mind: to manage the company's cash flow properly. Yet it has continued with flagship projects at full momentum, including a mall that will open in November, and the Mall of Russia, the company said, adding that it's working day and night to reach an arrangement with creditors based on its faith in its ability to resume rapid growth in the future.

Rosenthal became known for his documentary "The Shakshuka System," which described the less than kosher relations between wealthy Israeli families, mainly the Ofers, and government. The Ofers have released a rebuttal movie of their own.