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Sagi Genger is celebrating.

At age 27, his daddy Arie appointed him CFO of medical device giant Lumenis; at 29 he was COO, and at 31 he had to resign after the company chalked up hundreds of millions of dollars in losses during his tenure.

But last week we learned that after Genger Junior got $5 million from the company while he worked there - it sent him packing with a golden parachute: a $600,000 consulting contract for the next two years.

Nepotism is a well-known disease in Israel; huge salaries to poor managers is a well-known phenomenon - but Lumenis stands out since the bankrupt company essentially belongs to Bank Hapoalim which loaned it $209 million.

How, the financial market asks, does the bank allow Genger & Son to loot the kitty? It depends on the bank for life support and if the bank wants to it can liquidate the hole kit and caboodle.

Hard as it may be to believe, in the Lumenis case it is not at all clear who has their hands around whose throat.

Gengers Senior and Junior hold 4 percent of Lumenis, having sold off most of their stake in the company in the good ol' boom days. Arie Genger already made back his investment in the company and his son is set for life off the huge salary he paid him.

Bank Hapoalim could demand Lumenis go into liquidation and end its days, but the bank has far more to lose than Genger.

First of all, its chance of getting its money back is slim. Lumenis has no real estate or cash - the only value that company has, if any, is in its operations. It is currently negotiating the sale of one of its divisions for a substantial sum. Second of all, if Bank Hapoalim liquidates Lumenis, it will have to immediately write off the company's debt. So far, the bank has made provisions for only some of the credit to Lumenis. The moment it demands liquidation, it would have to write off every last penny.

Thirdly, and this is the most important: Liquidation of a company like Lumenis could reveal all the events that led to its bankruptcy.

And then the public debate will begin on the question of how Bank Hapoalim gave this company enormous credit, despite the fact it never posted positive cash flow from operations, and when it did grant the credit, it was already known that the rest of Genger's businesses in the U.S. and Israel were in trouble.

And that is exactly what Bank Hapoalim managers don't want to see happen. They are willing to kiss a lot of frogs - golden parachutes for Genger's kid and a wild contract for newly-minted CEO Avner Raz that includes more than $1 million for the first year: a $270,000 singing bonus, $530,000 wages, a minimum annual bonus of $250,000 and another 400,000 stock options - all to avoid or at least delay the public embarrassment of liquidating Lumenis.

Lumenis is an extreme example, because it has a controlling shareholder known for his cynical business practices, but Israeli banks have dozens of companies and businesspeople in that situation. They aren't making interest payments to the banks, there isn't a shot in the dark they will repay the entire principal, but the banking sector prefers to postpone the inevitable bitter end.

What did the banks do with Roy Gill and Eitan Eldar? The chain of companies the pair acquired, leveraged and linked together, went bankrupt after they had withdrawn tens of millions of shekels from the companies in the boom years.

But the banks decided to forgive tens of millions of dollars and let them keep running the company after they promised to inject a little cash themselves.

Didn't the banks know that Gill and Eldar got rich while the companies to which they were lending money were going belly up? Of course they know - but they prefer to appoint Gill and Eldar as receivers or trustees of Gill and Eldar's businesses, and hope that under the management of the dynamic duo, the companies will pay back the funds they owe.

Israel is strewn with dozens of businesspeople, some large, that are essentially serving as the receivers or trustees of businesses that they themselves established and managed right into bankruptcy.

This is the solution that is comfortable and good not just for the executives and owners of the companies, but also for the banks - banks that in some cases believe this is the only way to save their money, and in most cases are willing to do a great deal in order not to make a provision or a writeoff.

But no less than that, the bankers want to prevent public debate of the tough questions why and how they gave those borrowers billions of shekels in credit.