Taking Stock / Nochi Has No Complaints

"The quotes attributed to me were never said and do not represent my opinion," Nochi Dankner, the chairman of the IDB Group, announced on Sunday afternoon, in a press release issued 70 hours after a rare interview with him, in which it was claimed that he had bitterly complained about regulation in Israel.

The quotes attributed to him were indeed quite astonishing. Dankner, one of the most successful businessmen in Israel, suddenly seemed to have joined the chorus complaining that you can't do business in Israel, that everybody hates big businessmen and hounds them, and that regulators are strangling them, leading them to leave the country.

"It's like a hornet's nest stirred up against the big businessmen," Dankner was quoted as saying. "We feel we're under suspicion, always scheming. So why should I do business here? Somebody invented a jingle, `wealth and government' and uses it as a whip to lash us. Wealth and government? In Israel? Don't make me laugh. We, the leaders of the business community, have almost no influence on the authorities. In any other Western country, business has more to say than over here."

He says he never said any such thing, or anything similar. Somebody else did.

Dankner did well to clarify that he isn't one of the moaners blaming their failures on bureaucrats. For him to deliver the usual whine about regulation in Israel would have been truly disappointing. After all, just two years ago, he received the blessings of all the regulators for a mega-takeover that made him the most powerful businessman in Israel.

A billion shekels and nothing to buy

Lately if he's had any trouble, it's in finding worthy investments. He raised billions of shekels in bond offerings and can't find places to put the money, having received glaring signals from the regulators that he shouldn't try his hand at buying the two biggest opportunities around, banks Discount and Leumi.

Now he's competing with foreign investors to buy the controlling interest in Bezeq. Maybe he's fretting that the state will prefer them to IDB.

His denial was appropriate, as he surely understands that in some cases, there is good reason to prefer foreign investors and new players over investors such as IDB.

Nochi is dissociated from the other Dankners, but he knows that the family's story with Bank Hapoalim had been a sorry one. The Dankners, who had a veritable business empire in Israel, took a huge loan from Bank Leumi to buy a controlling interest in Hapoalim. Then they started to run into trouble.

The telecoms collapse badly hurt the family's businesses, creating a dangerous dependency between the banks Hapoalim and Leumi. It forced the regulators to interfere in all the family businesses and badly hurt the image of the banking establishment. A country with three and a half big banks that hand out 80 percent of the credit, a marketplace ruled by a handful of giant concerns owing giant sums to the banks is a recipe for conflicts of interest.

An IDB takeover of Bezeq does not portend anything good for the concentration of power in Israel. IDB is a giant squid with a tentacle in every economic pie there is. Buying Bezeq would make the titan even more formidable. You wouldn't be able to turn a corner without running into it.

It would be hard for the regulators to attack an IDB takeover of Bezeq, as the group would get rid of its other telecommunications holdings in Cellcom, Barak and Netvision. But it is obvious that the takeover would make IDB all the more dominant.

Nightmare on Ahad Ha'am St.

The horror scenario that the press plugs from time to time, of big businessmen and their capital abandoning Israel, is not horrifying at all. Quite the opposite.

From the perspective of the big businessmen, diversifying their investments outside Israel is basic. There are more opportunities out there and many of those seeking greater fortunes abroad, found them.

From the economy's perspective, it's still a good thing. There is enough capital for investment in Israel; indeed, if anything, there's too much money looking for good deals. What's lacking here is attractive opportunities, a positive environment for investments, and mainly the kind of economic growth that would increase the relative attraction of Israel compared with the wide world.

In general, when big business says "investment," it usually means a takeover of existing companies, mainly from the state. It is not talking about launching new businesses.

This is a free country with a free market. If Dankner wants to bid for Bezeq, that's his business.

But anybody buying a company like Bezeq, meaning a company operating as a monopoly or perhaps as half of a duopoly, is begging for a Catholic marriage to the regulators, the bureaucrats, the ministers and the public.

Why did Nochi insist on wooing a bride that everybody knows can't twitch an eyebrow without permission from her parents, aunts and uncles, and sisters and brothers, namely every last regulator in Israel? The world is littered with beautiful brides, wild and free of shackles, who may do as they wish.

Apparently because Nochi Dankner understands there are advantages and disadvantages to both kinds of brides, and at the end of the day, he prefers the first type, a bride subject to every regulator in town, who lives in the public and media spotlight. It is beautifully symbolic that the best two companies in the IDB portfolio are Clal Insurance and Cellcom, both of which are subject to heavy regulation.

Anyway, if you'd seen all the regulators drinking, dancing and carousing at the New Year's bash Dankner threw two months ago, you'd know that Nochi is a true master of disarming them all, be they regulators, politicians, officials, bureaucrats or the press.