Is Dankner worried about the 'wealth committee'?
Nochi Dankner doesn't talk to the media. He's barely given any interviews since acquiring IDB Holdings seven years ago, though occasionally someone manages to squeeze a quote out of him. But recently he's become more generous with his words. Dankner, who nearly always prefaces his responses to reporters' questions with a clear "off the record and not for attribution" has had three media appearances in the past two weeks.
His message, delivered in one interview each to television channels 2 and 10 and a third that appeared in a weekend edition of a financial newspaper, was: Israel's economy is not dominated by a handful of families and IDB is not as strong and as influential as people think it is.
"The IDB group is not aggressive," he said in one of the interviews. "There is no concentration of power in the economy. That's [part of] a populist agenda. The concentration is average compared to other countries and is declining each year. There are no families."
Translation: I don't have to scale back my activities.
But the interviews give it away: Dankner is anxious. He apparently suspects that his name will come up for discussion by the committee to examine the high concentration of wealth in Israel that Prime Minister Benjamin Netanyahu and Director General of the Prime Minister's Office Eyal Gabai are creating, and that he'll have to leave one of his posts.
He's not just being paranoid. Nochi Dankner is behind IDB's success. He turned it into the most powerful economic entity in the country and himself into Israel's most influential businessman.
IDB was responsible for about 5% of Israel's gross domestic product in 2009, with holdings in insurance and finance, food and fashion, communications and cellular services, real estate and cement.
But the power of IDB and Dankner go far beyond their control over certain industries.
Theoretically, all sectors of the economy are regulated. The supervisor of insurance monitors that area, the Communications Ministry oversees, well, communications, and the Antitrust Authority is responsible for making sure that there's fair competition in all sectors. Witness the recent indictment of Super-Sol CEO Effie Rosenhaus for noncompetitive business practices targeting a competing grocery chain, Blue Square.
IDB, however, isn't in anyone's regulatory bailiwick. Dankner controls a huge group of companies. He has retained the best lawyers and accountants and has brought in former regulators, politicians, cabinet ministers and even a former army chief of staff. His potential for influence is immense, and his fingerprints are on nearly every business deal in the country.
Deals that were, deals that fell through
Some of the deals that fell through for Dankner provide insight on his aspirations. He tried to get into Bank Hapoalim and Bank Leumi and was in the process of buying Bezeq Israel Telecommunications.
He entered into negotiations to buy the drugstore chain NewPharm, the Hanson cement company and HOT Cable Communication Systems. In some cases his rivals shot down the deals (Shari Arison, in the case of Hapoalim, for example ), in others it was the regulators. (The Antitrust Authority refused to sanction the acquisition of Hanson, HOT, NewPharm and Bank Leumi. )
IDB owes bondholders about NIS 35 billion, and Dankner is the biggest consumer of bank credit. IDB is the controlling shareholder of Super-Sol, which controls 37% of Israel's retail grocery sector. IDB's Cellcom Communications controls 35% of the country's mobile communications sector. Dankner controls the Internet and telephone service provider 013 NetVision, while the IDB-owned Nesher is a monopoly with more than 95% of the local cement market.
The most important part of the deliberations on wealth concentration will be over the need to separate industrial and financial holdings. For Dankner this would mean the sale of Clal Insurance Enterprise Holdings, which is already under way.
NIS 100 billion for sale
Clal is the second largest insurance company in Israel, with a 17% share of the general insurance market. Clal is also one of Dankner's main power centers: It manages NIS 100 billion of the public's money and can decide where to invest that money. Ido Dissentchik, who heads Clal's investment committee, is a former editor of the Maariv daily and a Hapoalim director, and is considered to be close to Dankner.
Clal Insurance owns Clal Finance, which manages NIS 60 billion in assets. IDB, via subsidiary Koor Industries, also controls the Epsilon investment house, which manages NIS 10 billion in assets.
Because it has large blocks of shares in lots of companies, Clal Insurance can push through or veto insider deals and executive salaries at countless companies (through voting at shareholder assemblies ). Clal had significant sway, for example, in the two biggest debt arrangements in Israel in 2009 - Africa Israel Investments and Zim Integrated Shipping Systems.
Clal Finances owns 25% of Clal Finances Underwriting, one of the top two firms in a sector that is controlled by Tzachi Sultan. It leads all the stock and bond issues for the IDB group and participates in nearly all the issues of other big Israeli companies. Some of the securities sold in these issues are purchased by Clal Insurance. IDB and Sultan are also partners in the Modi'in oil exploration partnership, and recently there was an interesting development when Modi'in raised money via Clal Underwriting.
Another of Dankner's partners in Clal Insurance is Hapoalim, which owns 9.5% of the insurance group. Hapoalim subsidiary Poalim Sahar advises institutional investors, including Clal Insurance, on voting in shareholders assemblies.
Poalim Sahar recently advised institutional investors with IDB shares to approve a controversial insider deal that Dankner wanted to push through, in which IDB took ownership of Ganden Tourism from Dankner and his partners. Ganden owns Israir Airlines, which is losing money, and the deal relieved Dankner and his partners from personal guarantees totaling NIS 500 million. Hapoalim, which is one of Ganden's lenders, recently decided to sell Poalim Sahar.
Among IDB's bevy of attorneys is legal strongman Ram Caspi. He serves as a convenient conduit to the corridors of political power, relaying messages on matters about which Dankner prefers not to be quoted. Dankner is close to the country's leaders, coming out publicly to support Netanyahu's campaign as well as President Shimon Peres in his bid for the post.
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