Till Debts Us Do Part

Not always does the adage "money make money" stand true. Several examples show that those who had fortunes were quick to lose them.

One of the most popular adages is "money makes money," that is, whoever is rich today, will be richer tomorrow, since the government will always give a helping hand to the rich, taking care to fill their pockets with cash, while only the poor lose out. But that demagogic phrase was never true. Business is a dangerous game. You win one, you lose one. And even if you are one of the great and good, you can still fall, and no one will rush to help. They may even help push.

In 1990 I met Robert Maxwell, the global tycoon. As he sat in the King David Hotel, he telephoned banks across the globe, and within minutes he had raised hundreds of millions for a massive deal. Then, he was one of the biggies, hobnobbing with ministers and bank governors. A year later he had died, drowned in the Atlantic, after accumulating enormous losses.

Today, Jonathan Kolber is licking his wounds from investing in Koor and ECI, investments made at high prices when high tech was riding a wave. Once Kolber was the wonder kid, but now he has lost millions, and no politician is rushing to his aid.

The third example is Gad Zeevi, whom I met in 1992. Then he played the part of a mysterious businessman with dealings across the globe, but I was not impressed. At the time he was attempting to buy United Mizrahi Bank. Zeev Abeles, then banking supervisor, demanded from Zeevi to put up personal capital of $100 million. Zeevi offered an oil refinery in Puerto Rico, which he also wanted to list in Israel (at the time the local exchange was riding high) and use the money to buy Mizrahi. Abeles did not like the idea. He went out and checked Zeevi's business deals and property, and came up with an unflattering picture. Apparently, a Kenyan bank controled by Zeevi and a former Kenyan energy minister, had collapsed after extending vast loans to Zeevi and his partner. Abeles decided that Zeevi was unsuitable to own a bank in Israel - and how right he was.

A few days ago Union Bank of Israel (Bank Igud) decided to sue Zeevi for the return of NIS 8.3 million in debts that he owed the bank. This of course is a paltry sum compared to Zeevi's total debts which stand at over $1 billion to banks here and abroad. But Union Bank saw that the big banks were not including it in their discussions on Zeevi's debt problems, while Zeevi himself was ignoring the bank's demands. So Union sued.

As a result, Zeevi can no longer hide his difficult business situation, the losses of Zeevi Holdings, the financing deal with Michael Chernoy over a stake in Bezeq or his cash flow problem. The banks will also be hurt by the move. They will have to put aside vast sums in provisions for doubtful debts - something they really don't like, because it cuts into their profits and their managers' bonuses.

Oh, and I nearly forgot. Who is chairman of the board at Union Bank, the one who decided to sue Zeevi (and again rightly so)? Why it's none other than Zeev Abeles, supervisor of the banks back in 1992. What a small world.