So the Israeli tycoon Eliezer Fishman reached an agreement on his towering debt to banks and bondholders, only to have it rejected by the banks supervisor, Hedva Bar, and the bankers themselves, following public pressure over the 92% haircut.
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Fishman proved to be a bad businessman, a gambler using borrowed money. But he became a leading player in Israel’s economy mainly because, after his first major business collapse, he returned with a brand-new newspaper and a lineup of attack dogs disguised as journalists.
So much for Fishman. Fishmanism, or as it used to be called, Danknerism, involves bankers lending your pension savings to Fishman. A couple of billion shekels is small potatoes when divided among millions of savers, but if we tally the total cost of Fishmanism, we’re talking maybe 20 billion shekels ($5.7 billion), maybe 200 billion. We can’t know the full damage that Fishmanism has caused over the past two decades and how badly it has stunted our living standards and the public’s faith in the system.
The banks have long since written off the 2 billion shekels they lent him. A small group of corrupt bankers and cowardly regulators have known for ages that this money was lost. Bar, the banks supervisor, instructed the banks last week to examine the Fishman deal carefully and consider the public’s faith in the banks.
A decade late, isn’t it? After all, it has been around a decade since Fishman lost hundreds of millions of shekels gambling on the Turkish lira. Now our pensions are down 2 billion shekels. But the hidden costs of Fishmanism are so much greater.
The money lost through Fishmanism didn’t go to real businessmen who wanted to establish real businesses rather than buy and sell monopolies and concessions from the state. Fishmanism’s message was that the Israeli financial system is corrupt. It favors a small club with access to bankers, politicians, former regulators and good friends in the media.
Fishmanism sent good businesspeople who didn’t belong to the ruling elite to seek their futures overseas. Fishmanism twisted the media outlets that the transgressors controlled; not only newspapers but TV as well. Fishmanism bought the silence that enabled a slew of corrupt bankers to climb to the top. Some are already in jail; some will go there. Some were spared disgrace by spending billions on lawyers and deals with the law enforcers.
Fishmanism preserved control by a small group of tycoons, executives, 10 top lawyers and five PR and strategic consultants who together formed the club. Most of them would sit by Fishman’s side at the annual conference of the newspaper he controlled. Six months ago the special manager of Fishman Properties, Joseph Benkel, revealed in court documents that these people knew perfectly well that Fishman was bankrupt or near bankruptcy as a result of his leveraged acquisitions and mismanagement.
That suited them fine. The knife that the bankers held at the throat of the leveraged tycoon, who according to Benkel’s documents was skirting bankruptcy for a decade, was another effective way to ensure that the media wouldn’t notice the smoke screens shrouding his failing businesses. Behind these screens the public was robbed blind as concessions, monopolies and our pension savings got divvied up.
Controlling a newspaper as Fishman did is power. Labor MK Miki Rosenthal uploaded posts to his website last week saying MKs are totally dependent on the media, the internet and television for survival in the Knesset. He used to work for Yedioth Ahronoth and explained how the paper controls politicians and has promoted the economic interests of its owners.
Rosenthal’s timing isn’t a coincidence. Over the past year, parts of the Israeli matrix were exposed when it turned out that Fishman, formerly a partner at Yedioth Ahronoth and a controlling shareholder of the business daily Globes, was bankrupt — and when it turned out that Prime Minister Benjamin Netanyahu and Yedioth’s owner Arnon Mozes had basically negotiated to swap sweetheart legislation for sweetheart coverage.
To have and have not
The Israeli media was controlled by Fishmanism for years. Everybody near the circles of power knew there are things one can talk about and things one can’t. There are areas where one can declare reforms and areas where one can’t. Fishmanism promoted an economic agenda that would help the politicians and regulators preserve the status quo and prevent resources from moving from the haves to the have-nots.
Fishmanism isn’t a man, it’s a method. It isn’t a tycoon, it’s an ecological system involving a few dozen back-scratchers who giggle when the politicians and media try to incite one community against another.
Fishmanism isn’t a 2-billion-shekel haircut. It’s what happens every day in the hidden connections between the people with power and money and the purported watchdogs of democracy who are supposed to fight the public’s fight but who are busy advancing the interests of the powerful.
Fishmanism isn’t assets siphoned off to family in Israel and overseas while the business empire secretly sinks deeper into debt. Fishmanism is a conspiracy on the boards of companies, banks and the media, which let Fishman behave as if he owned the country while actually his businesses belonged to the public through his heavy borrowing on the bond market.
Fishmanism became exposed in all its glory last week before the eyes of millions of Israelis because Eliezer Fishman lost his media clout and because the media, at long last, began to do what it’s supposed to do. The moment Bar and the bankers realized that the rules of the game had changed, they panicked and did what they should have done a decade ago. They insisted that Fishman not be allowed to cut his debts but declare bankruptcy.
Still, Fishmanism isn’t dead. It was exposed and weakened, but it’s the same disease that lets the natural-gas monopoly charge double the market price despite a state comptroller report against it. After all, the people who served the cause of Fishmanism are now serving the next round of robbers.