Aharon Fogel, formerly the chairman of insurance giant Migdal, was named chairman of IDB Development Corporation on Tuesday as the IDB group’s new controlling shareholders moved to take control of the conglomerate.
Fogel, who had been expected to assume the role, replaces Nochi Dankner, who lost control of IDB earlier in the week after a court approved a takeover plan by Eduardo Elsztain and Moti Ben-Moshe.
Fogel arrives at a company contending with some 5.4 billion shekels in debt to banks and bondholders. Its holdings include Migdal’s biggest rival, Clal Insurance, as well as stakes in food retailer Super-Sol, Cellcom Israel, the oil explorer Modiin and a chunk of Las Vegas real estate.
Fogel, 66, met with Elsztain and Ben-Moshe for several hours on Tuesday to discuss the appointment. In an interview published in TheMarker shortly before the appointment, Elsztain’s representative in Israel, Shaul Lapidot, said they wanted to appoint a chairman who would play an active role in the company’s management.
In addition to his term as chairman of Migdal, which lasted 13 years and ended only several months ago, Fogel previously served as director general of the Finance Ministry and chairman of the Bank of Israel’s advisory council. In addition to serving as IDB Development’s chairman, Fogel is also expected to act as chairman of Rosario Capital’s new private equity fund.
After rallying the previous two days to rise close to 50%, investors apparently had a change of heart about the holding company. Shares of IDB Holding plummeted 52% to 1.45 shekels, erasing all the gains of Sunday and Monday. Its market capitalization fell to a mere 70 million shekels.
IDB Development shares were delisted by Dankner, but they are likely to return to the TASE after the Elsztain-Ben-Moshe bailout program is completed. Under the restructuring, IDB Development is displacing IDB Holding as the top company in the group.
While a new guard was preparing to take the reins at IDB group, the old guard was fighting off allegations on Tuesday of past misconduct at IDB.
Dankner’s attorney, Eli Zohar, said he would seek to have the indictment against his client on charges of manipulating the stock price of IDB Holding in February 2012 be dismissed in court. Zohar said the allegations against his client and brokerage owner Itay Strum could only be flimsy if they were based on testimony of a witness turning state’s evidence. “Otherwise, they would not need a state witness, especially if the state witness is himself a criminal,” said Zohar.
Meanwhile, MK Nachman Shai (Labor) has asked Security Authorities chairman Shmuel Hauser to immediately investigate possible misconduct by outside directors at IDB Holding Corporation’s board during the years Dankner was in control of the company. “Outside directors are supposed to serve as watchdogs [preventing] the entry of outside interests threatening to harm the public interest,” Shai said in a letter. “The problematic business behavior of IDB, the mixing of personal and public considerations and the company’s collapse suggest improper influence and unprofessional considerations in appointing outside directors or the extension of their terms.”