Zehavit and Haim Cohen: The Iron Lady and Her Tin-pot Husband?

The Cohens are among the most prominent power couples in Israel, but critics say it’s not a marriage of equals when it comes to business acumen.

Hagai Frid

In early 2011, Haim Cohen was named CEO of the biggest business-information company in town, Dun & Bradstreet Israel. Some in the business community lifted an eyebrow at the appointment of a man who spent his entire career beforehand in banking – including granting credit to businesses – and whose new job would involve mainly contacts in the business scene. He lasted two and a half years before being fired, at least according to a source at D&B, even if his departure was presented very differently.

Asked for comment, Doron Cohen (no relation), one of D&B’s owners, didn’t deny it. The company itself stated merely that Haim Cohen had “contributed to advancing risk management” at the company and had developed close relations with Doron Cohen and the D&B management.

Many in business circles had expected that Haim Cohen would receive help from his wife – none other than Zehavit Cohen, managing partner of Apax Partners Israel. Apax Israel owns the controlling interests in Tnuva, the biggest fresh-foods and dairy company in Israel (which it’s trying to sell), and Psagot, the nation’s biggest investment bank.

Haim and Zehavit Cohen are among the most prominent power couples in Israel. The power isn’t equally divided between them, though. The words “nice” and “pleasant” came up again and again when people were asked about Haim. They didn’t come up once regarding Zehavit. She’s the closest thing to an “Iron Lady” that Israel has, and while the press may gush with compliments, she’s also taken plenty of criticism.

“They complement each other,” says a source who knows the couple. “She’s cunning and sharp, a person with primal, animal urges. He’s more settled. He helps her mainly in maintaining balance.”

Zehavit and Haim met in late 2002, at a Citibank bash for clients. Haim was the banker that served Zehavit, who at the time held a high position in the IDB group, which was – back then – still controlled by the Recanati family. In 2004, when she was 40, they married and today have three children. For both it was a second marriage; Haim has three other children from his first marriage.

Their careers crossed paths numerous times over the years. In 2005, Haim left Citibank and went to work for IDB. His wife was in the group’s top management – deputy CEO of the group and its main money manager. Haim was given the top job at Clal Credit Insurance, a member of the Clal Insurance group, which IDB owned. At the time Zehavit sat on the board of Clal Insurance. In 2011, their business paths crossed again. Zehavit was named to the board of real estate company Azorim. That company was run by one Hershey Friedman, who was a controlling shareholder in D&B, where Haim worked.

Last week, nine months after Haim Cohen left D&B, he apparently embarked on a new road: He’s building a mezzanine investments fund called Everest High Yield, say sources, together with two seasoned market foxes, Elchanan “Nani” Maoz and Eyal Zarbiv. Its initial goal is to raise 150 million shekels ($42 million).

A bank clerk at heart

Haim Cohen-watchers were surprised, and suspect that he wouldn’t have taken that road if not for Zehavit.

“He’s a certified bank clerk,” sniffs a capital market source who knows him well. “You know the type that finish university and go work at a bank until they retire? That’s him. He’s a guy whose state of mind is conservative; he’d rather stay at one place from morning to night, for years.”

At some point, Haim became dazzled by his wife’s success, says the same source. “He started to believe that their proximity would make him some other person than what he is, a higher ranking type. Note that despite all his experience in banking, he’s never been mentioned as a candidate to run any of the big ones. People understand that he’s nice, but he isn’t the top-ranking executive type.”

Another market source figures Cohen will tap his wife’s contacts for investors in the fund, which is supposed to focus on companies in trouble. “His partnership with Zehavit brings him the opportunity to rub shoulders with the business milieu,” he says. “Apax became a large, dominating player in the Israeli business scene, which is a very small pond at the end of the day.”

Others suspect Haim will have great difficulty on his new business path, given his complete lack of experience in running investment funds. But sources near the couple claim that when it comes to granting credit, that’s exactly where he has experience and so do his partners – mainly to companies in trouble. He has no intention of seeking clients from among his wife’s contacts, the sources add.

That said, tapping institutional investors for money isn’t easy. “What a bank does isn’t at all like what an equity fund does,” says a capital market source who knows the couple well. It’s easy for a multinational company to borrow 150 million from the banks; it’s less trivial for a private individual, let alone one not exactly perceived as being a dominant leader, but a man relying mainly on his wife’s reputation, says the source: “I think Haim is in for a difficult meeting with reality. He’ll have trouble raising even a third of the amount.”

Haim Cohen, 55, grew up in the Katamon neighborhood of Jerusalem, in an elite religious-Zionist family. His mother was a teacher and his father, a former Etzel activist, joined Bank Mizrahi and rose in its ranks. His brother Yossi became deputy head of Mossad and today chairs the National Security Council.

Haim began his career at Bank Mizrahi, among other things managing a branch. After 12 years he moved to Union Bank of Israel, where he served as deputy marketing veep. He joined Citibank Israel in 2000, as one of the bank’s many vice presidents, but not a member of management. Citibank eventually abandoned its ambitions to get into retail banking in Israel, keeping only a representative office, and in 2005 Cohen moved to the IDB group, to develop nonbank lending at Clal Insurance. That flopped: Clal Insurance couldn’t really compete with the banks.

Cottage cheese scapegoat

Zehavit’s story is more Cinderella-like. She rose from nowhere to the top of the business scene, and moreover, fell hard only to rise again.

She grew up in a modest home in Petah Tikva, and at age 20, after serving in the army magazine Bamahane (together with Yair Lapid), followed a Jewish-American man to the United States. She didn’t know English, which didn’t stop her from completing a first and second degree in local universities.

Her academic background is a sore point with Zehavit. For years she dubbed herself “doctor,” and did indeed take doctoral studies at Wharton in Pennsylvania, but didn’t complete the course, instead starting work at an accounting firm. At some point she did take doctoral studies, in financing, at LaSalle University of Louisiana, and was given the title, but six years ago she discovered that her shortcuts were a mistake. In 2008, Yedioth Ahronoth reported that LaSalle wasn’t even accredited to grant academic titles.

Meanwhile, in an archived stock market announcement dated 2003 regarding her appointment to its board of directors, Clal Insurance wrote that she holds a doctorate in financing from the University of Pennsylvania. But it isn’t so.

Anyway, after 15 years in the United States, in 1998 Zehavit returned to Israel. She worked at IDB until 2006 (the last three years under Nochi Dankner). She is acknowledged to be a superb finance person, who knows numbers and how to make decisions based on brilliant economic analyses.

But she has had her detractors – most notably when she chaired Tnuva, where complaints were voiced about her people skills with subordinates. Her difficulty in understanding people reached the general public: As Tnuva’s dominant leader, Zehavit played a not-small role in deciding to raise the price of cottage cheese based on a report that Tnuva commissioned from McKinsey.

Cottage cheese is a staple on Israeli tables, and raising its price enriched Tnuva – but damaged the company’s image and hers, too. During the social justice protests of 2011, she was marked as responsible for the cottage cheese price hike, and protests started taking place outside her house. At some point she went to talk with the demonstrators, but the dialogue did not go well. Zehavit never did like giving interviews, but after 2011 she stopped entirely and started shunning the spotlight. People in the know suspect some kind of trauma.

Until the protests, Zehavit Cohen was The Success Story, including because of her success in overcoming their resistance and persuading the kibbutzim to sell their shares in Tnuva to Apax, with the help of Tnuva CEO Arik Raichman.

In 2010 she led Apax’s acquisition of Psagot, the biggest investment house in Israel, from the York Capital fund, for 3.1 billion shekels ($870 million) which was, in retrospect, too much. She paid heavily for its goodwill, which was impaired by an investigation – just as the company was being sold – into stock manipulation in Psagot’s proprietary account. The company was let off the hook on condition that it fire its CEO, Roy Vermos, who was considered key to the company’s reputation. Psagot also paid an 150 million shekel fine. (Vermos paid a 500,000 shekel fine and charges against him were dropped.)

In October 2011, shortly after the social justice protest began, Zehavit had another criminal investigation to contend with: Tnuva and prices. In the Psagot case, she hadn’t been a player; here she was integral to the antitrust probe, and was even questioned under caution for allegedly concealing the McKinsey report from the Antitrust Authority. The case against Tnuva closed in December 2012 with a 3 million shekel fine, but meanwhile she quit as Tnuva’s chairwoman (in October 2011). She also quit as chairwoman of Psagot.

She seemed highly likely to leave Apax, too, but stayed. “She showed impressive survival skills,” says a close crony. “She survived the waves of protests against Tnuva, the Israel Securities Authority investigation [into Psagot], and after all that is still at Apax.”

Her main goal in recent years has been to sell Tnuva. The sale to the Chinese government company Bright Food was supposed to close last week, but got deferred for 45 days and possibly until January 2015, which means it isn’t yet a done deal. The price: 8.6 billion shekels, a tremendous profit for Apax, which bought the company in 2006 at a value of 3.8 billion.

Tnuva is a huge brand in Israel, a “home” brand, and many Israelis don’t like the idea of its sale to China, especially as they’re not seeing a penny from it. Zehavit was even attacked by the chairman of the Knesset Economic Affairs Committee, Avishay Braverman, who charged that the company’s sale was “not in the Zionist interest” and that the sale “stained” both Tnuva and her.

Even if the deal dies, her image has been tarnished, some say. She did well by Apax but not by Israel, they gripe, and the cottage cheese crisis hurt the company for the long run.

She has a champion. One retailer: “Even now that she brought the deal with the Chinese, instead of applauding her, she’s treated like an enemy of the people. Apax is a fund whose purpose is to make money. What’s wrong with that? They talk about the tax loss to the state – is that her fault? Did she determine the tax rules?”

Dankner days

At this stage, she seems to be laughing all the way to the bank. After a tense period in 2011, her relations with the Apax management in Britain seem better than ever. A year ago, she was promoted to general partner of the global Apax group, which means she gets a share of global profits.

And possibly, Nochi Dankner’s disgrace and loss of IDB brought a smile to her face. She didn’t enjoy an easy time under him during their three years together at the group. People in the know tell of Dankner shouting and rebuking her, not necessarily over professional reasons but as part of his tough management style in those days – something other managers suffered from as well.

“He treated her badly over a long period of time,” says an ex-colleague at IDB, who witnessed scenes. “On one occasion, it was done in public. At a board meeting Zehavit was reading the IDB financial statement and Dankner said terrible things about her, humiliated her in front of the whole board. Psagot’s support for the IDB takeover by [Moti] Ben-Moshe at Dankner’s expense was on purely professional grounds, but I wouldn’t be surprised if Cohen was happy to wholly back the move because of the hard times she had when working under Dankner.”

Moti Milrod