The battle over Nochi Dankner’s debts to Bank Leumi intensified yesterday as Labor Party leader MK Shelly Yacimovich urged Leumi customers to close their accounts if the bank didn’t back down on plans to forgive a large part of the financier’s liabilities.
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The Internet was abuzz with angry comments about the bank and plans were made to stage a protest at Leumi’s Tel Aviv headquarters next week. Meanwhile, bank CEO Rakefet Russak-Aminoach defended her actions.
“These are not easy days for any of us,” she said in a letter to employees. “As CEO of the bank, I want to look you straight in the eye and state clearly: Leumi is seeking every way to collect its debts and is using every means we have at our disposal. We will continue to act in accordance with Leumi’s values and serve as an example of professional and ethical management.”
Following an expose in TheMarker, Leumi said late Wednesday it had suspended negotiations with Ganden − the closely-held investment company through which Dankner controls the IDB Holding Corporation − over forgiving between NIS 100 million and NIS 200 million of an estimated NIS 450 million in debt.
The bank’s plans had already prompted a special session of the Knesset Finance Committee slated for next Tuesday, and the beginning of a Bank of Israel examination of Leumi’s actions.
Despite Russak-Aminoach’s tactical retreat, Yacimovich signaled that the pressure on the bank would not let up.
“I call upon major and minor clients to tell Bank Leumi that if it indeed intends to forgive Nochi Dankner’s debt and thereby damage the bank and the bank’s financial cushion, they will withdraw their accounts from the bank,” she told Army Radio. “A pubic protest could call the bank and its conduct to order.”
In a letter, Yacimovich urged David Zaken, supervisor of banks at the Bank of Israel, to act as well, although he is already examining the issue.
Yacimovich noted that accountant Gad Somekh is the auditor of both Dankner’s IDB group and of Leumi, as well as of most of the other banks in Israel, and that IDB owes him money.
“This anomalous duality breeds real suspicion that this is preventing him from properly auditing the financial risks inherent in the Leumi CEO’s decision to forgive the debts of clients he audits,” she wrote.
Under the plan that was being formulated by the two sides, Leumi would only forgive part of Ganden’s debt, conditional on NIS 75 million in fresh capital being injected into the company by the Argentine tycoon Eduardo Elsztain.
The bailout was also contingent on Dankner’s reaching a settlement with IDB Holdings’ bondholders and on Ganden reaching a debt agreement with Mizrahi Tefahot Bank, which has some NIS 85 million in loans outstanding to the company.
Ganden, which belongs to Dankner and his family, owns 47% of IDB Holding Corporation, the sprawling investment company whose interests include Cellcom Israel, Clal Insurance and Super-Sol. IDB Holding is itself facing serious debt problems and is trying to negotiate a settlement with bondholders.
Russak-Aminoach noted in her letter to staff that the bailout was not of Dankner personally but of Ganden. “In the opinion of the bank’s management and board, this framework is the best one possible for the bank as a creditor to Ganden Group and IDB. The framework does not include any concessions on personal debt held by the controlling shareholders of the group.”
Attorney and political activist Eldad Yaniv has opened a Facebook page in Hebrew called “Bank Leumi − consumer boycott,” which called for a demonstration on Monday in front of Leumi’s Tel Aviv headquarters.
“We have embarked on a struggle against the latest haircut,” Yaniv told TheMarker, referring to the practice where creditors agree to write off part of the debt owned to them. “The forgiving of this debt isn’t going to happen. The planned demonstration is only the beginning. The protest will not stop until the decision [to forgive Dankner’s debt] is halted and it is clear that no more debts are being forgiven to tycoons.
“People like Riki Cohen have to negotiate with the bank and pay their debts,” he said, referring to the fictional citizen Finance Minister Yair Lapid used to illustrate the problems of the middle class. “There’s no way the banks’ lawyers and the Bailiff’s Office will bill Riki Cohen while Nochi Dankner’s debts are forgiven. There’s no more picking and choosing.”
The plan to demonstrate at Bank Leumi has made waves on the Internet. “There’s no need for meetings or whatever,” wrote Gilad Rosin. “I’m going to leave the bank if this happens and another half a million people have to do so, too. Enough talk. Spread the word.”
“It’s possible to pose an ultimatum to the bank that if it doesn’t change its mind we will begin to take our money out − every day X shekels, say 5% of the account,” Liat Hanoch proposed. “The bank will freak out because it holds cash balances of 10%. The bank might very quickly go bankrupt.”
“I’m sorry I’m not at this bank, if only for the pleasure of canceling my account on the grounds that the bank and the executives are corrupt,” wrote Tal Buhbut. “In fact, I feel like transferring to Bank Leumi now only to close the account and add a bit of bad news to the statistics.”