A Commission of Inquiry Into Tycoon Fishman’s Collapse

Why did Israel's banks continue lending him money for 15 years while he was preparing not to repay them and transferring assets to relatives?

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Eliezer Fishman: Yields on his bonds have remained in sane territory.
Eliezer FishmanCredit: David Bachar
Haaretz Editorial

A report this week by the court-appointed receiver dealing with businessman Eliezer Fishman’s debts has revealed unequivocal facts that require the establishment of a state commission of inquiry.

The report said Fishman had been planning for a possible bankruptcy for the last 16 years. He transferred money and assets from his companies, on which there are liens, to his children’s bank accounts, on which there are not. He didn’t keep proper corporate records or engage in proper corporate governance.

>> How bankrupt Israeli tycoon Eliezer Fishman got away with it for so long <<

This is the biggest bankruptcy in Israel’s history, more than 4 billion shekels ($1.1 billion). The receiver believes that Fishman didn’t declare all his unattached assets, and a thorough investigation is needed to locate them all. Moreover, all this is the public’s money, because Fishman owed it to the Tax Authority and the banks, which are public institutions.

Even though the court has been making progress in its investigation into Fishman’s assets, it isn’t addressing the key question. Why did the banks, especially Hapoalim and Leumi, continue lending him money and giving him full backing for at least 15 years while he was preparing not to repay them and transferring assets to his relatives assets that, according to the receiver, could have been used to repay his debts?

It’s unacceptable for the public not to receive an accounting explaining how the banks kept giving or rolling over billions of shekels to people like Fishman and Nochi Dankner for decades without ever moving to stop their hefty salary payments, management fees and use of private planes.

The Bank of Israel’s banking supervision unit, whose job is to examine questionable relationships between the banks and borrowers of this magnitude, also didn’t do a thing to prevent the collapse. And while the Israel Securities Authority did investigate Fishman over his enormous losses from his bets on the Turkish lira in 2006, it closed the case for reasons that remain questionable to this day.

Therefore, we must insist on a state commission of inquiry that will reveal to the public how the banks make decisions, as well as their ties to and conflicts of interest with leveraged tycoons.

Fishman wasn’t just a run-of-the-mill businessman. He controlled the financial daily Globes and one-third of the daily Yedioth Ahronoth, while receiving billions of shekels from the banks, even though they knew more than a decade ago that he wouldn’t repay them in full. The public must know why.

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