The Supreme Court increased to three years, from two, the prison sentence of businessman Nochi Dankner. Its decision sent a clear message to Israel’s financial community. The sentence of his accomplice in the manipulation of IDB Holding Corp. shares, Itay Strum, was also increased, to two years from one. The Supreme Court rejected their appeal, further validating Tel Aviv District Court Judge Khaled Kabub’s conviction of Dankner and Strum of securities fraud.
In the ruling, issued Wednesday, Justice Neal Hendel said the Tel Aviv Stock Exchange is the Trans-Israel Highway of the country’s economy, a key artery that affects all other routes. As a result, securities offenses can cause concrete damage to various spheres of the national economy, in which the entire public is invested through its pension funds. The metaphor that Hendel used can also be applied to the IDB group, which Dankner dominated for a decade before losing it due to mismanagement and an inability to repay its debts.
Dankner’s company played a major role in many industries, including insurance (Clal), retail (Supersol), wireless service (Cellcom) and cement (Nesher). It employed tens of thousands of Israelis and raised tens of billions of shekels from capital markets and banks. It did so through a pyramid of companies that was tightly controlled by Dankner and that hired former regulators and politicians, executives and advisers, none of whom succeeded — and perhaps they never tried — to curb his appetite for high risk and his propensity for attaining more and more power.
This propensity was expressed, for example, in his decision to buy the unprofitable Maariv daily and install Nir Hefetz as editor in chief. Dankner sought to leverage the power of the newspaper in order to influence regulators and politicians when deciding on issues involving his Dankner’s businesses. This reflected his strong-arm approach, with his years at the helm of IDB serving to make the group a source of employment and business for other companies and service providers, as long as their actions served his interests.
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Dankner was convicted of insider trading, but he is guilty mainly of corrupting the business sector and of exploiting his economic power, which he gained through little of his own capital but with abundant public capital. Sending him to prison for three years is a message to the business community about the importance of protecting the rule of law, the obeying the rule of law, securities laws and the public’s savings, as well as a message about the risks associated with an excess concentration of economic power.
The above article is Haaretz’s lead editorial, as published in the Hebrew and English newspapers in Israel.