Background / A 20-man Show

There are three strings connecting Zadik Bino and the Ofers: they are among Israel's 18 richest families; both own banks; and both have a joint financial partner named Bank Leumi. Leumi holds 19 percent of Paz, controlled by Bino, and 18 percent of The Israel Corporation, controlled by the Ofers. As a result, the bank will have a large and clear interest in the Ashdod Oil Refineries.

No matter how you look at it, Paz's acquisition of the refineries will increase the concentration of economic power here. Only a few can put up NIS 3.5 billion or have access to such financing. Only three groups competed for the refineries, and all three were from the energy and fuel sector.

The cross-holdings between the families in Israel mean that neither Bino nor the Ofers can shop among banks for financing. At every turn they are likely to run into conflicts of interest. Since Leumi is a major investor in both Paz and The Israel Corporation, it will find it difficult to finance the deal, and it is expected that financing will come from a consortium led by Bank Hapoalim.

But the other names mentioned as members of the consortium are, of course, Leumi and Mizrahi Tefahot. But Mizrahi is partly owned by the Ofers and First International Bank belongs to Bino. That leaves only Hapoalim and Discount among the major banks. Add to that the fact that the Ofer family is one of Israel's biggest borrowers, and restrictions on any more large deals may cause financing problems for local banks.

A small group of 20 people here borrow and lend to each other, participate in deals and share risks with each other, and compete with each other over deals. A show with 20 people where the entire economy passes through their hands -- if not as buyers, then as sellers, or if not as sellers, then as lenders.