Bottom Shekel / Would You Buy a Used Stock From Boaz Yona?

Some day, say 14 years from now, Boaz Yona will be a free man. After "paying his debt to society," he'll be back in business. "Investing in real estate - that's what I know how to do," he'll tell some journalist in response to some future query.

He will start small, buying a three-story office building in downtown Tel Aviv, and then another one. A few weeks later, those two buildings will still be standing and Yona will try raising money from the public. Not a lot. Just a few tens of millions of shekels, to buy another building.

"Raise capital when you can, not when you need it," some associate of Yona's will drone, adding that Yona is not short of cash. "The banks are chasing him."

Yona will offer investors a tempting yield, and the prospectus issued by the underwriter will note that the tenant is financially solid; a big government agency. He will also promise the young investment managers who come to his presentation that the money raised will not leave the company founded specifically for the bond issue and that there will be a big safety net.

"Hey, Yona has partners in this," the underwriter will explain to anyone who mentions that unhappy, cough cough, Heftsiba affair. "He is just a small cog in the system."

Will pension, provident and venture capital funds and insurance companies leap on his paper? They will. How do we know? Because just last week the Borovich family's Knafaim Holdings successfully raised NIS 100 million.

Not even one investor mentioned the fall of the Clubmarket supermarket chain that family had owned, and the NIS 1.4 billion debt left by the chain's collapse three years ago.

Are the Borovich brothers like Yona? Of course not. No one ever proved that they did anything illegal at Clubmarket, but Yona's wrongdoing is obvious. Nor did the Boroviches skip the country and leave families without an apartment or savings. Clubmarket's crash hurt mainly a few big suppliers and Bank Leumi, while Heftsiba's collapse hurt thousands of apartment buyers and several thousand more depositors whose money managers had purchased Heftsiba bonds. The Borovich brothers also opened their own wallets and funneled millions into Clubmarket's liquidation, while Yona took care of only his wife and fought all the others from his jail cell in Italy.

Even so, the Borovich brothers let Clubmarket collapse without taking responsibility for the debts to suppliers, employees and clients, in one of the biggest corporate bankruptcies in Israel's history. Why, then, did institutional investors sink their money into Knafaim now? For the selfsame reason they will back Yona 14 years from now: reasonable risk, high yield and short memory.