Taking Stock / A Million in Geneva

Do you know Eli Uzan and Itzik Goldenberg?

No? That's okay. Unless you swim in the stock market waters like a shark, or own a construction company, there's no reason to have heard of them.

But just ask small contractors if they've heard of them, and they'll leap and rave as though snakebit.

Itzik Goldenberg and Eli Uzan were managers and controling shareholders in Noga Electrotechnika.

Noga had gone public in 1994. Come 2000, it floated its subsidiary Noga Electronics, which invested in startups.

The Noga companies raised tens of millions of dollars from investors on the Tel Aviv Stock Exchange, and borrowed hundreds of millions of shekels from banks and suppliers. When the Noga empire collapsed two years ago, its debts were tremendous.

For the banks, it was just another egg in the face, and they'd already taken a chicken ranch load. But the huge profits they make from the capital market and households can buy enough tissue paper to wipe it off, forget the whole thing and move on.

But dozens of small builders and suppliers of construction materials, countless laborers and workshops employed by Noga are still licking their wounds. Some were ruined outright when Noga went broke.

Where is the money?

The present estimate of the Noga group's debt is about NIS 800 million. Where did the money go? Some went into stupid investments in startups, some vanished into overpriced real estate projects, and some was spent on financing operating losses.

But not all. Attorney Zuriel Lavie, the group's receiver, presented an intriguing story last week. He diligently examined Noga's bank accounts and discovered that it had transfered a million dollars to a Swiss account. It booked the transfer as a down-payment to a "mediator in a transaction to sell shares."

Lavie's notification to the court last week appends a hand-written directive from Noga asking the bank to transfer the money to the Geneva branch of a UBS account. To whom did the account belong? To "Uzi and Dvora Uzan."

On July 2, 2001, Lavie claims, the private account of Uzan, who controled Noga together with Goldenberg, received the money from Noga Technology Investments.

The company's books show the amount to be "money held in trust" for a mediator in a shares transaction. The annual 2001 financial statement claims the amount is a "deposit held in trust, serving to guarantee payment to a service provider in respect to selling an investment."

But the mysterious "mediator" or "service provider" is none other than the director and controling shareholder Uzan, Lavie informed the court.

What does he care

The disclosure should have one of two possible results. Either Uzan should leap to his feet and announce that Lavie is inventing the whole thing, that he never received a sou and can explain the documentation.

Or he should be arrested on the spot, either by the police or the Israel Securities Authority, whoever gets there first, for embezzlement, misleading investors, and so on.

But Eli Uzan isn't troubled, nor is Itzik Goldenberg. They have new careers, one in Israel and the other elsewhere, and both have lawyers handling their affairs.

Uzan's attorney, Shmulik Cassouto, settled for the following statement: "We are not familiar with the petition, and it is a shame attorney Lavie did not consult with us before turning to the courts. I assume he would have received data and explanations. The petition appears to be a response to proceedings Uzan is conducting against advocate Lavie."

In other words, it's all technical, a matter of who contacted whom first, and in any case it's all personal.

The conclusion is obvious: If you're one of the contractors who borrowed tremendous amounts of money from the banks and from suppliers, and your business is spiraling down the toilet, dry your tears and rush to the bank and suppliers to borrow more and more! Try to reach a few hundred of millions at least.

If your debt is a measly few hundred thousand, the banks and suppliers will simply seize everything you have. They will file complaints with the police and crush you like a cockroach.

But if your debts are big enough, the whole thing will stop being personal and turn into a huge institutional and legal brouhaha. So if you're going to collapse, do it big, with style.