Taking Stock / Guardian Angel Udi

Udi Angel doesn't see the problem. He doesn't understand the wariness of Israel Corporation investors about the startling transaction its subsidiary Zim announced two weeks ago - an $820 million deal to buy and lease 12 ships from the Ofer brothers, who control the Israel Corporation, and from Angel himself.

In an interview with Yedioth Ahronoth two weeks ago Zim chairman Angel explained why the deal is so marvelous. "Sammy Ofer feels very hurt. He's wealthy in global terms and contributes an enormous amount to Israel. Does anybody really think he needs a commission from selling ships to Zim? He isn't even involved in the day to day deals," Angel said.

Udi, we have to agree - a multi-multi-millionaire like Sammy Ofer doesn't need a petty few million dollars comming from some seedy insider transaction. It isn't distinguished. Yet somehow the lurking suspicion arises time and again that in his dealings with the government and general public, Sammy Ofer somehow always comes out on top.

If you don't understand why investors find it hard to swallow the view that you and Sammy are some kind guardian angels watching over them all - well, let's give you a hand. The shipping industry is as vast as the oceans themselves. Why should Zim buy its ships from the Ofer kinfolk? Isn't anybody else selling ships somewhere?

You managed to wangle full ownership over Zim half a year ago, buying out the state. But Zim was and still is a public company, in that it is controlled by the Israel Corporation, in which the public holds 40 percent.

As a wily, seasoned businessman, Udi, you must know it's common practice to check a person's record before getting into business with him. Zim should look carefully too. In July 2004, Israel's State Comptroller wrote that Zim lost millions of shekels on prior transactions with the Ofers' privately-held shipping companies.

Some of the deals were never approved in a proper manner under the law, but only retrospectively. The comptroller found, among other things, that the Ofers had leased ships from Zim without paying royalties, as is the custom in shipping.

You must know that Zim was not born as an Ofer Bros. company. Half a year ago the state sold its shares in the shipper to the Ofers for $115 million. Right afterward, it became apparent that Zim was facing one of the most lucrative years in its history. Its profits shot up, and stand to exceed $100 million a year, because of the world surge in shipping.

To mangle a pet phrase from your own lawyer, Ram Caspi, you made a monkey of the sellers - namely us. Who can promise us that you won't make monkeys of us again in this giant deal for ships?

Naturally, this ships deal relies on third-party appraisals by foreign experts - whom you hired. Their expert opinions eased the minds of your directors. That is nice. But we still remember those "experts" the state hired to appraise Zim a year ago, and they were experts representing the state, not you.

You surely cannot reproach us too harshly if we have become jaded about "experts," especially ones commissioned by a party with vested interests. One can always find an expert to attest that a barnacled, worm-holed canoe abandoned on the shore is worth a million dollars.

After Zim was sold for a song, you told the press that people should realize the company is laden with debt. Yet as soon as you had the reins, it became apparently that the heavily leveraged company could borrow another $600 million, or was it $800 million, easily enough.

Admit it, that's some revolution in its finances! That may explain that when Angel says "may the Lord protect Zim if the deal doesn't materialize", we just can't suppress a giggle.

The Ofer family is an enigmatic one that does business around the whole world. Aside from his liking for dead cool glasses, we don't know much about Sammy Ofer, the brother who owns most of the shipping operations. We have roughly zero information about that shipping business either - how it is leveraged and managed, for instance.

Nothing wrong with that, of course. It is everybody's right to have privacy and that goes for billionaires too. But when you control a publicly traded company that has parallel operations, one has to worry about conflicts of interest involving the two companies. Suddenly the shroud of secrecy surrounding the private company becomes rather less legitimate.

As chairman of Zim, which is essentially a public company, and as a partner in the Ofers' private shipping company, you Udi say, "I often find myself walking a tightrope but I believe I am fulfilling the job with loyalty to Zim."

We believe you want to be loyal to Zim. And to yourself as a shareholder in the private company. And mainly to the family that made you rich. If you find it dispiriting to encounter people so weak in faith as us, Udi - well, let's end this on an upbeat note.

We know you are long inured to the behavior of public bodies that hold shares in the really big public corporations - yes, we're talking about people who manage other people's money.

They won't get in your way, Udi. You'll be able to do whatever you want so long as you present a sweet "compromise".

At the end of the day, they, like the directors and all too many of the bureaucrats you encounter, would rather maintain good relations with people like Sammy Ofer and Udi Angel than try to protect the rights of anonymous little people.