Tnuva CEO Calls Cream for Clubmarket Controlling Shareholders Scandalous'

"I don't know if there were financial irregularities at Clubmarket, but if the controlling shareholders withdrew management fees of NIS 3.6 million a year, it's a scandal," the CEO of foodstuffs giant Tnuva, Arik Raichman, told Haaretz yesterday.

Why do you say "a scandal?" Isn't it the norm that managers get management fees?

Raichman: "None of those shareholders managed that chain. You see what happened under their management."

The chain collapsed because of its management?

"Management is a major factor. They made serious strategic errors with the subsidiary chain Empiria. You can't sell for less than you buy. You can't get market share by lowering prices if it isn't based on lowering costs more than your competitors. Also, Clubmarket has horrible branch presence - too many up north and not enough in central Israel."

Did you know they were in serious trouble?

"I was worried about the chain's situation for some time, which is why I did not agree to increase the credit we extend to them."

How did they ask to raise it?

"We met with them several times."

With whom?

"With Yossi Rosen, Yaakov Ginsburg, Tami Mozes-Borovich and Jacob Gelbard."

Were you surprised how fast it collapsed?

"It's like a terminally ill patient. You're still surprised when they actually die. I hoped the shareholders would inject capital, and the banks would help out. It could have been prevented.

What could they have done?

"Replace the management. In a crisis there are steps that must be taken, like closing bleeding branches, emphasizing cash flow. These things weren't done."

What should be done now?

"The chain should be stabilized and operate. The trustee should close loss-generating branches. They have to stop buying high and selling low. I don't know the trustees, and I don't know if they know how to run a retail chain. They have to find a CEO.

How much Clubmarket debt are you willing to forgive?

"Even if I knew, I wouldn't say. I read there is talk of creditors getting shares, which may be an idea worth looking into.

Would you forgive half the debt?

"I won't answer that."