The Sin of Hubris

Lev Leviev, the man who had built himself an image of professionalism and moderation, has been suddenly exposed as an exhibitionist with dubious judgment.

The signs of a company's imminent collapse include a move to a luxurious office block and other conspicuous expenditures that show that the bosses have lost their grip on reality. It happened to Lev Leviev, controlling shareholder of Africa Israel, in December 2007. That is when he decided to relocate to London, and for this purpose purchased both the most expensive private residence in the city and the most expensive private jet on the market.

The man who had built himself an image of professionalism and moderation was thus suddenly exposed as an exhibitionist with dubious judgment. At the time, he told The New York Times in an interview that he did not rule out the possibility of one day becoming prime minister of Israel. The sin of hubris, the Greeks taught, brings about the downfall of its perpetrator.

Most of Leviev's activities were concentrated in the former Soviet Union. He paid exorbitant prices for land on which to build shopping centers and office buildings, all financed by gigantic loans. He also paid high prices for properties in the United States, just before the bubble burst. But the slide that became an avalanche began in mid-2007. Real estate prices collapsed all over the world. And now, Leviev has been forced to seek to reschedule his debts.

Leviev is not the only Israeli in trouble. The Ofer family purchased Zim in 2004, when it was worth $230 million, but the shipping company's value today is zero. The Ofers, like Leviev, believed that the market would go on growing, and they chartered more and more vessels. But the good years of the early part of the decade came to an end. Now, 15 percent of Zim's fleet is idle, due to the sharp fall in global trade and in the prices of marine cargo transportation.

Both of these cases illustrate the dangerous and fluctuating nature of international business. This does not mean that Israeli businesspeople must confine their enterprise to the borders of this country, but they must be more careful. Zim's case also teaches us that privatizing a government corporation can sometimes be a good deal for the state rather than the purchaser.

It is clear that there is no room here for governmental intervention. These companies are not banks which hold the public's deposits. They are businesses that failed, and their owners must pay the bill.

At worst, from their point of view, Leviev will lose Africa Israel and the Ofer brothers will lose Zim. But the companies will continue operating under different ownership. Thus the national economy will not suffer, and there will be no loss of jobs.