Until quite recently, Eliezer Fishman was a prominent Israeli businessman often described locally as a “tycoon,” a member of a class of a few dozen magnates who are said to have outsized control over Israeli politics and the economy. In 2013, Forbes Israel estimated the septuagenarian’s net worth at NIS 2.7 billion ($765 million).
But about two years ago, press reports, followed by court proceedings, revealed that the media and real estate mogul’s business empire was a house of cards. Far from having assets in the billions, he owed over NIS 4 billion ($1.13 billion) to Israel’s major banks, a fact that both he and the banks kept quiet for years while he and his family maintained an opulent lifestyle. In January, the receiver of his assets called Fishman the “biggest bankrupt in Israeli history.”
This week, amid revelations of the terms of a possible debt settlement in which 92 percent of his NIS 1.7 billion ($480 million) personal debt to the banks and tax authorities would be written off, a national furor erupted.
“This is one of the most despicable, foul-smelling things I’ve seen in recent years,” MK Eitan Cabel (Zionist Union) said in a stormy session of the Knesset Economic Affairs Committee on June 6 devoted to the topic of Fishman and his debt relief. “There must be a parliamentary investigation.”
“How can the banks continue to fund a lavish lifestyle for people who don’t repay their debts while at the same time throwing people out of their houses for defaulting on mortgages?” asked MK Ayelet Nahmias Verbin (Zionist Union) in the same meeting.
As numerous articles this week have pointed out, Fishman, under the proposed settlement, would be getting better treatment than the 700,000 Israelis who are currently being dragged through the government debt collection system for debts as low as NIS 10,000.
Others have protested that the public at large, and not the highly paid bank executives who indulged Fishman, would ultimately pick up the tab for Fishman’s insolvency through higher banking fees and lower share prices, since most Israeli pension funds are invested in Israel’s major banks.
On the evening of June 6, a meeting was held at the offices of the official bankruptcy receiver in Tel Aviv at which the receiver of Fishman’s assets presented his creditors with the details of the debt settlement deal. With 20-30 protesters outside — shouting slogans like “It’s our money!” “We demand a probe, the watchdogs are asleep!” and “The people will not be written off!” — the creditors inside failed to vote on the deal. A lawyer for one of the creditors, Bank Leumi, told Israel’s Globes business daily that the settlement was not approved “because the largest creditor, Bank Hapoalim, opposed it.”
After the meeting, Bank Hapoalim declared, “The bank believes there is no place for a debt settlement with Mr. Eliezer Fishman and we believe bankruptcy proceedings should move forward. This recommendation will be brought to the bank’s board of directors.”
Further negotiations will now be held between the creditors and the court-appointed administrator who negotiated the proposed settlement. Before the meeting, Fishman had told Israeli TV he has “no money left to give… They can declare me bankrupt. Is anyone stopping them?” he asked. “I would not advise them to do so, but they should do what is good for them.”
According to Akiva Lakser, an Israeli lawyer familiar with Fishman’s case, bankruptcy is a much worse outcome from Fishman’s point of view than a debt settlement.
“If you’re declared bankrupt you can’t use a credit card and there are limits on the use of checks. It’s not a good situation to be in.”
But Fishman won’t starve, Lasker stressed, even if many of his personal assets are seized. “His wife and children are very, very wealthy. They have homes and assets worth hundreds of millions of shekels,” Lakser told The Times of Israel.
Ronen Bar-el, who teaches economics at Israel’s Open University, believes the creditors rejected the debt settlement because of the public outcry.
“It would have sent a very bad signal to the next bankrupt debtors who come along. Besides, the public was looking at Eliezer Fishman and thinking, ‘What about me? What if I don’t pay my debt?’”
Are Israeli newspapers serving the tycoons’ interests?
Beyond the perceived unfairness of the controversial settlement, the notion that ordinary people would foot the bill for a major businessman’s incompetence, or worse, while he walks away from the chaos he created — the story of Fishman’s debt resonates with many Israelis because it symbolizes what is referred to as “hon-shilton” (“money and government”). This is the perception that Israel is increasingly corrupted by crony capitalism, and that politicians, banks and business tycoons have banded together to advance their own interests and pocketbooks at the expense of the public good. Many Israelis also talk about “hon-shilton-iton,” (“money, government, newspaper”), the view that some Israeli newspapers are not independent but skew their coverage to promote the business interests of their owners and their cronies.
Among his many holdings, which included real estate, retail chains (Celio, Zer4U, MegaSport), cable television, telecommunications infrastructure and gas stations, Fishman was also the owner, until recently, of the Globes business daily and held a 38 percent stake in the Yedioth Ahronoth newspaper. Many observers have contended that Bank Hapoalim and Fishman’s other creditors continued to lend him money because of the power he had to shape public opinion in their favor.
Writing in “The Seventh Eye,” a journal that critiques Israeli media, Oren Persico surveyed the newspaper’s coverage during Fishman’s tenure: “As we showed in a comprehensive investigation a year ago, the newspaper would attack regulators and competitors who worked against the economic interests of the owner. At the same time the newspaper gave the large banks and their owners the most positive coverage among Israel’s business newspapers. Israel’s banks and their executives, who always are very sensitive to their image in the media, enjoyed the treatment they received from Globes and certainly did not want it to change for the worse.”
‘The nerve center of Israeli power’
Last month, Israel’s brand-new state broadcaster, the Kan corporation, aired a five-part muckraking television report entitled “The Bank Hapoalim Report: A chronicle of lawlessness in five acts” produced by Guy Rolnik, editor of The Marker business daily, and television director Doron Tsabari, whose 2015 documentary “The Silver Platter” also featured Rolnik and also addressed the theme of crony capitalism in Israel.
In the show’s opening scene, Rolnik stands in front of a palatial mansion in the upscale Israeli town of Savyon, near Tel Aviv.
“The estate behind me is home to the biggest bankrupt in the history of the State of Israel, Eliezer Fishman.”
Rolnik asserts that “if you want to understand politics, economics and democracy, you need to understand power, and Bank Hapoalim has been the nerve center of power in Israel for the last 15 years.”
The report makes the case that senior management at Bank Hapoalim gave easy credit to their cronies; some of the bank’s own managers even took personal loans from the bank approved by their colleagues.
Fishman and other tycoons like him then used this credit to buy up businesses, including monopolies privatized by the government, often getting their loans on the strength of future earnings of businesses they bought with the loans. Regulators failed to introduce competition, the report contends. It further hints that it is no coincidence that many of these regulators later received plum jobs working for the very same banks and tycoons they had regulated with such a light touch.
Fishman’s businesses had periods of great success, Rolnik and other observers point out, but if there was a weakness that led to his downfall it was his appetite for gambling, both in high-risk business ventures and on foreign currency trading, aka forex.
Aryeh Avneri, an Israeli journalist who wrote a 2005 biography called “The Fishman Riddle,” told Israel’s Channel 10 that when he was interviewing Fishman for the book his subject would look up and answer questions while engrossed in his laptop, punching keys as if playing a video game.
Asked what he was doing, he responded that he was trading foreign currencies.
“He would say ‘I just transferred hundreds of thousands here, millions there,’ with an unperturbed air.”
In 2006 Fishman bought vast quantities of Turkish lira that he funded with a loan of Canadian dollars. When the lira crashed, he lost NIS 2 billion in a matter of days. Many observers believe that this loss is what sent him into the spiral of insolvency from which he has never recovered. When banks came asking for their money back, Fishman would put them off with promises that his latest business investment was sure to pay off handsomely and he would repay them soon.
By the time his debts became public knowledge, he owed over NIS 4 billion ($1.13 billion) to Israel’s banks, of which 1.7 billion was personal debt.
In the last episode of his series, called “The Matrix,” Rolnik contends that parts of the Israeli media have been captured by these corrupt forces as well.
In 2009, when Bank of Israel governor Stanley Fischer asked then Bank Hapoalim chairman Dani Dankner to resign because he no longer had faith in him, both Globes and Yedioth Ahronoth took an editorial line in support of Danny Dankner, Rolnik says. (Danker was subsequently jailed for fraud.)
“What we didn’t know at the time is that Bank Hapoalim was in fact a hidden partner in Fishman’s business dealings. If Fishman was already insolvent in 2006 it means that Bank Hapoalim was the real owner of Globes, as well as the hidden partner of [publisher] Noni Mozes in the Yedioth Group. Newspapers secretly controlled by banks are setting the agenda.”
Another Israeli newspaper that Rolnik attacks as lacking journalistic independence is Israel Hayom, the country’s most-read daily, a free-sheet funded by Las Vegas casino magnate Sheldon Adelson that takes a pro-Netanyahu stance. As if to support Rolnik’s contention, on June 6 one of the newspaper’s most prominent columnists, Dan Margalit, tweeted that he had been fired by the newspaper’s new editor for being critical of Israel’s prime minister.
Bank Hapoalim, Yedioth Ahronoth and Globes have all rejected the claims put forward in Rolnik’s report.
During the June 6 Knesset hearing into Fishman’s debts, Verbin, the lawmaker, further asked rhetorically, “Fishman was a speculator with the public’s money under the auspices of regulators who allowed him to do it. Why did the banks keep giving him more and more credit? The Bank of Israel was the casino. By the time he owed 3 or 4 billion shekels hadn’t anyone woken up?”
The answer put forward by Rolnik and many other commentaters is that Fishman’s massive debts are the consequence of a corrupt system.
“What’s the difference between Africa and Sweden,” Rolnik asks a small audience at the end of his television report. “After all, there is technology everywhere, money flows.”
“Because the governments there are corrupt,” someone answers.
“Right,” responds Rolnik, “what ultimately determines our quality of life, how well we live, is corruption.”