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Tag: Lev Leviev

Africa Israel Can’t Pay its Debts

A second Israeli giant is on his way down. After Arkadi Gaydamak, the Russian billionaire, unceremoniously fled the country with his tail between his legs and renounced his Israel citizenship after a miserable failure of an attempt to run for mayor of Jerusalem by courting the Arab vote, Lev Leviev, another Russian billionaire and owner of Africa Israel, is suffering. The company lost over 1.3 billion shekels in the last quarter, and stock in his company has plummeted. He recently announced that the company will not be able to repay their debts starting in 2011. His biggest mistake? Investing in the US.

Leviev2009 debts are about 600 million, with 2010 being about one billion shekels, which they will be able to meet. After that, it all depends on where the global economy stands.

In big trouble from this crisis is Bank HaPoalim, which has significant investments in Leviev’s company, and if Africa Israel indeed can’t repay what they owe the bank, then the Israeli banking system could take quite a hit, as HaPoalim is the lead domino in what could be a continuous fall. Commission paid to banks in Israel is high as it is already, and HaPoalim has lost a lot of money in recent years. Just wait until Leviev’s drop comes around and then see what happens to bank fees. It’s not going to be pretty.

The encouraging news is that Israel is one of the first countries to officially exit the global recession, with economic growth small, but measured in the last quarter. Hopefully, it will be enough to offset this, and perhaps the giant can recover in time for the upswing. Until such is determined, it will be an interesting next few years. Is it ever not?

I wonder who the next Russian billionaire to get some stress will be. Leviev has admitted to flowing a billion shekels of his own money into the company to keep it afloat, and tells of working 20 hour days recently in a frantic frenzy to keep above water.

The Money Trail

Human Narration on BNarrator.com

Lev Leviev AdJewish billionaire Lev (Levi) Leviev was born in the former Soviet Union, and is known in the Israeli public as a “Russian Oligarch”. Leviev earned his initial fortune in the diamond business, but he has since expended his financial empire to include several telecommunication and real estate companies. Among others, he controls the Russian-Israeli “Channel 9” cable station, and the currently-in-construction first private prison in Israel.

Mr. Leviev is a religious man, and he’s continuously donating great sums of money to religious Jewish institutions — particularly the “Habbad” movement. He alone makes it possible for about 5,000 Haredi men to spend all their time in Yeshivas, and out of the labor force. The financial support he provides them is more than likely to affect their voting patterns — theirs, and their family and friends.

Knesset Member Amnon CohenIn the political arena, Knesset Member Amnon Cohen from the Haredi “Shas” party is known to be a close friend of Lev Leviev. They both belong to the Bukharan community: Mr. Cohen is the representative of the Bukharan community in the Knesset, while Mr. Leviev founded the Ohr Avner Foundation which supports the Bukharan population both in Israel and abroad.

Both The Marker and The Calcalist report that Mr. Cohen, who is a member of the finance committee, intervened yesterday in behalf of Leviev’s Channel 9, and demanded the committee perform a re-vote on a failed proposal that could have a profound effect on Channel 9’s revenues. The proposal dealt with the inclusion of Channel 9 into the free Digital TV project — a governmental initiative that plans to broadcast several state-wide channels via a cable infrastructure.

It’s amazing how much power money can buy.

Top Israeli Banks Profits for 2007

Despite a crises in mortgage banks in both the USA and UK, Israel’s top banks revealed substantial profits for the year 2007. Leading the top three was Bank Leumi with a gross profit of N.S. 3.5 Billion. This was followed by Bank Hapoalim with N.S. 2.25 Billion, and Israel Discount Bank with 1.26 Billion.

Spokespersons for the banks did say, however, that their profits were affected somewhat by what has been happening in financial markets abroad, especially in the U.S.A. The severe mortgage and real estate crises in America has not yet had major implications in Israel, by many observers fear that the “ripples” created overseas could eventually find their way to the Israel mortgage and housing markets in Israel which are still fairly strong, due to continued sales of new apartments to purchasers in the U.K and Europe, especially France.

The bank profits were also evident in the salaries paid to top bank executives. CEO’s Galia Maor of Bank Leumi and Zvi Ziv of Bank Hapoalim reportedly received N.S. 9 Million each in 2007, while Giora Ofer of the Discount Bank received a whopping N.S. 17.5 million; nearly as much as the other two combined.

Banks in Israel have enjoyed large profits for some time, mainly due to the high fees and commissions they receive on all types of transactions, including payments of various debits by customers, commissions on stock market transactions, high interest rates on overdrafts and other short term debt, and even fees for counting large sums of money (banknotes) deposited into customer’s own accounts. These fees and commissions are some of the highest in the world, and are much higher than those charged by banks in the U.S.A. This is especially true in regards to foreign currency transactions. Perhaps this is why many bank executives receive such high salaries, as noted above. Due to the current mortgage bank crises in the USA, however, Bank Hapoalim’s overall profits were 20% less than in 2006. Bank Discount’s profits actually increased by 51%, which may explain the high salaries paid to Ofer and other high ranking Bank officials.

In another financial related matter, Lev Leviev, head of African Israel Development Company and LLD Diamonds, said that in his opinion, the Israeli economy is heading towards a recession. Perhaps this statement, by one of the country’s richest men, came in the wake of his losing 336 million Shekels (nearly $100 million dollars) in recent stock market falls. Despite this slight reversal, Leviev is said to have made more than 4 Billion Shekels in the year 2007.

Lev Leviev Quitting Israel

The announcement by Billionaire Lev Leviev, one of Israel’s wealthiest citizens, that he and his family are planning to leave Israel is causing reverberations all over Israel, and the Jewish world. Reported destination for Mr. Leviev is London, England, where the businessman and entrepreneur already has varied business interests. He is Chairman of African Israel Development Company, is also head of L.L.D. Diamonds, the largest diamond manufacturing company in Israel and one of the largest in the world. Leviev, age 51, came to Israel originally from Tashkent, Uzbekistan in 1971, and has been one of the leaders of the Bukharian Jewish community in Israel for many years. The billionaire’s personal fortune has been estimated at “between 4 and 7 billion dollars”, and he is rated number 278 by Forbes rating of the wealthiest people in the world.

A deeply religious man, Leviev made the news several years ago when he purchased the controlling interest in the exclusive Ramat Aviv Shopping Mall, and almost immediately prevented the multi-screen cinema there from being open on Shabbat and Jewish religious holidays. Although the cinema later opened its doors during Jewish holy days, Leviev retaliated by announcing that he would remove the cinema entirely from the mall. Leviev is deeply involved in the Chabad religious movement, and has made large donations to the Chabad Movement in both Israel and abroad. He was a personal friend of the late Lubavitcher Rebbe Menachem Schneerson, who has been refereed by many as the Jewish “Meshiach” or Messiah.

Leviev’s diamond empire, which includes mines in both Russia and southern Africa, has given him so much clout that he has even challenged the DeBeers international diamond syndicate by saying that due to the size and scale of his operations, he doesn’t need to be a Debeers diamond “sight-holder” since he has enough access to raw, uncut diamonds from his own sources. His real estate empire has also reached a state where he is purchasing exclusive property in cities such as London and New York City, some of which cost more than half a billion dollars. Besides purchasing various luxurious properties in the U.S., his Africa Israel company also owns controlling interest in the 1,700 “Fina” gas stations which are spread all over the continental U.S.

Leviev is a strong family man and the father of nine children. Recently, he appointed his eldest daughter to be the CEO of Africa-Israel, which may have been an advanced notification of his intention to relocate. He has also been recently quoted that he is very dissatisfied with the present political situation in Israel and also in the manner in which many non-religious Israelis are living, including their desecration of the Sabbath and religious holidays. Israel’s dealing with the Palestinians has also been disappointing to Leviev, especially in regards to the Olmert government’s willingness to return most of the West Bank in return for a peace agreement.

Whether Leviev and his family will like living in an increasingly Muslim influenced city like London is too early to tell. London’s Jewish population has recently taken on a religious revival which many younger families choosing to become deeply religious. London’s business proximity is probably attractive to Mr. Leviev as the city of nearly 20 million has one of the largest diamond bourses in the world. And regarding his many business interests in Israel, London is only a 4 hour plane flight away. While this move may not be permanent one, Mr. Leviev appears to be sending the State of Israel a distinct message that it should consider putting its political and religious house in order before it’s too late to do so.

The Big Apple Invasion

Israel is a little country of seven million inhabitants, and with a land area the size of the American state of New Jersey. Yet, despite its diminutive size, it has some of the richest people in the world as its citizens. And now, these super rich billionaires are trying to purchase many of the most well known landmarks in New York City.

Formerly the private turf of such well-known people as the Rockefeller family, banker J.P. Morgan, and Real Estate mogul Donald Trump, the 22.7 sq. mile Manhattan Island, on which all of New York City’s well known skyscrapers stand, is now being sought after by such Israeli families as the Ofers, the Levievs, and the Tshuvas. Yitzhak Tshuva, an Israeli businessman who came from very humble origins to now being the head of a billion dollar energy and importing concern that not only controls much of the new car and gasoline sales in Israel, but in America as well (his company owns literally hundreds of gas stations and convenience stores scattered all over the continental U.S.A.). Tshuva, recently purchased the historic and well known Plaza Hotel, once the most luxurious hotel in The City. The price of this purchase of in excess of $ 600 million, and Mr. Tshuva must have admired the building and what it represents long ago when he walked the streets of Manhattan as a young man following his army service. Now, he not only owns the building of his dreams but plans to purchase others on the island as well.

Another Israeli tycoon, Eyal Ofer, of the Zim Shipping Company empire, took possession of the Philip Morris Building for a price of $525 million. The Ofer family controls one of the largest merchant marine fleets in the world, and has also amassed a respectable real estate portfolio of which the building which housed one of the largest tobacco companies in the world is only a part of. Ofer’s possessions. It occupies one of the most coveted property locations, i.e. right across from Central Park. Eyal also purchased the prestigious Mayflower Plaza Hotel for $400 million, and has turned this former luxury hotel into super luxury apartments. Ofer, together with a group of investors also purchased the Central Tower building for a ‘paltry’ $300 million.

Not to be outdone, another super wealthy Israeli, Lev Leviev, purchased two well known New York City landmarks: the New York Times Building, for $ 525 million, and the Clock Building, for $211 million. Leviev, who is Chairman of the African Israel Real Estate Company, is also head of LLD Diamonds Ltd, now considered as the largest private company in the world dealing in rough and polished diamonds. Leviev is said to have spent another $100 million to purchase the Wall Street building once belonging to J.P. Morgan, and is turning it into luxury apartments as Ofer has done with the Mayflower Plaza.

What prestigious landmark is next in line for these guys and other Israeli billionaires is anybody’s guess; but one thing is for certain, and that is the sky’s the limit for their desire to control what is going on in America’s largest city. Who knows, maybe the Chrysler Building, Radio City Music Hall, or even the Empire State Building itself may fall under their ownership. The moral of all of this: you don’t have to come from a big country to be big.

Did Gaydamak save the “Chazer Store”?

Strange things definitely happen in this world. And one of the strangest things is the sudden decision by Russian billionaire Arcadi Gaydamak to cancel his purchase of 51% of the shares of the non-kosher food chain Tiv Taam. Gaydamak’s previous announced buy-out of Israel’s third largest supermarket chain, albeit non-kosher, and known affectionately by many as “the chazer store” (chazer in Yiddish meaning pork), became breaking news a few days ago; especially since Gaydamak announced that he planned to “convert” the food chain to one either not serving pork, or actually to one being certified as kosher.

The offered sum of $100 million must have been a worrisome amount for even someone like Arcadi, whose accumulated wealth is estimated at between 1.5 and 4 billion dollars. With all the media hype that has been thrown at everyone by the press (their favorite pastime) during the past few days, Arcadi must have begun to have second thoughts concerning the validity of his offer to the company controlled by financier Amit Berger and former Tiv Taam CEO Kobi Tribitch. So serious was Gaydamak’s reservations, he decided to reduce his offer by $10 million, with the likely idea that he would need to spend at least this amount to “Kosher” all the stores properly as well as absorb significant losses until the general public decided to once again purchase products at the Tiv Taam stores.

Even if pork and non kosher items were completely removed, including a big selection of non-kosher wines (one of the largest in Israel) there was still the matter of being open on the Jewish Sabbath and religious holidays. Consumers had gotten used to the convenience of being able to do their shopping there on both Friday evenings, until 8 p.m; and all day on Saturday. How Gaydamak would have gotten around this hurdle is still anybody’s guess.

So now the situation seems to have reverted to what it was before the earth shaking announcement of the proposed buyout less than ten days ago. One thing is for sure: non-kosher meat processing companies, including the one located at Kibbutz Mizra, located near Nazareth, are breathing a sigh of relief as a good deal of their income would have been lost had the deal actually gone through. And for those who appreciate being able to “run to the chazer store” for a few needed items on Shabbat, or for a tray or two of sushi, will now be able to continue to do so; unless some other billionaire like Lev Leviev (who is religious) might decide to purchase Tiv Taam and either ‘convert’ it to one selling only strictly kosher items or even close it down altogether.

Until that dark day happens, those who love wandering through what is considered a truly upscale European-style supermarket will still have the opportunity to do so.

Isn’t it interesting how things sometime work out for the best?

Shari Arison Loses Top Spot as Israel’s Wealthiest

Shari Arison Much to the possible chagrin of Bank Hapoalim Chairperson Shari Arison, former Iscar Tool Company head Stef Wertheimer is now Israel’s wealthiest citizen. After his sale of Iscar to American Billionaire Warren Buffet, Wertheimer’s net worth now runs close to $6 billion, putting him ahead of Arison, whose combined assets are ‘only’ at the $5 billion mark. Running a close third in this ‘race for the roses’ is Africa Israel real estate and diamond tycoon Lev Leviev whose net worth now stands at between 2.5 and 3 billion dollars. Leviev, who also heads the diamond firm LLB Diamonds, is reported to be the richest diamond man in the world, having amassed this part of his fortune in both Russia and Africa, where he has managed to acquire rough diamonds on such a scale that he is now in a position to dictate terms to the world renown DeBeers Diamond Syndicate.

Other members include Israel’s Billionaire Club include Zim Shipping magnate Sammy Ofer, who also heads the Israel Corporation, and who recently purchased the controlling shares of the Mizrachi-Tefahot bank, one of Israel’s largest banks. His net worth now stands at $2.5 billion.

Two more interesting personalities should also be noted here; the first being Yitzhak Tshuva who has amassed his $2 billion fortune in real estate and construction, as well as in the energy and automobile importing enterprise. Tshuva owns both Delek Oil Company and Delek Motors, importers of Mazda and Ford automobiles into Israel. And rounding out this list of Israel’s six top billionaires is none other than Russian financial mogul and Jerusalem Beitar Football Club owner Arkady Gaydamak, who seemed to appear out of nowhere and once held nearly a billion of his reportedly $1.5 billion fortune in Shari Arison’s bank, before removing it suddenly to avoid paying certain revenue taxes. This move, together with Wertheimer ‘s gain of $4 billion from selling Iscar to Warren Buffet, knocked Shari out of the top spot as she also has had to pay some legal fees on behalf of her husband Ofer Glazer, who is scheduled to begin serving a six month prison sentence for sexual misconduct next month.

These individuals, who together with a few others, control much of Israel’s commerce and industry, are worlds away from most of Israel’s population who work for less than satisfactory wages, many of them employed in companies owned by the above six billionaires. Recent studies indicate that more than 53% of Israel’s working population is very dissatisfied with the wages they currently receive, particularly in the 35 to 54 age group; which is supposed to compose that part of the population involved in their life long careers. Opinion polls further show that these dissatisfied people largely feel that the very wealthy elements of society, notably ones like those mentioned above, take advantage of their employees and pay wages below those that should be paid for these employees’ contribution to the building of such huge financial empires. The government, through its various economic measures is also blamed, but at a lesser degree than the ones actually paying the wages.

The old adage that you can’t get rich by working for someone else is very true; especially if your ultimate boss is worth a billion dollars or more.

(Photograph courtesy of Forbes)

Arkadi Gaydamak – Billionaire, Sports Fan, Newspaper Owner, Arms Dealer, did I miss anything..

Arkady Gaidamak in Israeli News
I can’t keep up. Too much happening too fast. Arkady Gaydamak (53) is all over the place. I planned to write this piece on this phenomena called Arkady (Arcadi or Arkadi) Gaydamak (an Oligarch) and as I am writing these words there are 2 new news bits that involve the Gaydamak family. This is like trying to nail Jello to the wall, and as you will see, apparently some law enforcement agencies seem to think the same thing.

Let’s start with the old news. Gaydamak moved into Israel and did some local shopping. He bought Jerusalem’s Beitar Jerusalem, a rather controversial soccer team. He then also bought a basketball team and donated $400,000 to a third team just to keep things fair.

But the shopping spree started earlier with this little acquisition reported in Russia:

“That changed this week when Gaydamak acquired the Moskovskiye Novosti, a leading Russian liberal publication from the time of perestroika. The St. Petersburg Times reported that “Arkady Gaydamak, a Moscow-born businessman with four passports and a controversial past, confirms that he had bought the weekly newspaper.”

“Gaydamak seems still to be close to the Angolan government and he is definitely involved in Angola’s Sunland Mining, a company in which Alrosa is believed to be the largest shareholder. As is well known, Sunland is one of the official buyers of rough diamonds from Angolan state company Sodiam. Gaydamak once was in partnership with Lev Leviev. Though they publicly talk nicely about each other, there is no doubt that there has been a fall-out between these ex-partners.”

Forbes had an interesting article about Gaydamak, shedding a little more light about the Angola (alleged Angola) connection and the connection to Lev Leviev, owner of Africa Israel, the largest real estate behemoth in Israel, and someone who had gone on several shopping sprees himself a few years back:

“A friend of his (Lev Leviev’s), Arcadi Gaydamak, an alleged arms dealer with Israeli and Russian citizenship, was an adviser to Dos Santos. According to the Center for Public Integrity, in the mid 1990s Gaydamak (wanted in France for illegal arms trafficking) negotiated a forgiveness of Angolan debt to Russia, in exchange for arms. In January 2000, a month after Leviev’s Ascorp was awarded the exclusive on Angola’s diamonds, Gaydamak bought 15% of Leviev’s Africa Israel Investments. Within a year Leviev bought back Gaydamak’s stake. A quid pro quo? “He offered to sell me the shares at a good price,” says Leviev. “This was a time before Mr. Gaydamak had legal problems.” While the two are no longer business associates, they remain chums.”

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