The Downfall of Israel's Top Tycoon

From al-Monitor, July 6:

This week, the Tel Aviv District Court witnessed one of the steepest downfalls in the history of Israel’s economy and capital market. Nochi Dankner, the “golden boy” of the Israeli economy who until about three years ago held sway over a tremendous business empire, was convicted of securities fraud July 4. Dankner was found guilty of carrying out millions of dollars' worth of fraudulent transactions on behalf of his company IDB Holdings Corp. in an attempt to raise share prices and save his empire from collapse.

Dankner was, until recently, the most powerful man in the Israeli business world. Prime ministers waited at his door, and the banks worshipped him. Journalists, mayors and politicians made pilgrimages to see him. Dankner was an impressive, well-spoken man with a magnetic personality. People used to say that if he wanted, he could easily transition from business into politics and secure Israeli premiership.

Instead, Dankner now awaits what is expected to be an actual prison sentence.

Dankner is paying for the sin of arrogance and greed, for not reading the writing on the wall and believing everything that people said about him. His fall from grace did not begin this week. Three years ago, Dankner had already lost the IDB Holdings business empire over debt arrangements and insolvency. Now, Dankner is likely to lose his personal freedom as well. He has almost no personal capital left. Recently, he vacated the luxurious villa where he lived for the past decade.

We are talking about much more than a mere business failure. The collapse of the Israeli strongman signals the victory of the summer 2011 social justice protests. The case also marks the official end of an era of pyramid schemes, in which sleights of hand turned a handful of businessmen and tricksters into tycoons. While investing very little of their own capital, these conjurers exploited funds from the public and the pensions of millions of Israelis to make easy profits.

Dankner is nearly the last of his kind. As of now, the only survivor among the tycoons who ruled Israel until recently is Yitzhak Tshuva, who made a fortune as a party to the discoveries of giant natural gas reserves off Israel's shores, together with American Noble Energy.

Over the past two years, other fallen Israeli tycoons have included Moti Ziser (who passed away this June), Eliezer Fishman, Lev Leviev, Ilan Ben-Dov and many others who found themselves in financial difficulties. Some of them lost all of their assets, while others are struggling to survive debt arrangements.

Dankner was the most prominent and influential of them all, the scion of the Israeli economic aristocracy. A local prince, impressive and charismatic, he was a very good friend of former Prime Minister Ehud Olmert, an associate of late Prime Minister Ariel Sharon and closely linked to Prime Minister Benjamin Netanyahu until just before the crash. Dankner contributed a lot of money to local municipalities, city councils and charities, acquiring a flock of enthusiastic admirers among the municipal authorities....MORE