Friday, August 24, 2012
Rabbi's Bless My MONEY
The pilgrimages of the very rich to the rabbis attest to this, and the economic reality underlying the bizarre friendship between the rich and the religious constitutes a very disturbing picture.
Two of the most prominent businessmen in Israel in recent years, Nochi Dankner and Ilan Ben-Dov, are currently experiencing major difficulties: The corporations they own are in existential danger. Dankner’s IDB Holdings, for example, owes the public almost NIS 5 billion.
Ironically, both on the way up and during the slide down, these two tycoons consulted rabbis to whom the ultra-rich attribute almost magical powers: Rabbi Yaakov Ifergan (the “X-ray rabbi”) and Rabbi Yoshiyahu Pinto.
Some might consider this reverential attitude to be the businessmen’s private affair. But what makes it of general concern is the fact that these people have donated millions of shekels to the rabbis’ not-for-profit associations, partly through public companies.
Effectively, then, this turns members of the public whose money funds those companies into donors.
This same public that lent these tycoons billions of shekels, now, owing to their straitened circumstances, cannot be certain it will recoup its money.
But there is more at stake here than the use of money raised for public companies.
Today, more than ever, in light of the tremendous difficulties being faced by Dankner, Ben-Dov and others of their ilk, we need to question the rationality and degree of responsibility of the decisions made by these people, who control vast enterprises (IDB accounts for 5 percent of Israel’s GDP) and employ tens of thousands of people.
Dankner’s investment in Swiss bank Credit Suisse, which many viewed as a gamble and inflicted losses of billions on IDB, also made with a rabbi’s advice?
Was the gigantic credit line Ben-Dov took through his public companies to acquire Partner, the cellular phone provider, given religious “authorization”?
“These are businesspeople whose stomachs churn when they have to make huge, crucial decisions, so they want approval from the rabbi, because that makes it easier for them,” says a top lawyer who advises the ultra-rich. “But the truth is that these rabbis have little understanding of finances, so they don’t really say anything. I was present at several of these events.
The businessman says to the rabbi, ‘I want to execute this deal, but my stomach is churning.
Another businessman rather cynically suggests an interesting correlation: “I look at the people who go to the rabbis and see mainly the most leveraged tycoons [those who took large-scale credit from the public and the banks for their business concerns], such as Ben-Dov or Dankner or Jacky Ben-Zaken. With the tremendous leverage now in danger, they need someone to cling to.”
The question of who is clinging to whom is complicated. Even as the business tycoons have run into trouble in the past few years, the 46-yearold Ifergan and the 39-year-old Pinto have become mini-tycoons themselves, estimated to be worth tens of millions of shekels each.
Ifergan ranks sixth this year on the Forbes Israel list of the country’s richest rabbis, with a personal fortune of NIS 90 million. How did this come about? Ifergan and Pinto are known among their colleagues for their wisdom, personal charm and charisma, and Ifergan, the “X-ray rabbi,” is said to be able to discern medical problems simply by looking at a person.
Greetings from the PM
Anyone who was in the Negev town of Netivot on July 1 at about 9 P.M. could have learned something about the so-called X-ray rabbi’s clout
How far does Ifergan’s influence extend at this time? For the first time in the 18-year tradition of the hilulot, a video message to his family and the guests was sent on this recent occasion by the prime minister. “Dear Rabbi Ifergan and the members of the Ifergan family,” Benjamin
Netanyahu said. “Today you are marking the passing of the head of your family, Rabbi Shalom Ifergan, the Baba Shalom ... Your Eminence the
Rabbi, I know that you are following your father’s path in helping the needy and in the aspiration to forge unity. I wish you many more years of blessed activity.”
But the high point of the evening was the arrival at the celebration, next to the municipal cemetery, in separate but equally luxurious cars, of Rabbi Ifergan himself and his guest, Nochi Dankner, who received a royal welcome.
The crowd moves inside singing loudly until the two take their seats at the head table on the central platform.”
How close does the businessman feel to the rabbi? “We are good friends, close,” Dankner said of his relations with Ifergan in a documentary about the latter that was broadcast on Channel 10 in 2010. “We have been friends for 11 years and I love the rabbi. I enjoy him, his wisdom, his advice, his experience, the way he cares about me, his concern for me, and we are truly good friends.”
Possibly contributing to these effusive remarks was the fact that the film’s director, Sharon Kidon, a former advertising executive and currently a radio presenter, is known to be an admirer of the rabbi and is married to the adman Mody Kidon, Dankner’s best friend.
In the film, Sharon Kidon described how Dankner pulled off the most dramatic coup in his life, a decade ago.
“At the X-ray rabbi’s advice, Dankner opts to pass up an attractive deal,” the film’s narrator says.
“He prefers instead to take the risk of a surprising move that many saw as a tightrope-walk that was way beyond his ability. Against all the odds he acquires IDB, the country’s largest concern.
Dankner’s move proves successful and makes him Israel’s leading businessman. The synergy between the two [Dankner and Ifergan] is only heightened ... They maintain close, daily ties.”
financial reports of Ifergan’s two major associations, Brit Shalom V’Chesed and Yad Yehudit − about which information is being made public for the first time − show that Dankner is the rabbi’s biggest donor.
Between 2005 and 2010, as he was assuming tycoon status, Dankner donated at least NIS 20 million to Ifergan’s associations. Most of the funds were transferred personally by Dankner from two of his private companies, Ganden 2000 and Ganden Holdings, through which he controls
IDB. Because Ganden Holdings was the recipient of large dividends from the public companies, it can be argued that money invested by the public made its way to the rabbi in this manner.
All this may be indicative of the high regard, whether justified or not, that Dankner has for Ifergan. When it comes to private firms or personal transactions, an individual can generally do whatever takes his fancy.
But it was not Dankner’s private pocketbook that helped catapult the rabbi from Netivot to a leading place in the Forbes list.
With Ifergan heaping honors on Dankner, and Dankner reciprocating, in an ongoing cycle, it turns out that Ifergan’s high regard (plus maybe a small blessing) should also be bestowed on tens of thousands of Israelis who unknowingly donated about NIS 4 million to him during those five years.
Those donations were made largely through IDB’s Fund for the Community, which receives its donations budget from the IDB Group’s public companies.
These include Discount Investments, IDB Development, Koor Industries, Golf and others − companies in which the public is the major shareholder.
Paying the rabbi’s salary
The public, of course, did not choose to make these donations. Indeed, many of the pensioners whose funds are helping finance the public companies would not necessarily be pleased to learn that, as the reports of Ifergan’s associations show, the donations to them go mainly to cover scholarships for yeshiva students.
Another aim the investing public in Israel possibly did not know it was supporting, is the annual hilula in memory of Ifergan’s father.
The Brit Shalom V’Chesed association spends between NIS 300,000 and NIS 650,000 a year on the celebration. A third major expense is the annual salary of Rabbi Ifergan himself, which grew from about NIS 267,000 in 2005 to approximately NIS 440,000 five years later. That makes
Ifergan one of the richest inhabitants of Netivot, a town in which economic hardship is rampant.
The declared aim of Brit Shalom V’Chesed is “to establish and manage a synagogue, a yeshiva, a kollel [yeshiva for married men] and to organize acts of charity and philanthropy.” Its major donors, in addition to Dankner and his investors from the general public, include Bank
Hapoalim (whose major shareholder is also the public); Zur Shamir Holdings controlled by Moshe Schneidman, the owner of Bituach Yashir insurance company; and the Education Ministry, which supports the rabbi’s association to the tune of millions of shekels.
In addition to all these glittering names, many of the donations to Ifergan come directly from his followers, or from those who seek his blessings.
These amount to many hundreds or perhaps thousands a year, including blessings via the Internet or the telephone, personal blessings bestowed in the course of hospital visits or during various events held by the rabbi.
The recipients of the blessings are asked to donate whatever they can − and this adds up to millions of shekels annually.
The interesting question is of course who Dankner, Ben-Dov and the other high rollers are actually supporting, in part with money from the public.
In 2010, Ifergan used most of the donations he received − NIS 6.1 million − to provide scholarships for yeshiva students. Another NIS 1.2 million was earmarked for what the financial reports term “Torah activity” and “ritual objects,” with another NIS 260,000 going for media services. That left NIS 1.1 million to be used to help the needy.
Ifergan’s other large association, Yad Yehudit, transferred NIS 4 million for scholarships and aid to the needy in 2010.
According to the association’s reports, its aims include giving charity and philanthropy, assisting with medical treatment in Israel and abroad, and constructing medical and public buildings.
Of the NIS 4 million, more than half − NIS 2.4 million − was transferred to Brit Shalom V’Chesed, meaning that most of that amount also went to yeshiva students.
Like a revolving door, while Yad Yehudit transferred millions to Brit Shalom V’Chesed, the
latter transferred funds back to Yad Yehudit.
Yad Yehudit also transferred an additional NIS 300,000 to another small association run by the rabbi, Kol Yehudit.
Its aims are to establish and operate religious institutions of learning, from kindergartens to kollels, and to support yeshiva students and provide scholarships for the needy among them.
In 2010, this association received donations of NIS 1 million. Of that, NIS 273,000 went to the happiest teacher in the country.
The association’s report does not state the teacher’s name or ID number, but does declare that in 2010 his gross salary was NIS 274,000, almost four times the average wage of Israeli teachers. At the same time, three other teachers and a principal who were employed by the association earned a total of NIS 95,000 between them.
The report does not specify how many hours a month the highly paid teacher or the others worked, but the investors in IDB will undoubtedly be pleased to know that thanks to them, at least one person who chose the teaching profession is being amply rewarded.
The Dankner brand
Two and a half years have passed since Kidon’s film was broadcast.
The advice and the daily talks with Ifergan did not help Dankner. At present it looks as though the gift of prophecy resides with those the director quoted as saying that Dankner was out of his league in acquiring IDB.
But in contrast to the dubious benefits that accrued to Dankner from his ties with Ifergan, the benefits Ifergan reaps from Dankner’s name and from the names of other businessmen who are close to him cannot be measured in money alone.
They are far more extensive:In recent years, the Xray rabbi has turned Dankner and the other celebrities into his representatives, and for free.
“Massive use will be made of the Dankner brand in the direct references to the rabbi and to the declared goals of the list [of the rabbi’s candidates],” the document stated. “Frequent mention will be made of the scale of Dankner’s philanthropic activity as a hint of what can be expected in Netivot.”
The document also stated that a survey would be conducted about the use in the election campaign of well-liked public figures, such as the actor Ze’ev Revach and the advertising woman G. Yafit.
R. owns a small catering business in the center of the country.
“They are wise men who help others and also give good advice,” he says. “If Nochi Dankner consults them, he certainly knows what he is doing.”
It’s not by chance that there are marked similarities between the Dankner-Ifergan relationship and the friendship between Ilan Ben-Dov and Rabbi Yoshiyahu Pinto. Ben-Dov always wanted to be Nochi Dankner. Indeed, in 2008 he stated in an interview that he would like to see
Dankner become prime minister. Like Dankner, he too adopted the model of building a business empire with a little private capital and plenty of public capital he raised as loans.
Like Dankner, he too craved to own a cellular phone company. Like Dankner, he chose a rabbi.
And like Dankner, he too made a point of telling the media that he did not dare take his giant leap in the business world − the purchase of Partner three years ago − without first consulting his spiritual mentor, Rabbi Yoshiyahu Pinto from Ashdod.
Manhattan and Ashdod. In the Israeli port town he lives in a mansion the Jewish-American businessman Jay Schottenstein, owner of the
American Eagle Outfitters chain, bought for him for NIS 11 million.
“The rabbi gave me his blessing in the Partner deal, which is sure to help,” Ben-Dov told a reporter for TheMarker who in 2009 accompanied the rabbi and his followers, many of them from the business sector, on a visit to Bulgaria to pay homage at the grave of Rabbi Eliezer Papo, a revered 19th-century tzaddik, or righteous person. Rabbi Pinto responded in kind with a hug, saying about Ben-Dov, “We cherish Rabbi Ilan.
Rabbi Ilan is a tzaddik. He is donating 10,000 food parcels to needy families for the holidays. Rabbi Ilan is a credit to the people.”
Three years after the Partner deal, the righteous Ben-Dov is the target of rage in the Israeli capital market.
He is unable to repay the hundreds of millions of shekels that Tao Tsuot, a holding company under his control, borrowed from the public − more precisely, from the public’s savings in superannuation funds and its investments in mutual funds − and the company is going under.
Two months ago, Ben-Dov admitted, “The deal was out of my league.” He did not mention his spiritual mentor on that occasion.
Like the X-ray rabbi, the prophetic ability of the young rabbi from Ashdod − who ranked seventh on the Forbes Israel list of the country’s richest rabbis, with a fortune estimated at NIS 75 million − is in doubt.
Rabbis, whether wonder-workers or not, cannot apparently stand up toone regulator, in this case Communications Minister Moshe Kahlon, who was determined to reform the cellular phone industry for the benefit of consumers and changed the rules of the game for the tycoons.
What is not in doubt is that Ben-Dov has donated handsomely to not-for-profit associations connected to Pinto or his family. More important, perhaps, are the donations made through Ben-Dov by thousands of people who didn’t know they were righteous souls and didn’t have the privilege of visiting Rabbi Papo’s grave.
Pinto’s father, Rabbi Haim Pinto, the chief rabbi of Ashdod.
The group’s aims are to operate a kollel and a Talmud Torah (a religious elementary school), and to establish an education network for ultra-Orthodox girls.
Even as he was making these donations, Ben-Dov was busy trying to organize a “haircut” for the holders of Tao bonds − in other words, not to repay the full amount loaned to him by those who bought the bonds.
Like his role model, Dankner, Ben-Dov made some of the donations, worth NIS 700,000, from his public companies, Suny Electronic and Scailex.
In addition, Ben-Dov donated some NIS 800,000 through Suny, Scailex and even Tao to Rabbi Ifergan.
He also attended the annual hilula in Netivot regularly until this year, when he was conspicuous by his absence.
Like Ben-Dov, Dankner too donated to Pinto, not only to Ifergan. In 2010, his private firm, Ganden, transferred NIS 540,000 to Brit Shalom
V’Chesed. Jacky Ben-Zaken, who like the Pinto family also hails from Ashdod and is an admirer of the rabbi, donated NIS 1.2 million through a public company that was under his control until a year ago, Tao Menofim (Israel Financial Levers), and its subsidiaries Pilger and MacPell.
In contrast, he donated only NIS 150,000 through his private company, Manor A.D. Construction and Investments.
This in fact is a prime example of the buddy system in the business sector. It was Ben-Zaken who introduced Ben-Dov to the Pinto rabbis, father and son.
That was in 2007, when Ben-Zaken decided to buy the “Lipstick Building” in Manhattan and invited Ben-Dov to be a partner in the
investment. While they were in New York to examine the deal, Pinto hosted them at his home for dinner and gave the transaction his blessing.
The two businessmen each put up tens of millions of dollars to acquire the property through their public companies: Ben-Zaken through
Financial Levers and Ben-Dov through Tao Tsuot. Within less than three years, the public companies wrote off most of their investment and sold the building at a steep loss.
Tycoons are not the only source of support for Rabbi Haim Pinto’s Otzrot Chaim association. The Education Ministry, under the minister,
Gideon Sa’ar, also pumps millions of shekels into the association every year − NIS 4.2 million in 2010. Support also comes the Ashdod municipality.
The million-dollar question, as usual, is what all this money is used for. According to the financial reports of Otzrot Chaim, NIS 4.75 million is earmarked for supporting yeshiva students and charity for the needy, and another NIS 3.4 million is spent on soup kitchens.
With the exception of one year, the association did not provide a list of its donors to the Registrar of Associations. In 2010, Shuva Israel, whose aims include maintaining Jewish religious institutions, publishing holy books and establishing synagogues, had donations of NIS 10.5 million.
About NIS 2.6 million went for charity and food, and another NIS 2.2 million for scholarships and support for yeshiva students.
But two other interesting items in the report show that the association spent NIS 1 million on postal services and communications, and another NIS 700,000 on traveling expenses. It has been reported in the past that Rabbi Pinto flies first class. In addition, Shuva Israel transfers hundreds of thousands of shekels a year to Otzrot Chaim, controlled by Yoshiyahu Pinto’s father.
Financial Levers stated in response: “Financial Levers views contributing and assisting the community as an important element that it is proper to integrate with its business vision and its many activities.
2010 were $642,000 and in 2011 $255,000.” Bank Hapoalim stated in response: The bank donates much money to worthy social causes, all of it exclusively through associations recognized by the state as a “public institution.” Ilan Ben-Dov declined to comment.