Chabad Rabbi emerges as key player in bid for Israel's IDB

Rabbi Avraham Wolff

Over the years that Nochi Dankner has wielded control over the IDB group, questions have arisen over his ties with kabbalists such as Rabbi Yoshiyahu Pinto and Rabbi Yaakov Ifergan, popularly known as the X-Ray Rabbi. Dankner has often been seen making a pilgrimage to seek their advice and blessings.

It now seems that if Jewish-Ukrainian billionaire Alexander Granovsky takes over IDB, the conglomerate will be led by a man enjoying even tighter connections to Torah scholars.

On Saturday night Russian-language Channel 9 broadcast a report on Granovsky and Rabbi Avraham Wolff, Odessa's chief rabbi. Wolff describes how he and  Granovsky have helped Dankner retain control over the IDB group.

"I'm a rabbi and deal only in spiritual matters," Wolff told Channel 9, adding that "there is such a partnership" as between Issachar and Zebulun, the biblical figures. "A businessman and rabbi work together. One studies Torah, the other does business. Alexander and I are partners. Every time he goes to close a deal he says to me 'Rabbi, I need you to pray,' and I pray. Every time I need money for activities I ask him for money and he gives."

Channel 9's Maya Zinshtein found that most of the money controlled by Wolff and Granovsky is in a fund linked to Chabad, the New York-based Hasidic movement. The two men use the fund, registered in the Netherlands, to control BGI Investments, a publicly traded company listed on the Tel Aviv Stock Exchange. The fund's address is the office of attorney Doron Shamir in Amsterdam.

"Our company provides trustee services to a variety of foreign companies," Shamir told Channel 9. "I can't go into detail due to attorney-client privilege. I understand the public interest but, as a well-known jurist once said, not everything of interest is somebody's business."

According to Wolff, "When Dankner visited Odessa to conduct negotiations, first of all he met with me, not on business matters but on spiritual matters and the subject of donations. Once we completed the religious part they got down to work."

Granovsky controls BGI through a company called Chabad 770, which owns a controlling stake in the firm ZBI that in turn owns 80% of BGI. The chief executive of BGI, whose market value is about NIS 50 million, is Yosef Schneersohn, with Wolff serving as chairman. BGI's debt to bondholders, scheduled to be paid off within three years, is estimated at NIS 108 million and is covered by about NIS 168 million in cash, putting its cash surplus at NIS 60 million.

In August, BGI bought a 20% stake in Emblaze, a company incorporated in Israel and trading in London, for 75 pence a share, or $25 million, but the stock currently trades at just 50 pence. BGI also undertook to acquire a controlling stake in Emblaze, but this commitment was transferred to its parents, ZBI and Chabad 770. Wolff was subsequently appointed chairman of Emblaze, with Schneersohn deputy chairman.

Granovsky and Dankner intend to gain control over Emblaze's copious cash, amounting to about NIS 500 million. This would help them take control of IDB Holding Corporation, the company that controls the IDB group.

Granovsky, who is cooperating with Dankner and Netz Group, wants to channel NIS 826 million through Emblaze into IDB Holding. About NIS 600 million of this would bolster subsidiary IDB Development and pave the way for a settlement with creditors of IDB Holding.

Emblaze's shareholders are due to meet in the next few weeks to approve the company's transfer from the London Stock Exchange's premium list to its standard list. The company is also expected to change it objectives to let it gain control of IDB.

Granovsky's office replied to some of the questions raised by Channel 9 as follows.

"The Chabad movement has no connection with Mr. Granovsky's public activities in Israel through ZBI or its management except that the fund's profits are intended for charitable purposes in supporting Chabad activities around the world. Management of the company is nothing but professional.

"IDB presents a business opportunity to invest in Israel's largest concern. Granovsky believes in working together with IDB, not against it, for the benefit of everyone involved. It was never said that Mr. Dankner would remain the controlling principal in IDB or continue managing it. Under amendments to the offer, IDB will be managed by a professional staff and Emblaze will hold control of IDB."