Gitam sues Apax for non-payment on Bezeq

lLawsuit relates to contacts between Apax Partners, registered in Britain, and leading telecommunications group Gitam.

June 15, 2006 21:52
2 minute read.
Gitam sues Apax for non-payment on Bezeq

Itzik Saban 88. (photo credit: Courtesy photo)

A multi-million dollar lawsuit against international investment fund Apax Partners was filed this week in Tel Aviv District Court by the Gitam public relations firm. The story began in August 2004, when the state announced its intention to sell 30 percent of Bezeq. Many local and international groups participated in the tender, and hired top lawyers, accountants and strategic advisers to boost their chances. The lawsuit relates to the contacts between Apax Partners, registered in Britain, and leading telecommunications group Gitam, which includes Gitam BBDO and public relations firm Gitam Porter Novelli. Apax Partners is one of the world's leading private equity investment groups, operating across the US, Europe, Israel and Asia. Both of the Gitam companies are headed by Moshe Theumim, and it was agreed that he would personally spearhead Apax's bid, oversee strategy and handle media relations. Several of the bidders coveted Theumim's services, it is understood, because he was deemed to be a major potential asset in securing the tender. Under the terms of the arrangement, the suit alleges, Apax was to pay Theumim and Gitam $4.88 million for PR services if it won the tender, but Theumim would not see a penny if the bid failed. Additionally, Apax had the option to drastically reduce that payment, by $4m., if it arranged for Bezeq and its subsidiaries to name Gitam as its the public-relations firm for a period of at least three years. Theumim, an adviser to numerous Israeli politicians and businessmen, is known to be close to Prime Minister Ehud Olmert and other cabinet ministers, notably Shimon Peres and Haim Ramon. He is also on the board of the Jewish Agency and the Peres Center for Peace. His firm also represents several of Israel's top 10 companies - including Teva, Bank Hapoalim, IDB and Tnuva. International clients include L'Oreal, Nestle, Sony, Pepsi, Kimberley Clark, Wrigley, Microsoft and Nokia. He is also an adviser to several Jewish billionaires abroad - including Charles Bronfman, Canadian Gerry Schwartz, Pierre Besnainou of France, Russian-Israeli Arkadi Gaydamak, Los Angeles-based Haim Saban and Frank Lowy from Australia - on their dealings in Israel. In the course of the tender, Apax joined up with a consortium led by Saban. And they prevailed, paying the state nearly NIS 4.25 billion last October for the 30% Bezeq share. The victors celebrated at a party attended by then-finance minister Binyamin Netanyahu, communications minister Dalia Itzik and others. The trouble began, the suit alleges, when the time came for Apax to pay Gitam. According to the suit, filed by attorney Ya'acov Weinroth, Apax inexplicably postponed payment, with Stephen Grabiner, who led the negotiations on the payment for Apax, saying it was not avoiding its obligation, but was looking for different ways to carry it out. Andrew Robertson, president of BBDO international, which holds 49% of Gitam's stock, was also involved in the negotiations, and was also stalled by Grabiner, according to the suit. Gitam is suing Apax to recover the full $4.88m. It is not suing Saban, since he had no part in the original arrangement. Apax could not be reached for comment by press time.

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