Forbes Israel: 12 groups run economy

"This is an economy where the country is afraid of its capital holders."

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April 3, 2006 01:06
2 minute read.
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Twelve business groups control the Israeli economy, making it one of the most concentrated in the world, Forbes Israel said in a report published Sunday. The groups - controlled by Sami Ofer, Nochi Dankner, Shari Arison, the Cerberus-Gabriel consortium, Charles Bronfman, Yitzchak Tshuva, the Saban group, Lev Leviev, Matthew Bronfman, Tzadik Bino, the Borovich family, and Eliezer Fishman - have each put together empires of the largest companies in Israel, using organizational structures that have since been eliminated in other parts of the Western world, the report said. "This is an economy in which the banks can control whole corporations and where the country is afraid of its capital holders," said Ben-Gurion University professor Daniel Maman.

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These 12 groups own 60 percent of the aggregate market value of all Israeli public companies (when the exceptionally-large Teva Pharmaceutical Industries is excluded), with shares valued at some NIS 200 billion, Forbes Israel showed. The groups achieved their control by structuring their holdings like pyramids, such that the top-level holding company controls different groups of companies through descending layers of ownership. The report noted that these types of organizations were eliminated in the US in the 1930s, through a series of restrictions on ownership, as well as double taxation of dividends paid by a company to its parent organization. However, Maman noted that "In Israel, the issue is not economic, but political. In order to change this here, we would need a coalition to lead the way, and no such effort currently seems feasible." In lieu of that, regulators at the Israel Securities Authority or the Bank of Israel could lead a campaign, "but I don't see that happening either," Maman said. Separately, nine Israeli companies made Forbes' list of the world's 2000 largest public companies, published over the weekend. The international financial magazine ranked Teva Pharmaceutical Industries, the world's largest generic drug company, at number 722 on the list, which ranked companies using sales, profits, assets, and market capitalization. Following close behind was Bank Hapoalim, at 725. The second of four Israeli banks on the list, Leumi, came in at 793. Further down the list was Israel Corporation (1,409), Check Point Software (1,634), Israel Discount Bank (1,638), Mizrahi-Tefahot Bank (1,771), IDB Holdings (1,814), and FIBI Holdings (1,854). Of these, all but Check Point are traded on the Tel Aviv Stock Exchange. Teva and Check Point are traded in the US, and Hapoalim is dual listed in London with plans to issue an ADR in the US shortly.

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