Dankner ran a business universe for around a decade, far longer than Olmert was prime minister.
By YONAH JEREMY BOBNochi Dankner(photo credit: REUTERS)
In many ways, former IDB chairman Nochi Dankner’s sentence to two years in prison, completing his fall from his reputed status as the country’s greatest business magnate, was an even greater humiliation than the conviction and imprisonment of former prime minister Ehud Olmert.Dankner ran a business universe for around a decade, far longer than Olmert was prime minister. Before his fall from grace, he controlled an estimated NIS 400 billion of the public’s wealth through his IDB business pyramid, which included controlling or substantial shares in the country’s biggest supermarket chain, Super-Sol, and mobile operator Cellcom, as well as financial giants Clal Insurance, Bank Hapoalim and others.But many have said that Monday’s sentence of a July conviction for stock manipulation was just the tip of the iceberg in a culture of insider corruption by business oligarchs, which allows them to reap huge profits while ignoring the normal rules of the game.What was so powerful about Dankner in this narrative was that he was the king of the oligarchs and could flex his muscles to often remake business realities as he wanted them to be.Aspects of the scheme for which Dankner and Itay Strum of the ISP Group were convicted of and sentenced to prison for on Monday are instructive regarding that influence.Hatched in February 2012, the bottom line of the scheme was that, after years of glory and a meteoric rise to power, Dankner and IDB had run into rough times, and he tried to rig the game to save himself and his company.Many of his international investments had not paid off, and changes in the cellular market hammered Cellcom and IDB’s profits and share price.His plan was to get Strum, stockbroker Adi Sheleg and some other extremely wealthy colleagues to buy and sell newly offered IDB stock at inflated prices as part of a public offering to raise capital.But why would Strum and many other top business people such as Yitzhak Tshuva and Ofer Nimrodi invest in a scheme whose many investors like them admitted that they knew they would personally lose money? Observers say it is all part of the give and take at the top among tycoons, who see the market more in terms of relationships, power and currying influence than the profit or loss of a particular deal.And the rule was that as long as IDB was making big money, politicians, government market overseers, military heroes and much of the press – many of whom were character witnesses for Dankner – would play ball with the irregularities and look the other way.
All of that might have continued forever if Dankner’s scheme had raised more funds. But even the successful scheme was not successful enough.IDB collapsed anyway, and by the time Dankner lost control in 2014, none of his former friends was willing to save him anymore, other than testifying to his character to shorten his jail time.It turns out that eventually even the master of the universe’s power is only as good as his balance sheet.