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In Israel, Nochi Dankner's Empire Is at Risk

Amid a cash squeeze, Nochi Dankner faces a fraud probe
Shares in Dankner’s company fell 74 percent in 2012, hitting a record low on Dec. 27
Shares in Dankner’s company fell 74 percent in 2012, hitting a record low on Dec. 27Photograph by Jonathan Bloom/Israel-Concentration/Reuters

Fifty-four Israeli companies are listed on the Nasdaq, and the country contains more startups per capita than the U.S. Yet just 20 families control about 50 percent of the value of the Tel Aviv Stock Exchange. In 2009, Nochi Dankner, the scion of a family that made its fortune in table salt and real estate, was its biggest name. As Israel’s largest holding companies struggled to refinance debt amid worldwide recession, Dankner’s IDB Holding expanded overseas, buying stakes in French retailer Carrefour, Credit Suisse, and HSBC Holdings’ Manhattan building. That year, TheMarker, an Israeli daily, ranked him the third most influential person in the economy, behind Prime Minister Benjamin Netanyahu and central bank Governor Stanley Fischer.

That was then. With IDB Holding now struggling under debt of about 2 billion shekels ($514 million), Dankner, 58, is selling, not buying. His company’s shares plunged 74 percent in 2012, hitting a record low on Dec. 27. The company reported on Aug. 31 that its second-quarter loss widened 44 percent to 1.27 billion shekels and said that it might not remain a “going concern.” IDB Holding is in talks with bondholders to settle its debt, according to Israeli newspaper Calcalist. Making matters more complicated, the Israel Securities Authority is investigating whether Dankner committed securities fraud. The investigation relates to the issuance of shares and options, according to an e-mailed statement by the ISA. Dankner said in an e-mail that he was confident his actions were legal.