Disgraced businessman Nochi Dankner was released from prison on Sunday after serving part of a sentence for massive financial fraud.
The former controlling shareholder of IDB Holding Corp, Dankner was sentenced to three years in prison for stock manipulation and other offenses. IDB had accrued millions of dollars in debt following a series of bad business deals, when Dankner, desperately trying to keep his company’s share price up, carried out millions of dollars’ worth of fraudulent transactions by the time control of IDB was wrested from him by the courts.
After his conviction in 2016, he was initially set to serve two years in prison, but the Supreme Court in 2018 tacked on another year when he appealed the sentence, citing his central role in the company’s fraudulent behavior as undermining the public faith in the securities markets.
Last month though, President Reuven Rivlin agreed to shorten Dankner’s sentence by four months due to unspecified health issues. Those months were added to the one-year suspended sentence handed to Dankner.
Shortly after Rivlin’s January 13 decision, Dankner filed a formal request for early parole, citing good behavior and health issues. The Israel Prisons Service Parole Board approved that request on Thursday.
His early release has a few conditions. He must be in his home every night from 10 p.m. to 6 a.m., during the initial period out of prison.
Dankner, a favorite of Israel’s business community, was often credited with helping rescue the country’s economy at the height of the Palestinian uprising in the early 2000s.
Under his leadership, IDB became Israel’s largest holding company and Dankner a celebrity.
While manipulating share prices at the expense of widows and orphans arguably warrants hard time, Dankner definitely suffered from association with two myths about the “successful businessman.”
The first is the myth that has dogged him since the IDB group ran aground, which also sticks to all the other tycoons of Israel’s brief gilded age in the early 2000s: that they are thieves. They made their billions by gaining control of monopoly businesses through sweetheart connections, buying politicians and regulators, abusing their minority shareholders, borrowing recklessly and then reneging on their debts. By those lights, Dankner’s jail sentenceis a fitting and all too rare denouement.
The second myth is one Dankner himself believed in and no doubt the other tycoons, too, namely that they are business geniuses. They have insights, abilities and skills far above ordinary mortals who have to work for a living.
Like most myths, these have elements of truth. The Israeli economy was a monopolist’s paradise a decade ago: if you could get ahold of a company that controlled a key market, you had a near-guaranteed cash flow that didn’t required much management skill, much less vision. It was enough to keep regulators friendly.
Dankner’s problem was that mistook his initial success in the go-go years before 2008, and his acquisition of the IDB herd of cash cows, as testimony to his brilliance, when in fact it was testimony to his abilities as a rentier.
Thankfully, Israel has real entrepreneurs who are visionary enough to see opportunities and build real businesses.
Also, thankfully, Israelis don’t wholly subscribe to either myth, and when the excesses of their era became evident, they were addressed.
Even though the tycoons supposedly had the government under their thumbs, reforms and evolving markets introduced competition into the areas of mobile communications , air travel, food shopping, media and banking. New business-concentration laws limited cross-holdings between businesses within a group.
And tycoons failed, lost their businesses and in a few cases, their homes.
That puts Israel in sharp contrast to Americans, whose infatuation with businessmen seems defy any ordinary logic or lasting reforms to rein them in.
Donald Trump wasn’t elected just because of his anti-establishment and America First mutterings, but also because voters are convinced that as a “successful businessman,” he has talents and abilities that can change the way things works in Washington. They think he will start running things “according to business principles.”
Why they think that when the rest of the capital is run by politicians and bureaucrats is hard to understand. It’s probably related to another great American myth about the new sheriff coming into town and single-handedly restoring law and order.
But it’s even harder to understand why they think Trump is their mythic businessman at all.
Trump has never built a factory. Trump has never developed a disruptive technology; his career was in wheeling and dealing in real estate, licensing his name on menswear and chocolates, starring on a television reality show, developing casinos and golf course, avoiding taxes and going bankrupt. Trump is the epitome of the economy of frothy money and financial engineering, the polar opposite of the kind of business his voters long for. Myths die so hard.
Source: David Rosenberg, Haaretz contributor
Note: strange enough, the second part of this article was written in…2016
Header: Nochi Dankner leaving the courtroom after sentencing, Dec. 5, 2016. Credit”>Ofer Vaknin