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The stock affair: Netanyahu received a discount from his cousin?

The data offer another version

The stock deals between the Prime Minister and Milikowski have occupied the High Court and the Ombudsman in recent weeks. Data that have received little attention to date indicate that the shares may have been bought and sold at their real value. The question remains how Netanyahu financed this, In the past

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• Benjamin Netanyahu

Daniel Dolev and Sonia Gorodisky

Friday, 26 February 2021, 19:54

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In the video: The Netanyahu trial - Prime Minister Kfar in the indictment against him (stills: Reuven Castro, video: contact)

On January 25, High Court judges heard about seven hours in petitions demanding, among other things, forcing Attorney General Avichai Mandelblit to open a criminal investigation into Prime Minister Benjamin Netanyahu's "stock affair." A few days later, Mandelblit announced that in light of findings The police investigation into the affair, which did not become an investigation, believes that Netanyahu should return 300,000 shekels he received from his cousin, Natan Milikovsky. The affair that exploded about two years ago seems more relevant than ever, but data from some of the companies involved. her new light.

in the affair - shares acquired by Netanyahu cousin, gave Milikovsky, in the name of "Sidrift." Netanyahu sold the shares back Lmilikobski after three years in a million. according to the argument of those pushing for a criminal investigation in the case, cousin sold to Netanyahu The shares are at a fraction of their true value, thus ostensibly giving him a benefit. But this is a partial picture.

According to reports to the tax authorities and the State Comptroller, which were also acceptable to the ombudsman, Netanyahu purchased 1.7% of a private partnership called NMSD dollar.

The partnership owned 61% of the Sidrift plant, which produces an additive needed to produce steel.

Indirectly, Netanyahu became the owner of 1% of the steel plant.

Read more about the Netanyahu trial

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• The High Court spokesman: $ 300,000 that Netanyahu received from his cousin - a forbidden gift

• The ombudsman ruled that Netanyahu received benefits in the share affair - but closed the case

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The affair returned to the headlines.

Netanyahu (Photo: Reuven Castro)

According to documents provided by Netanyahu to the State Comptroller, published by journalist Gur Megiddo of TheMarker, NMSD took out a $ 60 million loan in 2005 to acquire Sidrift.

Taking into account what is left of the debt when Netanyahu purchased the shares, it can be said that the Netanyahu-Milikovsky deal embodies for Sidrift an estimated value of $ 107 million.

This is the key figure.

In November 2010, Netanyahu sold his share back to Milikowski for about $ 4.5 million.

In doing so he made a return of more than 700% on the investment within three years.

A dream deal.

Maybe even one that looks too good to be true.

And this is not the only suspicious figure.

In July 2008, almost a year after Netanyahu bought the shares from his cousin, an American fund called Falcon, which owned 18.9% of Sidrift, sold them to a giant corporation called Graftec for $ 135 million.

According to this deal, the value of the Sidrift plant was estimated at $ 715 million - seven times the value at which Netanyahu bought his share from his cousin a few months earlier.

It is this huge gap that gave rise to the assessment that Milikowski sold the shares to Netanyahu at a significant discount from their true market value, and in fact gave rise to the entire affair.

The assumption is that it is not possible that the value of Sidrift - an old-generation industrial company that is very far from being a glitzy high-tech company - soared in less than a year.

But the reports tell a different story.

Explanation of each claim

Graftech, which acquired about one-fifth of Sidrift in 2008, is a publicly traded company listed in the United States.

Because of this, it is committed to public reporting to investors.

In 2010, Cydript merged into Graftech, prompting the company to publish a lengthy and detailed report on its financial position, as well as Cydrift's past.

The data in the report indicate that it is quite possible that Netanyahu purchased the shares at a realistic price.

The report reveals, for example, that Falcon acquired its stake in Sidrift in 2005, when the company's condition was very bad and its value was estimated at only $ 10 million.

When it sold its stake in 2010 the value of the company was valued 73 times. Netanyahu, who had no touch on these deals, may have made a great return on his investment, but he can only dream of a move like that of the American fund.

Graftech is a publicly traded company listed on the US Stock Exchange and acquired about one-fifth of Sidrift in 2008 (Photo: AP)

In addition, in January 2006, the Sidrift Board of Directors offered selected employees to purchase 3,000 shares at a price of $ 100 per share - the same price as Falcon had purchased its stake in the previous year.

The workers were in no hurry to realize the "benefit."

They may have thought the price was too high, and only 1,392 shares were purchased at that price.

A year later, in January 2007, the company allotted 160 shares to employees, who in return signed a non-compete agreement with the company.

Each unit was valued at $ 1,100.

That means the company's valuation soared tenfold within a year, and at that time it was already valued at about $ 110 million.

This is a very close estimate of what Netanyahu paid.

It could perhaps be argued that the company wanted to do good with selected employees, and also sold them shares at a discount.

But this argument is highly unlikely for two reasons: The first is that U.S. law does not allow it to do so, and takes such a bias of valuations seriously.

The second reason is that in those days the company also purchased shares from its employees at the same price.

More on Walla!

NEWS

If Netanyahu gets 61 fingers, the conflict of interest arrangement will not stop him

To the full article

In January 2007 the company repurchased 931 shares at $ 1,100 per unit, and in June 2007 it purchased 320 shares from one of the partners at $ 1,200 per unit.

This happens two months before Netanyahu purchased the shares from Milikowski, and reflects an almost identical price estimate.

In other words, in the months leading up to Netanyahu's purchase of the shares, at least three buy and sell transactions were made that represented the same value for Sidrift.

If Netanyahu bought the shares at market value, as the other transactions made nearby seem to show, it means that the value of Sidrift has risen sharply.

But the company's financial statements provide an explanation for this: in 2005, Sidrift lost $ 6 million.

In 2006 it already had a profit of ten million, and in 2007 its revenues were 59 million.

That is: a consistent and sharp increase in revenues, which can certainly be expected to increase the value of the plant as well.

The increase in the value of the plant is based not only on the data of the reports, but also on the business environment in those years.

In 2007 and 2008 there was a tremendous construction boom in China, which created an increase in demand for various commodities, including steel.

Cedrift, whose additive is necessary for the production of certain types of steel, has been on the wave, but has certainly not been alone.

Steel companies enjoyed huge margins in those years.

The company made two acquisitions before Netanyahu acquired them from Milikowski (Photo: GettyImages)

Two accountants and a veteran capital market trader who were exposed to the data told Walla!

NEWS that there are indeed things in the body.

The reports indicate that it is quite possible that Netanyahu bought the shares at a price that reflected their real value, or close to it.

And what about the sale?

In 2009 Chinese demand began to decline, and with it Cedrift's profits.

In 2010, Graftec acquired the remaining shares of Sidripat and in fact merged the plant, which was valued at $ 421 million.

As part of the deal, Netanyahu sold his shares back to his cousin Milikowski, who sold them to Graftech.

The prime minister pocketed about NIS 16 million, but since the price was set according to the general merger deal with Graftech, it is difficult to say that he was inclined to do better with Netanyahu.

The question marks behind the loan

Last October the Attorney General issued a Mandelblitt the decision not to open an investigation of the shares. Although the bottom line is not opened a criminal investigation, Mandelblitt wrote that it was assumed that Netanyahu also received favors from his cousin Milikovsky, the latter sold his shares in 2007.

The assumption This was based on the difference in the price Netanyahu paid compared to the deal made less than a year later, but also on a loan he received from his cousin to finance the purchase, on unclear terms.While the financial data show that Netanyahu may have bought the shares at a price many question.

Netanyahu has not publicly mention the loan. In fact, he claimed in an interview with news 12 March 2019 before the elections that the share paid 600 thousand dollars "of his own money." However, the court hearing last week provided Yossi Cohen, who represented According to Cohen, Netanyahu paid $ 600,000 of his money, and in addition received a loan of an additional $ 600,000 from Milikowski, so that he actually paid $ 1.2 million for the shares.

Found in a trap.

Mandelblit (Photo: Flash 90, Olivia Fitoussi)

The State Attorney's Office and the Attorney General, who examined Netanyahu's reports to the tax authorities in Israel and the United States, as well as his reports to the State Comptroller, acknowledged the loan, although it was not mentioned in the Attorney General's decision to close the case. However, the documents held by the authorities did not specify its terms or whether it was returned.

Last month, the adviser passed a decision stating that $ 300,000 that Netanyahu received from Milikowski in recent years for his legal protection was a prohibited gift. Netanyahu received a benefit from his cousin - but not necessarily through a discount on the share price. Apart from the fog surrounding the terms of the loan, there is a question as to whether the very possibility of entering as a partner in the private company does not constitute a benefit. In a higher amount than he reported in his statements to the State Comptroller.

Now, both the ombudsman and Netanyahu are in a trap.

The adviser stated that even if Netanyahu received a benefit, the offenses that could arise from it have become obsolete, and therefore there is no justification for opening an investigation.

Because there is no justification for an investigation - the enforcement system cannot demand clear answers from Netanyahu to the questions raised by the affair, and he, for his part, cannot clear his name.

The prime minister also does not provide the public with detailed answers that will reveal what was behind the deals.

Given this situation, it is not inconceivable that the affair will continue to accompany us in the future as well.

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