The Ofer family's dirty linen was aired publicly yesterday. The dispute between Doron Ofer and his sister Liora and their father Yuli went public, when Supervisor of Banks David Zaken called the family to order.
The issue is straightforward. Ofer Investments Ltd. exceeded its leverage limit by expanding its real estate business through Melisron Ltd. (TASE: MLSR), which put it in breach of the Bank of Israel control permit for Mizrahi Tefahot Bank (TASE:MZTF). To fix the problem, Ofer Investments is to split, with one company owning the real estate business and the other owning the banking business. The restructuring requires the consent of Ofer Investments' shareholders, and Doron will not go along.
In the letter, Zaken wrote, "Most of the controlling shareholders have announced their consent to the immediate separation of the holdings. The delay is due to the position of a small minority… Unless you take the necessary measures… you will be in prime facie material breach of the terms of the control permit." Translation: you may be billionaires, but I am the regulator, and I am responsible for the stability of the banking system. The time has come to stop your games and stupid quarrels, and reach a deal, or I will intervene.
Besides Yuli, Doron, and Liora, no one really knows what is happening in the family spat, but something bad has been brewing for years. The Ofers are a family of men. Liora, the daughter, was never before considered a person be given managerial authority, so Yuli almost automatically transferred rule to his son, Doron to carry on the family business. But problems percolated at some point, Doron disappointed daddy, who decided to give Liora the chance. Liora succeeded and is now daddy's preferred child. Doron is unhappy with the new circumstances, especially since he chalked up successes in London in his own right. The results of his anger and frustration came out publicly yesterday.
What will happen next? "You cannot compel the man," one of Doron's aides says. But the family feud is irrelevant to the Bank of Israel. If Yuli and Doron want to squabble, that is their affair; Zaken is neither prepared for the son to do the father's bidding or to be a babysitter. But if the Ofer family cannot settle its affairs, he will use his authority to call them to the carpet and the Bank of Israel will amend Ofer Investments' control permit for Mizrahi Tefahot Bank.
If Doron does not offer well argued reasons to oppose the splitting of Ofer Investments as the Bank of Israel demands, he is liable to find himself a shareholder without a control permit for the bank.
The various lawyers of the Ofer family members declined to comment on the report.
Published by Globes [online], Israel business news - www.globes-online.com - on August 23, 2011
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