Sunday night's announcement by the Egyptian government that it was cancelling the gas supply agreement with Israel is another nail in the coffin of EMG (EAST Mediterranean Gas), the Egyptian gas vehicle set up by Yosef (Yossi) Maiman. Few will disagree that EMG, which built the gas pipeline from El Arish to Ashkelon, is today worth nothing. This is only a few years after Maiman sold his shares in EMG to Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL), a public company that he controls, and to a group of investment institutions, at a valuation of $2.2 billion.
The history of the capital market is littered with dubious deals, in which controlling shareholders transferred private assets to public companies under their control. These were deals that benefitted the controlling shareholders at the expense of shareholders among the public. But none of these deals comes close to the huge damage inflicted by Maiman's party-at-interest deal.
Between 2005 and 2007, Maiman sold EMG shares to Ampal and institutions for a total of NIS 1.3 billion (mainly in cash). It is now quite possible that the investment in EMG may go completely down the drain, causing the collapse of Ampal - once a splendid company, and today with a "going concern" warning attached to its reports - and massive losses for its shareholders and bondholders.
Worrying about himself and those around him
The concern accompanying Maiman's acquisition of control of Ampal at the beginning of the last decade arose because of his intention of transferring to it his shares in Channel 10, which even back then was losing substantial amounts of money. Today, Maiman's commercial TV station is in dire straits and there is a tangible threat to its future existence hovering over it, just as there is over Ampal. This exacerbates the question marks over the ability of the owner of the two companies to create value for those who invest in his businesses.
But what cannot be disputed is Maiman's ability to benefit himself and those around him. In retrospect, it is possible that what caught his eye when he acquired Ampal in 2001 was not the diverse investment portfolio that had been nurtured by the company over the years, but rather that it was a US company with which he could make party-at-interest transactions without the need for approval at a shareholders meeting.
Indeed, Ampal ratified the purchase of the shares in EMG from Maiman, in a series of party-at -interest transactions unprecedented in their size, via a forum of just three directors, who were described as independent: former Prime Minister's Office director general Eitan Haber; Menachem (Hemi) Morag; and Adv. Yehuda Karni. Equipped with the desired approval, Maiman transferred to Ampal shares in EMG, an immature and highly risky infrastructure venture (from which the company has not seen a single shekel), for hundreds of millions of shekels in cash.
The same applies to the way the generous employment terms were approved for Maiman and his right-hand person in Ampal, CFO Irit Eluz. Checks by "Globes" have found that the pair enjoyed compensation in the scandalous sum of NIS 100 million in the period 2003 to 2011, at a time when Ampal's affairs were deteriorating to a state beyond recognition under their management. Only in the past year, Ampal shares have lost 85% of their value.
Published by Globes [online], Israel business news - www.globes-online.com - on April 24, 2012
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