Hurvitz ousted Makov after failed Teva putsch, biography claims

Yossi Goldstein describes how Israel Makov was fired as Teva CEO for "treason."

Former Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) CEO Israel Makov tried to oust then-chairman Eli Hurvitz, according to Yossi Goldstein's biography "Eli Hurvitz". Goldstein relates the tensions between Hurvitz and Makov, and tells the behind-the-scenes story that led to the firing of Makov in 2007. Hurvitz appointed Makov as CEO in 2002, but their disputes soon bubbled to the surface.

"Makov apparently struggled to accept that Hurvitz was Mr. Teva, the company's main man," writes Goldstein. "Although Makov continued to say that Hurvitz was the manager he admired, at the same time, he tried to strengthen his position."

Goldstein says that Hurvtiz's unease over Makov increased during 2004, but outwardly kept quiet. "Makov's crude remarks, as if he were personally responsible for Teva's development, bothered Hurvitz, but he knew how to restrain himself."

Matters reached a head when Hurvitz learned that Makov was in talks with businessmen who wanted to take over Teva and oust Hurvitz as chairman, while keeping Makov as CEO. Goldstein says that Hurvitz discovered the plot by chance. "Hurvitz was very hurt by the affair. He called it a putsch, and felt like a man stabbed in the back. 'This was treason,' he explicitly said."

Hurvitz was worried that Teva would lose its Israeli character, which he sought to preserve at any price. "I took a lot of hits from Makov, but I was never surprised," Hurvitz told Goldstein. "Israel Makov did something he shouldn’t have and he had no authority to do what he did."

Goldstein makes other charges against Makov: he tried to make new arrangements, create a new level of managers who did not know Hurvitz, and hurt George Barrett, a close personal friend of Hurvitz, and considered the number one man at Teva USA. Goldstein says that Makov is an excellent manager for day-to-day operations, but had no long-term strategic vision and failed to work with the board of directors. "Makov's reports always included self-praise," claims Goldstein.

After Makov's attempted putsch, Hurvitz convened Teva's board in early 2007 and fired Makov, whose contract, renewed in 2004, was valid through 2009. A clause in the contract stated that he would cease serving as CEO in February 2007 and become a senior advisor to the board of directors. Makov's request to extend his term as CEO was rejected, and Goldstein says that this was tantamount to being fired.

Goldstein says that Hurvitz held off firing Makov for a year, rather than fire him immediately when he discovered the attempted putsch. During that year, Goldstein says that Hurvitz was on guard and foiled every deal that Makov arranged.

Makov's failed putsch was a disaster for him

"I know who tried to take over Teva, but I cannot say," Goldstein told "Globes" today. "The front men in the talks were Israeli businessmen, and behind them were Americans."

"Globes": Was Teva's current chairman, Phillip Frost, among them?

Goldstein: "I cannot tell you."

With all due respect to Makov's putsch, it seems that Hurvitz had a role in the tensions.

"Yes. Hurvitz was wrong too. He did not stop acting as CEO, even though after appointing Makov, he gave Makov the impression that he would do so. Makov is a strong man, who was sure that he deserved the job and that he was succeeding Hurvitz and he that he would do exactly what he wanted to do. Fighting Hurvitz, and that he tried to do, could only be done by someone as strong as Hurvitz and there is no such man."

Goldstein says, "This was a disaster for Makov. He lost. It's awful to be in his shoes. But Makov is actually very talented. He managed the company properly, and he wanted to stay after he realized that he had lost, which could be the most humiliating thing of all."

A source close to Hurvitz says that, even after the attempted putsch, he still admired Makov, and called him "the best banker I know," because of the successful acquisitions that Teva made during Makov's tenures, such as Ivax and Sicor.

The source told "Globes", "Hurvitz was a shark, and Makov was a cold and calculating businessman. He made a move, Eli spotted it, blocked it as fast as he could. I don’t think that he considered what Makov did as treason, either against him or against Teva. I think that he had a bigger problem with Shlomo Yanai [Makov's successor who resigned in January 2012], who made controversial acquisitions. He even had time to plan Yanai's departure before he himself resigned as chairman."

Yanai makes no mention of such an incident in his recently completed book about his time at Teva.

Published by Globes [online], Israel business news - www.globes-online.com - on June 14, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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