Morris Kahn seeks harbor

How the publicity-shy Morris Kahn built his Amdocs fortune, and how he's bringing it home after ten years at sea.

At the age of 75, after 10 years on the sea, Morris Kahn wants to feel solid ground beneath his feet. However, he knows that he must get rid of all his options and shares in Amdocs before he can do so. Otherwise, the income tax authorities will lay their hands on a large slice of his fortune. Yes, the rich, too, have problems.

Much has been written about Morris Kahns charisma, his extraordinary influence on foreign investors, his astounding ability to form world-embracing business connections and his exceptional characteristics as an untiring entrepreneur. Practically nothing has been written about the fact that Morris Kahn has invented the tax planning of the century.

When asked, What do you know about Morris Kahn? most of the people interviewed for this article replied, He lives on a yacht, doesnt he? No. I dont know anything about him. The mysterious Israeli billionaire, often compared to Howard Hughes, loves the sea and the sea apparently loves him. So much so that during the past 10 years it has provided him with an extremely effective shelter from the iron jaws of the capital taxation system of countries worldwide.

Actually, Morris Kahn and his partners, the brothers Zvi and Shmuel Meitars tax plan has been executed in several ways. The most simple was the founding of the Aurum company. After 20 years during which Morris Kahn and Shmuel Meitar built the Aurec-Amdocs empire, in the past two years they have been dismantling it and liquidating their investments.

Investing the Amdocs loot

Right now, the two are investing all the money from the realization of the shares of Amdocs International (which holds Amdocs Ltd., traded in Nasdaq) through Aurum. Aurum is owned and managed by Paz Littman, who used to be lawyer Zvi Meitars partner. Contrary to common belief, Aurum is not owned by Aurec, but is directly owned by Kahn and Meitar.

Incidentally, the Latin word Aurum means gold. Aurecs name also derives from this root. Hence the suffix gold, appended to the names of its subsidiary companies.

So, where is Kahn currently investing the 1.5 billion dollars that he realized from his investments in Amdocs? It turns out that the investment trust, Aurum, is investing most of the money coming in from the realization of Morris Kahn and Shmuel Meitars shares in investments involving no risk, such as in US Treasury bonds. At the same time, the trust is also investing in biotechnological and telecommunication companies, mostly abroad.

Among other things, Aurum holds 100% of the venture capital fund Aurum-SBC, which focuses on investments in companies that develop technologies for the telecommunications sector. As far as it is known, Aurum has invested in the Israeli startup companies NetMount and Pontic Systems. Sources within the sector say that Aurum is investing in an additional, undisclosed, venture capital fund.

The tax planning here finds expression, among other things, in the fact that investments in US Treasury bonds through a third party (in this case, Aurum) exempt legatees from having to pay inheritance taxes and exempt Kahn from having to pay other taxes. This, apparently, was the decisive factor in Kahns considerations regarding what investments to make.

Tax planning is also the reason why Amdocss directors and managers do not hold shares directly but, rather, through holding bodies.

Other Kahn investments are apparently in projects connected with tourism, the largest and most important being the Coral World company, which establishes underwater observatories and which Kahn holds together with Ampal. Sources in the sector estimate that Kahn is not expected to let go of this investment.

The first question that arises in light of Kahns large-scale realizations of his investments is why, in fact, is he selling so much? The prevailing argument is that Kahn has understood that the price of Amdocs sharesreached a sufficiently high level and that it was worthwhile selling. As a seasoned businessman who is not in love with his portfolio, he decided to realize his investment at a high price. Another claim is, as said, that he is simply keeping his childrens inheritance out of the reach of US inheritance tax.

However, sources close to him say that the main reason for the realizations is that, after 10 years at sea, Kahn is interested in returning to live in Israel. In order to do so without the tax authorities laying their long hands on his pocket and money, he must get rid of all the options and shares in his possession while he is still not considered a resident of Israel.

His income resulting from Aurecs profits is subject to taxes no matter what since, according to Israeli law, every person or corporation must pay taxes on income from activity conducted in Israel, even if he is a foreign citizen.

Tax shelter - the open sea

On the other hand, Amdocs is registered in the island of Guernsey, which is considered a tax shelter. Incidentally, Amdocs is not, and never was, owned by Aurec. The owners of the company are Amdocs International, the risk-capital fund Welsh, Carson, Anderson and Stowe, and several small investors. The company has, indeed, development centers in Britain, the US and Israel, but the center of profit and loss is on Guernsey.

However, the most sophisticated tax planning of all is that bestowed on him by his good friend, the sea. Rumor in the sector has it that this is how things went: for years, Kahn used to stay 180 days a year on his yacht beyond the territorial water of any state. According to the tax laws of Israel and of 200 additional countries which are signatories to the tax treaty, a person who is absent 180 days or more from a specific country is exempt from paying tax on the realization of options and the sale of shares in that country.

That being the case, Kahns abode at sea for 180 days a year exempts him from having to pay taxes. In such cases, it is the custom to establish that the liable person has to pay taxes according to the test of the center of life. That is to say, the country where taxes are to be paid is that which is considered to be the center of the liable persons of life.

Here Kahns secrecy enters the picture, helping him preserve a heavy cloak of fog. In other words, no one knows where his main residence is. He has houses in England, in the US and in Israel. Neither would the attempt to determine his place of residence according to the place of residence of his family be of much avail to the tax authorities. For, his son Benjy has houses in Bermuda, in Australia and in Kfar Shmaryahu and Khan apparently has a sister who lives in England. All this means that his center of life may be in England, in Israel or even in Nice, France, where his yacht anchored for several years.

Legal sources say it is believed that Kahn has indeed reached certain compromises with the income tax authorities. However, since he arrived at the offices of the income tax authorities in the capacity of someone volunteering to pay taxes even though he apparently could not be bound to do so, the sums he paid were very far from being those he would have had to pay had be been compelled to do so.

We emphasize that there is nothing wrong with that and Kahn is not violating any law. He is using the tax regulations to execute tax planning, just like any company does for its workers and managers, in an entirely legitimate fashion.

Complementary talents

Meanwhile, the further Kahn distanced himself from the public eye, the more people became interested in him. The further he fled from the media, the more people wanted to interview him. In the end, whether intentionally or not, Kahn succeeded in attracting all the attention to himself, thus supplying an even thicker cloak of fog for his right hand man, his confidant and business manager, Shmuel Meitar.

So, who, in fact, is Shmuel Meitar? It turns out that Meitar has been orchestrating Kahns affairs for many years and holds large parcels of shares in Amdocs, and considerable stakes in Aurum and Aurec, over and beyond what most of the public estimates. Meitar has remained well in the background for many years, even though he, in fact, is the force behind Kahns affairs.

Shmuel Meitar functioned, inter alia, as the director-general of Aurec for several years. He subsequently served as the chairman of the board of directors of Aurec and also, until 1999, as the chairman of the board of directors of Amdocs. Meitar had decisive influence on Amdocss business direction and also, eventually, apparently on the decision of the companys general manager, Boaz Dotan, to resign. It appears that he is, in fact, the dominant factor in the management of Morris Kahns investments in Israel.

Over the years, a tight pact has developed between Kahn and Meitar. Sources close to them ascribe this to the fact that the two have complementary capabilities. Kahn has extensive contacts in the international business community, a rare skill in developing relationships, and enormous capabilities as an entrepreneur. Beyond that, Kahn is not exactly Israeli by character. The fact of his living in a Western culture, combined with his pleasant manner, has helped him a lot in forming his connections with foreign companies, and especially with SBC. So that, in fact, Kahn is a businessman in the sense of identifying opportunities and forming connections. But he is not one of those people who know how to take an idea and turn it into fact. Here Shmuel Meitar enters the picture.

Meitar is the one who sets business processes into motion. He knows whether a certain idea will work in practice, or not. He is capable of translating an idea into reality. He also knows how to identify opportunities. He has a healthy sense of business and much ability to cause things to happen. Even though the most aggressive initiatives have come from Kahn, it has been Meitar who has known how to turn Kahns ideas into flourishing business.

Meitar also has the ability to find managers. According to those close to him, Kahn is incapable of sitting opposite someone and determining whether he will be a good manager or not. He has no understanding in the matter. Meitar, on the other hand, can immediately identify successful managers. So, he was also the person who chose all of the genral managers of Aurec, Amdocs and Aurum.

No options

Shmuel Meitars style of management is characterized by cooperation, teamwork and the bestowal of full freedom of action on the managers operating beneath him. However, this freedom of action stops short at the painful subject of the distribution of options and shares to workers and managers. Here, the managers independence is abolished and the fighting starts. Inside sources relate that both Meitar and Kahn have agreed to be generous about everything concerning the rewarding of workers, except when it comes to options. In short, Meitar has never been ready even to hear of the distribution of options to workers.

Whether Kahn relies on Meitars opinion in the matter, or whether he, too, strongly opposes the distribution of options to workers, one thing is certain: the issue of the distribution of options to workers has never been solved; it has never even come up for discussion in Aurec.

Whatever the case, Meitar and Kahn have been working together for over 30 years now. According to the story circulating in the hi-tech sector, the relationship between the two started when Meitar was a law student in the late 60s. Golden Pages was then making its first steps and the representatives of ITT, which then was Kahns partner (in Golden Pages), arrived for a visit in Israel. Zvi Meitar, who was Kahns lawyer, asked Shmuel, who was on vacation from the university right then, to take the ITT managers on a trip in Israel.

The young Meitar acquainted the ITT representatives with Israel and apparently, at the same time, with his business talents. For, after returning home, the ITT managers told Kahn: You have a talented, sharp-minded young man here. Take him and integrate him in the business. Meitar did not straightway assume the position of general manager. However, he arrived there speedily. The rest is history.

Tchetchik leaves

For many years now, Aurecs number two, after Meitar, has been its general manager, Israel (Isia) Tchetchik. Tchetchiks first years in Aurec were good ones for him. Aurec became Israels biggest communications corporation. As it flourished, the number of companies under Tchetchiks management grew. Meitar and Kahn gave him their full trust, and he enjoyed full managerial autonomy.

The falling-out started when lawyer Zvi Meitars former partner, Paz Littman, became a significant factor in the company. Littman was intended to be Aurums Tchetchik, that is, to manage it from above. However, as time went by, deep differences between the two surfaced.

Sources in the sector say that Littman is a capital market man. He was involved in Amdocss IPO. His strong side is the determining of a value for buying and selling companies. He has never actually managed a company, certainly not complex ones like Aurec, so that his managerial side is less strong. Moreover, Littman does not tend to involve others in his decisions or to engage in team work. In short, Littman is a manager whose first priority is the task, not the people.

Tchetchik, on the other hand, recognizes the importance of human resources and is meticulous about maintaining a managerial style characterized by teamwork, fully cooperating with the managers operating beneath him. As a result, an unbridgeable contradiction developed between Littman and Tchetchik. This contradiction led to Littmans failure to understand Tchetchiks moves and to generally oppose them.

From Tchetchiks point of view, the main problem was that Littmans influence on Meitar and Kahn steadily grew. At the same time, the management of Aurec became increasingly complex. Sources in the sector say that apparently the combination of Littmans influence on the companys owners along with the increasing complexity of the management of Aurec, led to the weakening of Tchetchiks influence on Meitar and Kahn.

Whatever the case, sources in the sector firmly claim that it is not the reason for Tchetchiks approaching retirement from the company (expected at the end of June). They estimate that Tchetchik is not the type of person to give up when faced with marginal problems such as power struggles or managerial complexity. These sources say that his retirement is a practical necessity, for the simple reason that there is nearly nothing to manage in Aurec these days. Aurec is becoming empty of content and is expected to cease functioning in its traditional format in the course of the year 2001.

Slammed door

Let us proceed from Aurec to Amdocs: Boaz Dotan was the person who founded Amdocs and managed it until just before its IPO. In complete opposition to Tchetchik and Meitar, Dotan was considered an extremely dominant, centralist and autocratic manager. Sources in the sector say that in Dotans time it was practically impossible to express an opinion that contradicted his. As a result, Amdocs is a company that is currently managed in a very centralist manner.

The background to Dotans leaving was, apparently, the continuous struggle between him and Meitar regarding the companys future. It was actually Dotan who led the directions of Amdocss development. Meitar did not really understand what they were doing there, mainly because he never had any understanding in technology, but he did not interfere.

And then, one day, a loud slamming of the door was heard from Amdocss managerial corridor, and Dotan left the company stormily. Only a very few people in Amdocs know what was the background to that door slamming and they refused to be interviewed. However, sources in the sector say that Dotan was simply fed up with the incessant arguments with the board of directors, that is, with Meitar.

Other sources say that the straw that broke the camels back was Meitars adamant refusal to agree to the distribution of options to workers, and this after a long period of differences of opinion between the two regarding the companys future and its business direction.

Inside sources say that while Dotan looked forward, Meitar and Kahn did not see far enough ahead. No one knows exactly what business direction was in question. The bitter argument between Dotan and Kahn and Meitar regarding the distribution of options to workers has been mentioned. Add this to the fact that, except for the matter of the options, Dotan was free to lead the company in practically any direction he wanted, and it can be assumed that it was a combination of both these issues.

Acquisition-based growth

Here, another fact enters the picture: in recent years, Amdocs started purchasing companies so as to grow. Naturally, the acquisition of companies obligates the purchasing company to give options to the workers of the purchased company, in exchange for the options they had prior to the purchase.

So, the bottom line, after all the testimony arriving from the various sources are put together, emerges. It can be assumed, with great caution, that Dotan expected that at the time of the purchasing of the companies by Amdocs, the granting of options to the purchased companies workers would be liable to rouse bitterness among Amdocss more senior workers, who were not given options. That may be the reason why Dotan thought, as the IPO approached, that Amdocs had to start behaving like all hi-tech companies worldwide and give its workers options.

That being the case, sources in the sector do not rule out the following hypothesis. Meitar and Kahns firm opposition to the distribution of options put a significant limitation on Dotan regarding the companys future path, including, inter alia, acquisitions, the latter being intended to lead the company to the growth necessary for continued increase in profit per share.

Amdocs aspired to lead the market in everything connected with the recruitment of workers and, in fact, always needed an especially large number of workers, much more than any other hi-tech company. So, above everything else, it can be assumed that since the options distribution model had started to gain in popularity, it is possible that Dotan simply feared to be left behind. He may have feared a situation in which Amdocs would have difficulty recruiting new workers, something that would harm its activity.

Meanwhile, the approach has changed, say sources in the sector. After Dotans departure, workers started to pressure the company on the matter of the distribution of options. Initially, before the IPO, options were granted to some 100 of the companys veteran and senior workers, and some of them even received shares. The overall scope of the options and shares for workers totaled some 3% of those held by the TOES company. The companys policy has changed during the last two years and, as a result, according to sources in the sector, most of the workers nowadays receive options.

However, if Amdocs has distributed options to at least some of its workers, this has not been the case with Aurec. Aurec, indeed, is not traded, but most of the large hi-tech companies tend to distribute phantom options. Sources in the sector say that Meitar vocabulary does not include the phrase employee options, not to mention phantom options. So, Aurec has remained aloof from the trend of distributing options to workers and managers, with Meitar having a decisive say in this decision.

Kalmanson goes too

Sources in the sector estimate that this, too, was the main reason for the departure of Danny Kalmanson, who was the director-general of Aurec prior to Tchetchik. Even though the custom of granting employee options was not yet widespread then, Kalmanson apparently demanded to receive shares in Aurec or at least a capital-linked benefit, such as phantom shares. When Kahn and Meitar refused, Kalmanson left. It is to be emphasized that this is only a hypothesis and Kalmanson, who refused to be interviewed for the article, has not confirmed it.

At any rate, the struggle over Amdocss future was not the first quarrel between Dotan on one side and Meitar and Kahn on the other. An earlier disagreement between them found expression in the companys prospectus, which was published before the IPO. The prospectus noted a difference of opinion between shareholders in Amdocs International (which before the issue held 28.5% of Amdocs Ltd., the listed company), and the minority shareholders, who held some 18.71% of the company, regarding the rights of the minority holders.

It appears that the disagreement arose due to the demand of Amdocss managers (the minority shareholders) to receive additional percentages in Amdocs International, and thus increase their holding in Amdocs Ltd. The quarrel was over a small stake, and the parties reached a compromise in the end. The disagreement is therefore not mentioned in the subsequently published prospectus.

The the disagreement stems from the fact that before the IPO, Amdocss managers held some 18.8% of Amdocs Ltd. (the listed company). Of these, they held 14% directly in Amdocs Ltd., and some additional 4.8% through Amdocs International (the 18.71% of Amdocs International held by Amdocss managers translates to some 4.8% of Amdocs Ltd., since Amdocs International held some 25.8% of Amdocs Ltd. shares.)

So, prior to the IPO (and prior to the compromise), Kahn and Meitar held some 21% of Amdocs Ltd. through Amdocs International. As stated, Amdocss managers in the end received additional stakes out of Kahn and Meitars portion.

According to sources in the sector, Dotan holds by far the largest amount of shares in Amdocs, well beyond the amount held by the companys other managers. Those same sources estimate that Dotans income deriving from the shares currently amounts to tens of millions of dollars a year.

After he left, Dotan founded investment company Aria Ventures, together with Roni Tzur, formerly vice-president of Oshap Technologies, and Shrem, Fudim, Kelner Technologies (SFKT). Aria Ventures was recently closed due to a disagreement between the partners, because of what they viewed as conflicts of interests between Aria and another venture capital fund of SFKT.

Incidentally, one of the methods that Amdocs has adopted for the sophisticated sales of shares is the issuing of tracking stocks. The shareholders have founded a trust called Traces, for selling shares of Amdocs International. This trust facilitates a process for the selling of shares that enables sellers to get their shares back should it turn out that the value of a share rose above a certain threshold after the sale. A shareholder who gets his shares back must return the amount he received for the shares together with interest.

SBC has faith

Let us proceed from the relations inside the group to Meitar and Kahns relations with their American partners. Kahn and Meitars first partner was the US communications company, Southwestern Bell (SBC). On the one hand, the SBCs directors have always relied on Meitar with closed eyes, something unusual for them. In every other country where the telecommunications giant operates, it tends to be very involved in management, watching performance closely.

On the other hand, the directors of SBC are Americans, and as is the custom in US companies, they never deviate from the companys procedures. Accordingly, they demand to know exactly what the company is doing. At the same time, as far as the substance is concerned, Meitar has been given a free hand to operate as he wishes.

Sources in the sector say that the solid relations between Kahn/Meitar and SBC proved themselves during the Gulf War. In that period, many foreign companies got out of their investments in Israel or simply stopped investing, while SBC actually made investments.

Another of Meitar and Kahns partners in Amdocs is Welsh, Carson, Anderson and Stowe company. This is an investment fund that started investing in the company for financial reasons and that behaves like a financial partner. It is generally assumed that it has no influence on Amdocs.

We now reach the third Israeli partner, Zvi Meitar. A few weeks ago, Globes reported that lawyer Zvi Meitar was about to close his Israeli office and move to England, and that he intended retiring abroad. Sources close to him say that his choice of England is not accidental, and that there are two reasons for it. Firstly, Zvi Meitar is an anglophile and, beyond the fact that he originates from an English-speaking country, he is in love with English culture. His second consideration is more practical. A years residence in England will also entitle Zvi Meitar to an exemption from paying taxes in Israel while he realizes his options in Amdocs.

Successes and failures

It can be assumed that the sale of the Golden Channels cable television company will be remembered by Aurec as one of its big successes, even though the reason for the sale stemmed from less positive circumstances. In the past, it was reported that the SBC directors decided to sell their investment in the cable company because they were indignant at the hard time that the Israeli government was giving them.

It was also reported that SBC did not understand why it had to pay the State of Israel an additional sum of money for the sole purpose of receiving a license to avail itself of technological developments designed to upgrade the infrastructure that it itself had set up out of its own pocket. Its directors viewed this as nationalization, and demanded to meet with the then finance minister, Avraham Shochat. It was further reported that Shochat was then visiting Washington and refused to meet with them. The directors of SBC, which was considered the largest investor in Israel, viewed this as a scandal and sources in the sector estimate that this was what motivated them to sell their investments in Israel.

Other sources in the sector claim that, on the contrary, SBC is, for the moment, less enthusiastic about selling its investments in Israel than its business partners, Meitar and Kahn, and the fact that it currently is Amdocss largest shareholder is proof of that. According to those same sources, the person behind Meitar and Kahns selling their investments in Israel is actually Meitar.

Returning to the sale of Golden Channels: it turns out that the negotiations were relatively short and fast, and the parties reached an agreement about the price within a few days. Opinions vary in the industry regarding the major factor behind the success of Aurecs managers in selling Golden Channels at a record price at the right time. According to prevailing opinion, there was a lot of luck involved, but, luck is also an important element in business.

If Aurec had a lot of luck in selling Golden Channels, the companys luck turned against it in its entry into the credit card business, Visa Alpha (the Alpha Card company). The main problem was that just when Alpha Card entered the market, credit cards turned into a consumer good characterized by low profit margins. In fact, Visa Alpha did not bring with it significant added value, even though it had plenty of advantages.

According to sources in the sector, Aurec may have here entered an area that it did not understand. After all, it was the first time it was entering the area of financial services. At any rate, its entry was not accidental. The idea behind it was that Aurec had to progress on the track of financial services parallel to that of communications, and this out of the belief that there would be synergy between the two along the way.

Aurec was a company that supplied communications services, including international communications, cable communications, and the like. It postulated that it was logical to introduce financial services as an additional service. Its basic assumption was that a large portion of customer service would, in the future, be virtual and be conducted through the communications media. Aurec thus followed in the footsteps of US companies that view micro-payments (payments in small amounts for products and services purchased through the Internet, the telephone, and the like) as part of their natural habitat.

In fact, the telephony companies are the only entities capable of collecting micro-payments through their billing system, while such a method of collection is not economically worthwhile for the credit card companies. Therefore, Aurec perceived it as logical to combine a financial entity with the companys communications entities.

An additional basic assumption by Aurec was that the banks would not forego the hundreds of millions of dollars received in fees for the use of credit cards, which go directly to the bottom line. This assumption turned out to be erroneous and, to Aurecs misfortune, the banks surprised it and waived usage charges. In the end, this relinquishment was what broke Alpha Card.

Aurecs general manager, Isia Tchetchik, may have been the one who initiated the companys entry into the field of finance. Or, he may have simply been cooperating with the line laid down from above by Shmuel Meitar. What is clear is that, at the time, the idea was considered as essential for the company. True, it failed in the end, but thats an integral part of doing business. No one can guarantee 100% success; what really matters is the bottom line. According to sources in the sector, that figure proves that Tchetchiks successes outnumber his failures.

Another company in the field of finances whose degree of success has yet to become clear is the direct insurance company AIG. At the moment, the company is indeed posting losses, but a relatively high proportion of clients (some 85%) is renewing its policies from year to year. Beyond that, sources in the sector foresee that the company will start posting profits in non-life insurance already this year. Other sources claim that one of the main reasons why AIG is not yet profitable is that it introduces a new line of products every year.

Whatever the case, AIG, just like SBC, reached Israel thanks to Morris Kahns charms. At the next stage, Tchetchik was the one who prepared the way for its entry into the Israeli market.

However, the main point is that Kahn not only brought AIG to Israel, but that he also brought it here at his own terms. Thanks to him, AIG agreed to a different control model than the one it uses in other countries. While AIG makes its entry into all other countries conditional on a 100% holding, it agreed to a model of joint control in Israel. So, Aurec received 50% of the company in the end, with AIG holding the remaining 50%.

Amdocs - from telephone directories to billing

Amdocs was, in fact, founded by Boaz Dotan. Dotan, who was one of the heads of the Department of Information in the Postal Authority, established the Authoritys computing unit and, subsequently, the first computerized database for the 144 directory inquiry service (then 14). However, 14s computerized system did not become functional for 10 years due to the opposition of the workers.

At a certain stage, Tadiran received the rights to sell the system worldwide and Dotan transferred to Tadiran. There he recruited Amdocss current general manager, Avinoam Naor, and together they sold the system to the world.

In 1967, together with US company, ITT, which provided the financial backing, Kahn participated in a tender issued by the Ministry of Communications for the production of Yellow Pages. ITTs managers expressed interest in Dotan and Naors system and recruited them to the company. Several years later, Kahn purchased ITTs shares in the company and remained its sole owner.

At first, Naor and Dotan engaged in the development of software for the telephone directory, Yellow Pages. They then progressed to the development of billing and customer relations management software for telephone companies. At this stage, they decided to separate the computerization activity from Yellow Pages, and to found Amdocs.

From failed glove factory to the Aurec goldmine

Kahn has two sons, David and Benjy. The elder son, David, is a psychologist and, according to friends, is not interested in business. On the other hand, the younger son, Benjy, does invest in hi-tech companies. In spite of the crisis in the Internet companies, Benjy Kahn continues to express interest in investing in them, but only in those that combine hardware with software. It turns out that he has many friends high up in the venture capital industry who check investments for him privately, and not as part of the funds activity. Beyond that, Benjy is involved in his fathers affairs and serves as president of Coral World, the company that set up underwater observatories.

Haaretz once reported that Kahn had apartments in London and New York, flower plantations in South America, a 75,000 acre sheep ranch in New Zealand, and a horse ranch in Holland. He is fond of riding, and keeps horses in Rishpon. In addition, as part of his extensive philanthropic activity, Kahn founded the therapeutic riding club in Beit Yehoshua with his own money.

The paper also reported that Kahn goes skiing in France and Switzerland. After the Six-Day War, he looked into the possibility of setting up a ski resort on Mount Hermon, but decided not to go through with it. He likes sailing and diving, and has a magnificent yacht named Jacqueline, after his wife. The yacht anchored in Nice, France, and he invites friends to go sailing with him.

Kahn was born and grew up in South Africa, in the town of Benoni, near Johannesburg. His father had a bicycle shop, and his mother dealt in catering. He immigrated to Israel in the mid-1950s and founded a leather glove factory. The factory failed and he tried to develop a patent against car thefts. After failing in this, too, Kahn tried to manufacture bicycles and lost a fortune. At a certain stage, he invested in a cattle ranch. This business, too, failed after the cattle were stolen.

Kahn does not have a university degree. His academic history comprises one years study of political science at the University of Johannesburg. During that year, Kahn was active in leftist circles but, taking into account his present-day vehement opposition to the distribution of options and shares to workers, it was apparently a passing stage. After immigrating to Israel with his family, Kahn purchased a house in the moshav, Beit Yanai, where his family still lives.

Kahn started investing in underwater observatories in the 1970s, after he damaged an eardrum while diving and he was afraid he would not be able to dive any more. The underwater observatory in Eilat was established in collaboration with Bank Hapoalims Ampal company.

Since then, Kahn has been involved in additional business enterprises. But his big business break-through occurred in the mid-1980s, after he established the Aurec group from Golden Pages.

Published by Israel's Business Arena on 26 June, 2001

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