The best description of Sami Shamoon’s unique personality comes from Shamoon himself. “My emotionalism and my sentimentality are from my Arab background, while my realism is from my Jewish origins,” he says. His charming appearance and warm smile make it easy to overlook the realistic side of this Iraqi-Jewish-British billionaire. When his emotions get the better of him, it’s easy to forget what a sharp-witted tycoon he is.
In recent years, his emotional side has been reflected in a series of letters expressing the amazement and hurt of someone whose has suffered injury to his honor, as well as his business. These letters, which he sent to Knesset members, the prime minister, and the press, complained about bureaucracy; his bitter enemy, the Israel Land Administration (ILA); and the changes in the taxes imposed on foreign investors, which led him to move away from Israel a year ago. “School children in Israel are forced to learn how to lie, in order to bypass the bureaucracy,” he says bitterly.
Shamoon’s sentimentality finds expression in his extensive donations and public activity, which two weeks ago won him an honorary doctorate from Bar Ilan University. Six months ago, this same activity put him in the center of a controversy in the Jewish world, when another title of his, president of the World Sephardi Federation, led another president of the World Sephardi Federation, Nissim Gaon, to publish announcements in press saying that Gaon, and only Gaon, was the real president.
Shamoon’s emotional side is illustrated by a story he told me (and forbade me to publish) about a big deal he almost made with the Israeli government and another party. He dropped the matter, however, when he was presented with a formal demand for a document proving his financial ability to fulfill his part in the deal. Shamoon says he was simply insulted, and withdrew from the deal.
”I give complete trust”
It’s said that it’s very difficult to win Shamoon’s confidence, but if he does learn to trust someone, he’ll do it all his heart. One person who has gained Shamoon’s unlimited confidence is Benjamin D. (Benny) Gaon, both as a partner in Gaon Holdings, of which Shamoon owns 20%, and in citrus orchard, packing plant, and agricultural-industrial company Yakhin Hakal. Shamoon appointed Gaon vice-chairman of Yakhin Hakal, which he bought from the Jewish Agency 12 years ago, when the company controlled 14,000 dunam (3,500 acres). It was Yakhin Hakal that led to Shamoon’s paper intensive confrontation with the ILA, the Attorney General, and the courts. Gaon’s mandate is to sell Yakhin Hakal as a united company, if possible (Shamoon says the chances are slight), and if not, in sections.
With Shamoon, everything is personal. Disappointment makes him feel hurt, and when he trusts and believes, he puts his money where his mouth is. If Gaon tells him to buy 10% of Tel-Ad Jerusalem Studios, or 16% of the Radio a-Shams Arabic radio station, or to put $2 million into a venture capital fund that he manages, Shamoon will do it, although he’ll probably research it first. “I have a lot of trust in Benny Gaon; he’s brilliant,” Shamoon says.
Somehow, using these methods, the places where Shamoon puts his money aren’t so bad. One example is the 4% stake in Teva (Nasdaq: TEVA; TASE:TEVA) that he has held since 1985 (Shamoon: “It was a very risky investment at the time”). Teva’s success has yielded Shamoon very handsome profits.
Shamoon is so trustful that he doesn’t even remember whether he’s still a member of the board of directors. “I don’t remember, I think I’m still on the board,” he answers, when I ask about the reports from two years ago that the board of directors had been reduced, and that Shamoon had resigned from it. “That’s not important. I trust management; I always do. If I don’t trust people, I don’t work with them. If I trust them, I trust them completely.”
”Globes”: Do you trust Eli Hurvitz?
Shamoon: ”Yes, I like Hurvitz a lot. I’m friends with him, his wife, and his family.”
Whom else do you trust around here?
”I was very disappointed with the former Minister of Finance Silvan Shalom, but now I think that Bibi (Minister of Finance Benjamin Netanyahu) is great: he’s young, successful, and studied economics in the US. I support his economic plan, and I pray that God helps him do something good.”
Shamoon won’t make God do all the work, though. Last November, he sent a sharp letter to the Prime Minister’s office, with copies to the press, in which he complained about his trials with “ruinous bureaucracy. He told his friends “to go on contributing to whatever causes in Israel they find worthy,” but under no circumstances to invest there.
”I came to Israel as an investor, after having been promised the sun and the moon, and with signed contractual commitments. In the decade since then, Israel has changed the rules of the game at least 17 times.” Shamoon is referring to the changes in the ILA land zoning regulations. “All my initial calculations became invalid, and instead of making a profit and building up my business, I suffered huge losses,” he added in his letter. Most of his anger was directed at the new directive by the Rabinovitch committee “Silvan Shalom’s committee.” Based on this directive, the Income Tax Authority ruled that starting in 2003, a foreign investor would considered as an Israeli if he resided there more than 180 days per year, or more than 30 days in 2003, or more than 425 days over the next three years. That means that Shamoon will have to report his income wherever he does business, including overseas. “Investors are fleeing in a panic,” he wrote. “Don’t try to extort taxes from us.” The letter did not exactly clash with the interests of Netanyahu, who vehemently opposed the committee’s recommendations, particularly with regard to foreign investors.
”I sent the letter to Prime Minister’s Bureau director Ad. Dov Weissglas and Prime Minister’s Office director general Avigdor Yitzhaki,” he says. “Weissglas didn’t answer me; Yitzhaki did. He wrote, ‘Look, Mr. Shamoon, you have the same law in the US.’ I told him, ‘Look, I know there’s an Israeli delegation raising money in the US. Can you tell me if there’s a similar US delegation raising money in Israel for the US? How can you compare Israel to the US?’”
It’s possible to argue about this issue; a universal tax system is logical. “My dear lady, ask my boys,” he says, referring to the team he employs at Yakhin Hakal. “I pay all the taxes here. But what business of the state is my business overseas? If I work here, I pay here, but should I pay here on my business there? I built a house here, I provide charity meals for hundreds of people, and now I can’t live here. You can’t keep track of things like Yakhin Hakal through a computer in Britain. This law they have enacted now prevents me from taking care of my business, and furthermore, it’s retroactive. Who ever heard of such a thing?”
You like to say that you understand business, but you’re completely naïve about politics. On the other hand, you’re intimate with politicians, and you run to them with your problems. You hurried to tell Netanyahu that it’s impossible to invest here, you wrote to Ariel Sharon, when he was Minister of Housing and chairman of the ILA. Did you ever contact any bureaucrat? No. You go straight to the ministers and prime ministers.
”I went to Sharon, the late Prime Minister Yitzhak Rabin, and former Prime Minister Shimon Peres. But did I ever ask them for any favors? Never.”
But you tried to exert political influence.
”They’re the leaders. To whom else could I go?”
Shamoon’s bureaucratic wars
When Shamoon bought Yakhin-Hakal in 1991 (or a 100-year lease on it, to be more exact), Sharon was Minister of Agriculture, and made a habit of advocating privatization. Some thought that Shamoon believed he could buy desirable land at the price of agricultural land, and reap the profits later, after privatization and rezoning had increased the value.
”First of all,” Shamoon bridles, “I didn’t buy the company cheaply. It was bankrupt, and I paid $46 million for all of it at the time, including its debts to the banks, and so forth. Many people before me had considered buying it, but no one else did, only I did. I bought it for farming, I planted thousands of acres, I exported to Japan, Scandinavia, Europe, and Asia. Then they cut the water quotas. How can you grow citrus orchards without water?”
The first cut in water quotas, amounting to 30%, was in 1991.”I overcame that,” Shamoon says. The original water quotas were later restored, but the cuts began again in 1996.
Since that time, you’ve been quarreling incessantly with the ILA and the local planning and building commissions about rezoning land.
”I never ask to have a single citrus orchard rezoned,” Shamoon gets excited, and asks another witness, Yakhin Hakal legal advisor Adv. Shalom Mizrahi, to step into the room. “Hello, Shalom, tell me, did we ever ask to have a citrus orchard rezoned?”, Shamoon presses. “Never,” answers Shalom. “All we wanted was to make an exceptional use of agriculture land for a short period of five years as a parking lot for the Dan bus cooperative.” The ILA denied the exception to the lease terms, and demanded the return of 1,400 dunam (350 acres) near Kiryat Atidim.
This made Shamoon so angry that he sent a letter to the prime minister. “When I asked for the rezoning of land that had dried up,” Adv. Yaakov Neeman wrote for him, “the bureaucrats told me very simply, ‘Forget about it.’” Eventually, Mizrahi says, Dan rented land for parking from the ILA in a different area. “You see?”, Shamoon says. “They were competing with me. What is this a government, or a real estate brokerage?”
Even if there’s no citrus orchard there, it’s still rezoning. It’s still upgrading the property.
”Wherever we upgraded property, we paid a betterment tax, which was a lot of money, and we were willing to do it.”
In addition to the Kiryat Atidim citrus orchard, most of Shamoon’s struggles about upgrading and rezoning concerned Yakhin Hakal land that was industrial, not agricultural the company’s packing plants and other enterprises. The way Shamoon tells it, it sounds like in infinite march of folly by ill-willed officials, or those incapable of stretching the regulations. “Those poor bureaucrats,” he says. “Everyone in Israel hates them, but they can’t really do much, because they’re afraid of legal disputes.”
This remark is aimed directly at Attorney General Elyakim Rubinstein, whose intervention prevented the construction of buildings with 40,000 sq.m. for Scitex(Nasdaq:SCIX) on Yakhin Hakal land in the Tel Mond region, occupied by an old packing plant. In this case, the local planning and building commission approved the plan, although the land was defined in the National Outline Plan as an open rural vista. The ILA initially opposed the plan, but eventually signed it. Shamoon remembers his efforts to persuade the ILA: “They said it was a packing plant. I said, ‘But there aren’t any oranges. Should it stay that way? If it were a maternity hospital, and there were no women in the area, will you leave it there for men giving birth?” Netanya Mayor Miriam Feierberg, however, didn’t like the competition from the Hof Hasharon local council over the high-tech industry very much. She enlisted the Attorney General, and the environmental organizations also joined in. In court, the question was asked whether “industry”, in the sense of a packing and canning plant, was materially different from high-tech industry. Two courts ruled that there was a substantial difference, and forbade the use of the land for high tech.
The disappointed Shamoon now wants to sell Yakhin Hakal, with its remaining 10,000 dunam (2,500 acres): 30 dunam (7.5 acres) in Petah Tikva, 50 dunam (12.5 acres) in Tel Mond, and land for construction of a power center in southern Netanya, all approved for industrial construction, commerce, and offices, as well as thousands of acres of agricultural land.
Love memories of Baghdad
We were sitting in Shamoon’s office in the old Yakhin building on Kaplan St. in Tel Aviv. Isabel, his secretary, came to get instructions, and told him that Angela, his wife was in the building. The whole conversation was in Arabic. “When I came here,” Shamoon said, “I employed many Jews from Iraq, so they thought I didn’t like Ashkenazi Jews. That’s not true. I just need people around me whom I can talk to.” Angela soon entered the room for a moment. She has the look of what is usually called an English rose: blue eyes, very light complexion, and naturally red cheeks. They have an eighteen-and-a-half year-old daughter, Alexandra Naima, named after his mother, Naima. The large Jewish school Shamoon founded in Britain is also named after Naima.
The room contains an oil painting in ocher desert colors, portraying a house, a palm tree, and a fountain. This is the house in which Shamoon grew up. “I have a very strong memory of the fountain,” he says. “It’s very hot in Baghdad, and I used to sit under the water fountain. One day, I stood up and banged my head against one of the heads. You see the palm tree there? We used to send one of the servants to pick dates from the tree. Papa’s study was down here. No one was allowed in there, except when ministers and members of parliament visited. That window in the upper left was my room. We had a divan… what a divan.”
The opposite wall is completely covered by a bookcase with glass doors. Shamoon published most of the books for various rabbis. “We’re Iraqi Jews,” Shamoon says. “We’re not religiously observant, but we stick close to tradition. In Iraq, a rabbi was a very important person. We called him a wise man, and kissed his hand. They kept out of politics, though.”
Shamoon was born in Baghdad. When he came of age, his grandfather sent him and his brother by way of Turkey, to join the Israel Defense Forces, under an assumed name, “because had they known I was in the Israeli army, they would have killed him.” After that, his father was smuggled from Iraq to Iran. When Khomeini gained power in Iran, the family moved to London. There, Shamoon’s grandfather, father, and uncle began to engage in trading “everything possible”.
Today, Shamoon’s many businesses include an international trading and oil transportation company, founded in 1971, which was the first private company in the field. Shamoon also dealt in steel manufacturing in South Africa, but he sold his share and got out, because of cultural differences with his partner. He heads an international consortium (he owns 35%), which has invested €1 billon (making his personal investment €350 million) in constructing Europe’s second largest marina near Lisbon, Portugal.
His Portuguese partner is also his partner in an extraordinary venture the Amos communications satellite. At the end of the 1980s, Shamoon says, Amos’s people came and asked him to help, saying they were developing a communications satellite, and needed customers for it. “I asked them to send me something explaining not the technology, but its principles. I got an engineer who spent three days with me, until I said, ‘OK, I understand.’ Everywhere I went around the world, I spoke about the Amos, how successful it was, what capabilities it had. One day I sat with my Portuguese partner, and told him about the satellite’s wonders. He said, ‘How about that? I’ve got a TV station; that’s exactly what I need.’ I introduced him to people from Israel Aircraft Industries (IAI), and after the meeting, he told me, ‘Sami, I can’t do it alone. Come in with me.’ I told him, ‘What do I know about satellites?’ I don’t understand anything about them.’ When I saw he wouldn’t come in without me, however, I said, ‘All right’.
”We signed the agreement in 1989. After a few years, I suddenly heard that the Amos satellite had been launched, without asking us or telling us. I called my partner, and convinced him not to sue. I told him these were matters of state security. Several years later, I got this letter,” Shamoon says, and shows me a letter from IAI, dated 1996. ‘As manager of the Amos program,” Amitsur Rosenfeld wrote me, “I am aware of your unique contribution to the successful beginning of the Amos program. My predecessor believes it was your 1989 letter of intent to rent the Amos that convinced the authorities to consider the program, and eventually paved the way for its beginning’.”
”The Arabs have no reality”
The conversation gets around to politics and the Road Map. “I don’t think anything will come of it, although I hope I’m wrong,” says Shamoon. “I was born in Iraq; my forefathers lived in Iraq for 2,700 years. We know each other very well. They’re Arabs. When we grew up in Iraq, they taught us how the Arabs think. They did it so well that when an Arab breathes, I know how much air he has in his lungs. That’s how in London, we can be friends of people from Syria, Saudi Arabia, Kuwait, and Iraq. They’re good people, if you know how to handle them.
”I don’t think that you Israelis know how to handle the Arabs. Have you ever been in the home of a Palestinian? In one of their villages?”
What don’t we understand about the Palestinians?
”The Arabs are half emotion and half sentimentality. They have no sense of reality. They’re good friends, very good, but you have to respect them, and make them respect you.”
How would you describe yourself in this context?
”I grew up in an Arab country. I’m an Arab Jew. I once sat with (former Prime Minister Shimon) Peres and King Hassan (of Morocco). I said, ‘Your majesty, in the Middle East, when two families fight, it takes a hundred years to make up the quarrel. When two tribes fight, it hundreds of years.’ ‘Where are you from,’ he asked me, and I told him, ‘I’m an Arab Jew from Baghdad.’ Then Peres asked me in amazement, ‘Sami, are you an Arab?’ I told him, ‘I’m an Arab Jew, like you’re a Polish Jew’.”
Published by Globes [online] - www.globes.co.il - on June 25, 2003