Israeli businessman Lev Leviev's debts to banks in Israel total NIS 500 million, according to an investigation by "Globes." The source of the debt is NIS 1 billion in loans taken by Leviev to pay for his acquisition of a controlling interest in Africa-Israel Investments Ltd. (TASE:AFIL), which Leviev lost control of last year.
Under Leviev's control, Africa-Israel underwent two debt arrangements in the past decade after announcing that it was unable to pay its debts to its bondholders. In the second and recently concluded debt arrangement, which amounted to NIS 3 billion, ownership of the company passed to businessperson Moti Ben-Moshe.
Although he long ago lost his tycoon status and does not even live in Israel, in payment of his private debts to local banks, Leviev is still paying from his privately owned businesses. After losing control of Africa-Israel, Leviev is focusing most of his business on diamonds and real estate in Russia.
Leviev has been in the headlines in recent days in connection with suspected smuggling of diamonds to Israel by former employees of LLD, a company owned by Leviev. In the course of the investigation, law enforcement authorities unearthed evidence giving rise to suspicions that diamond smuggling took place for over 15 years and amounted to hundreds of millions of shekels.
A source familiar with the investigation said yesterday that as of now, no extradition request has been filed against Leviev himself, but the law enforcement authorities intend to proceed with a joint investigation of his case in cooperation with the authorities in Russia. The source added that the law enforcement authorities theorize that the reason why Leviev recently moved to Russia is the ongoing investigation against him.
Repaying NIS 200 million a year
Two years ago, "Globes" revealed that through private company Memorand, Leviev was trying to postpone repayment of his personal debt to banks under the debt arrangement he signed with them several years previously, in exchange for providing more collateral. At that time, the balance of Leviev's debt to banks in Israel was NIS 1.1 billion, 60% of which was owed to Bank Hapoalim (TASE: POLI) and the rest to four other banks: Bank Leumi (TASE: LUMI), Israel Discount Bank (TASE: DSCT), Mizrahi Tefahot Bank (TASE:MZTF), and First International Bank of Israel (TASE: FTIN).
Leviev's private debt arrangement with these banks, which was agreed in 2009, rescheduled a NIS 2.5 billion debt over a long period (NIS 200 million annual payments). The debt arrangement was signed at the same time as the first Africa-Israel debt arrangement, following which Leviev continued to control Africa-Israel, while injecting NIS 750 million of his own money into the company.
Two years ago, with Africa-Israel facing a second debt arrangement, Leviev bought the company's holdings in its subsidiary, AFI Development (LSE: AFID), which deals in real estate in Russia. The deal highlighted both Leviev's financial capabilities and his belief in AFI Development's business in Russia, then in the midst of a great crisis.
Leviev injected NIS 550 million into Africa-Israel for a 65% controlling interest in AFI Development, and also provided a personal guarantee to AFI Development's creditor bank - a total of NIS 1.2 billion in capital and guarantees.
Published by Globes, Israel business news - en.globes.co.il - on November 7, 2018
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