Israel's Hottest Economic Scandal

installments due to the shipyards
(amounting to several million
dollars), because Somerfin de-
faulted on the payments. And a
few weeks ago, two Swiss banks,
from which came probably most
of the cash invested in Somerfin,
instituted proceedings against the
failing company, thus bringing
the crisis to a head.

By ELIAHU SALPETER
Chief JTA Correspondent in Israel

(Copyright, 1966. JTA, Inc.)

JERUSALEM—In 1937, a young
man by the name of. Meir Halevi
immigrated to Palestine from Ro-
mania. Today, his name is con-
nected with the hottest economic
scandal in Israel. In the years in
between. he built up a forty mil-
lion dollars shopping and business
empire, the collapse of which now
for many Israelis has become the
symbol of the mismanagement of
this country's financial and eco-
nomic affairs.
A relatively unknown business-
man for almoSt a decade. Halvei
moved to Italy toward the end of
World War II and engaged in ex-
port and import trade. Later he
moved to Switzerland. formed a
financial company. "Somerfin. -
which—after various other busi-
ness ventures—began to concen-
trate. in the fifties. on shipping.
Halevi discovered that Japanese
shipyards were short of work and ;
were acceptin_tr orders on very!
small down-payments. These pay-
ments he obtained in Switzerland.
while from the Israel Ministry of
Finance he secured guarantees for
the balance of 80 percent he owed
on most of his ships. Thus he built
the car ferries "Bilii" and "Nili."
the fishin.; vessels "Dagit" and
"Daniela" and the tanker "Aurora"
(for which, however, the " Israel
guarantee is only mina. the main
burden being carried by the Jew-
ish industrialist Woolfson. from
England). At present. four refrig-
erated fruit carriers are under con-
struction for what was planned by
Halevi as a "banana-fleet" to
be run jointly by Equador and the ,
Somerfin company.

Trouble began about two years
ago, when Somerfin started hav-
ing difficulties paying its regular
suppliers. Matters got worse and
worse, and some months ago the
Israel Government, as guarantor,
had to pay the latest of the two

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operator who happens to hold
Israel nationality, but actually
acts on behalf of the Israel gov-
ernment in his ventures? And
last, but not least, how did it
happen that the Treasury guar-
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erly investigating the reliability
of the company and the basic
chances of profitability of the
proposed investments?

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A man who had just given a
883-7800
15555 Woodrow Wilson
s chnorreT a whole ruble found him
seated in. a restaurant a little
later. eating caviar. "Shame!" he
cried. "You beg money on the
streets and then squander it on
Holiday Greetings
caviar!"
The schnorrer became indignant
instead of abashed. "And why
not?" he retorted. "Before I got'
LIFE INSURANCE! FOR ALL!
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Agnes Bristol, Secretary
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into the open a year ago, much less caviar. At that rate, when in the
public attention would have been world will I eat caviar?"
given to it. After all, this is not the
first case where many millions of
Best Wishes for a Happy
the Israeli taxpayers money may
Happy Hanuka
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quite a lot of explaining to ex-
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plain away the responsibility for
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Marshall Korshak (left) re-
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day. The presentation was made
by Samuel Bronfman, WJC vice
president, and the guest speaker
was Senator William Proxmire
(right) of Wisconsin.

The total indebtedness of Somer-
fin is estimated at about $34-$36
million. The present value of its
assets is put at $26 million, leav-
ing a liability of about $8-$10 mil-
lion without cover. It is assumed
that a large part, possibly most, of
the liability was accumulated by
the huge operating losses of the
ships.
The Israel government maintains
that by holding first mortgage on
most of the Somerfin ships (in-
cluding the four under construc-
A rich man was sitting at his
tion for the Equador venture).
practically its entire $18 million window when he saw a beggar
across the street scratching his
financial guarantee is fully pro-
tected and therefore the Israel back against a fence. Learning
from the poor fellow that he had
Treasury will suffer very small
not been able to afford a bath in
financial losses. if at all. Some eco-
nomic observers consider this an many months. he gave him some
estimate too optimistic to be true. money and also a change of under-
But this is not the issue now so clothes.
When the news spread to the
hotly debated in Israel.
other beggars in the neighborhood,
What Israelis ask, in discus- two of them rushed to the fence
sions as well as in editorials, is and began scratching themselves
why the government got involved against it with all their might.
in the Somerfin venture in the Instead of giving them alms, how-
ever. the rich man started belabor-
first place. What business had
the Israel Treasury to risk the ing them with his stick.
"You can't fool me!" he cried.
taxpayers money in giving guar-
antees to a private company reg- "You are impostors!"
istered in Switzerland and en- j "But why did you believe the
gaging in such projects as carry- other fellow?" they protested.
"Because he was alone. and nat-
ing bananas from South America
to the United States? Why did orally had to use the fence to
the government allow the (mis- relieve his itching. But you are
taken) impression to be created two. and if you were not impostors
abroad that Halevi was not sim- each of you would scratch the
ply a shrewd and smooth private other's hack."

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