In the News

Did Leviev's Empire Succumb to Boycott?

September 3, 2009

Shir Hever
Alternative Information Center

 

On 31 August 2009, Lev Leviev, the sixth richest Israeli according to Forbes Magazine, convened a pressconference and announced that his company Africa Israel will beunable to meet its financial obligations and repay its debts on time.

 

Shir Hever
Alternative Information Center

 

On 31 August 2009, Lev Leviev, the sixth richest Israeli according to Forbes Magazine, convened a pressconference and announced that his company Africa Israel will beunable to meet its financial obligations and repay its debts on time.

 

Leviev'sdebt is estimated at nearly Euro 1.4 billion. While this tycoon said in August2008 that "I will meet all of my obligations, to the last penny," headmitted in the latest press conference, one year later, that he made seriousinvestment mistakes.

 

Though Leviev originally made hisfortune in the diamond industry, Africa Israel is the flagship of hisbusiness empire. The company is well known for its widespread real-estateinvestments, but also for the fact that it builds in Israeli settlements, orcolonies, in the West Bank. The company's construction projects in areas suchas Ma'ale Adumim, Har Homa, Adam and Modi'in Ilit contribute to the ongoingefforts to dispossess Palestinians from their lands, to expand illegal Jewishsettlements, entrench Israeli control, and place obstacles to ending theoccupation and achieving peace between the Palestinians and Israel.

 

As a result of these constructionprojects, Leviev's business empire came under a massive and well-coordinatedworldwide boycott campaign. Although it is difficult to organize a consumerboycott on a real-estate company, because that would amount to convincing peoplenot to live in certain areas, supporters of the Palestinian cause for justiceand freedom found creative ways to apply pressure on Africa Israel.

 

As the crimes of Africa Israelbecame infamous throughout the world, international pressure on the company beganto mount. Demonstrations took place in New York City, including in front ofLeviev's store on Madison Avenue. Leviev's diamonds were shunned in Dubai, andUNICEF refused a donation from him, saying "We are aware of thecontroversy surrounding Mr. Leviev because of his reported involvement inconstruction work in the occupied Palestinian territory." The UK embassyin Tel Aviv decided not to buy its office from Africa Israel while on 23August  2009, it was revealed that Blackrock Inc., a large British investmentfirm, decided to divest from Africa Israel. Eight days later, Levievconvened the press conference in which he announced his inability to repay hisdebts.

 

The question that naturallyarises is whether the efforts of the boycott campaign were what eventuallytoppled one of Israel's biggest tycoons. There is no way to answer thisquestion based solely on financial data. Company financial reports do notinclude a clause for "losses because of boycott." Also, it isunrealistic to assume that the massive losses of Africa Israel resultsolely from the boycott—it is clear from company reports that the primaryreason for debt is the depreciation of real-estate assets, which the companybought at tremendous leveraging. The international capitalist crisis impactedthe value of the company's assets, making the huge company seem like a sinkholeof debt.

 

While it would be irresponsibleto contend that Africa Israel accumulated a significant amount of itsEuro 1.4 billion debt as a result of the boycott movement, this does not meanthat the boycott movement did not play a key role in toppling the company.After all, a company doesn't go into crisis because of heavy debts, but onlywhen it cannot refinance its debts and borrow money to cover previouscommitments.

 

The "big five" Israelitycoons include Eliezer Fischman with debts estimated at Euro 4.2 billion,Israel Corp of the Ofer family, with debts worth Euro 7.5 billion, Delek Groupof Yitzhak Tshuva, with debts amounting to about Euro 8.1 billion and I.D.B ofNochi Dankner, with debts estimated at Euro 14.9 billion. Africa Israel hasthe least amount of debt amongst these tycoons, but was the first to fall,partially because its image was destroyed along with its fortunes, and becauseinvestors were wary of lending money to a company beset by protests, and facingpossible litigation for crimes committed in the occupied Palestinianterritories. The other Israeli tycoons are not subject to widespread boycottcampaigns, and are so far able to obtain sufficient credit from investors tokeep doing business, despite the international crisis.

 

In, fact, the impact of boycottcannot be directly measured in numerical terms. The educational, mobilizing andpsychological impacts are always more powerful than the direct economic impact.What can be measured, however, are the decisions of companies that clearlystate their decisions to withdraw from illegal projects, like the statements ofBlackrock regarding Leviev, or Veolia regarding the illegal light rail inJerusalem, or companies that succumb to economic pressure faster than companiesin similar financial dire straits, such as Africa Israel succumbingbefore Israel's more indebted tycoons.

 

It is too early to say what theconsequences of Leviev's fall could be. His creditors are mostly Israelis, andmany were invested in his companies through their pension funds. The fall couldbe painful for tens of thousands or even hundreds of thousands of Israelis.Some of them might dedicate a moment of thought, as a result of losing money,to the reasons behind the boycott campaign, and to the fact that the crimescommitted by their government and complicit corporations can affect thempersonally. Some may realize the occupation of Palestine is not free.

 

One thing is certain: the brave peoplewho took to the streets to demand boycott, divestment and sanctions againstIsrael and Israeli companies received a clear message that their efforts arenot in vein. Private companies that seek to make easy profits in Palestinewhile ignoring the injustices and illegality of Israel's crimes there, willhave to think twice about their investments. They may be required to pay aprice in actual money for the moral deficit in their accounts.

September 3, 2009
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