Israel shaken by firm’s collapse

Press, Volume CXIV, Issue 33655, 3 October 1974, Page 13

Israel shaken by firm’s collapse

(N.Z. P-en Ann—Copyright) JERUSALEM, October 2. A major financial collapse with losses estimated at up to SUS2Om is shaking Israeli economic circles and arousing concern for Israel’s ability to attract badly-needed foreign investment.

The issue centres on the Israel Corporation, a com-, pany set up in 1969 with Government help to lure foreign investment into Israel’s struggling economy. , But not all the investments have gone directly into build-' ing the Jewish State. Millions; of dollars have flowed into speculative real estate and other deals in Europe, and, may be irretrievably lost, economic officials say. The monev was funnelled to Europe through a small, Swiss bank owned by Tibor Rosenbaum, a former Israeli who still keeps strong politi-[ cal and economic ties with, Israel. The Israel Corporation’s; future was plunged into 1 ieopardy when Rosenbaum's financial empire and his Inter-

■ national Credit Bank (1.C.8.) lin Geneva began to totter. The affair burgeoned into a scandal, even though its losses were small compared with other financial calamities that have hit Israel in recent years. This is because of the Government's close involvement with the firm. It established the corporation, owns isome of its shares, and was iso keen on foreign investment {that it enacted special legislation giving the company large tax exemptions.

The manager of the company, Mr Michael Zur, was relieved of his post last Thursday, and also resigned as chairman of Zim, the national shipping line. The official reason given was that he wanted to devote all his energy to clarifying the affair.

The corporation is now being temporarily managed by an Israeli banker and two businessmen, all members of the board.

The corporation is heavily involved with Jewish investors. Baron Edmond de [Rothschild of Paris, is its [chairman and many experts ■ fear its losses may damape < Israel’s name among potential 1 investors.