TIME: Almanac 1995

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<text id=93TT0111> <title> Oct. 25, 1993: Israel's Secret Weapon </title> <history> TIME--The Weekly Newsmagazine--1993 Oct. 25, 1993 All The Rage:Angry Young Rockers </history> <article> <source>Time Magazine</source> <hdr> ARMS TRADE, Page 42 Israel's Secret Weapon </hdr> <body> For this trading tycoon, a $3.5 billion military sale to China is only one chapter in a story of rags-to-riches success and nonstop wheeling and dealing By BRUCE W. NELAN--Reported by Lisa Beyer/Tel Aviv and Jaime A. FlorCruz/Beijing At a formal dinner in a Beijing hotel last week, Israeli Prime Minister Yitzhak Rabin toasted a rotund 72-year-old at the table and offered a tribute: "Mr. Eisenberg opened the doors to China for Israel." It was a rare moment in the public spotlight for Israeli tycoon Shoul Eisenberg, but senior officials at the dinner knew exactly what Rabin meant. Modern weaponry is at the heart of the Jerusalem-Beijing relationship, and Eisenberg has been selling Israeli defense technology to the Chinese for more than a decade. Eisenberg is the real-life version of the international power brokers who appear in the pages of popular thrillers, and he is usually described with some of the same adjectives: shadowy, reclusive, discreet. Worth an estimated $1.3 billion, he is a legendary figure in Asia, a modern taipan. His holdings include all or part of hundreds of companies in 30 countries, and though he has half a dozen lavish homes in several countries, he says with some justification that he lives in his private Boeing 727, which is outfitted with a bedroom and sophisticated communications gear. Calling Eisenberg an arms dealer does not do justice to the scale and astonishing variety of his operations. He may have handled Israel's military sales to China, but at the same time he was completing hundreds of other deals, bringing investors, manufacturers and markets together in tidy packages and taking a large cut for himself. He has been the key man in coffee processing in Thailand, desalinization in the Caribbean, steel, railroads and atomic power in South Korea, real estate in the U.S., mining, fuel oil and cooking oils, aircraft leasing, shipping, fertilizer. In spite of the toast last week in China, Rabin tried to downplay Eisenberg's sales efforts. By coincidence,CIA Director R. James Woolsey had just reported to a congressional committee in Washington that the value of Israel's military sales to China over the past 10 years "may be several billion dollars." At a press conference in Beijing, Rabin confirmed that sales had taken place but quibbled about the total: "All these stories of billions of dollars of arms business in the past 12 years are total nonsense." Actually they are not nonsense. As early as December 1978, Eisenberg was in China sizing up business opportunities. According to a senior aide to Menachem Begin, Eisenberg paid a call on the then Prime Minister and said that he could use his influence to open China to Israeli goods--mostly military--if Begin would give him exclusive rights to all weapons deals. It was a time when China was looking for first-rate military technology that it could not obtain from the West. For its part, Israel was eager to reduce its defense costs by selling overseas and to increase its influence over a country that supported Israel's Arab enemies. No other Israelis were doing business with China, so Begin, according to this aide, accepted Eisenberg's offer. Eisenberg denies that Begin provided him with exclusive rights to arms-technology deals. According to the Begin aide, Eisenberg bought the military technology from Israel's defense industries and sold it to China for whatever he could get. Eisenberg's office says he made only nominal commissions, but in parts of Asia he was known for the high profits he made on deals. In any case, says the Begin aide, "he made a lot of money out of it, but he also helped the Israeli military industry." Since 1979, Israeli security officials say, the country has sold China $3.5 billion worth of arms components and technology--not finished weapons, but parts and processes to improve China's tank guns, armor and targeting systems, missiles, aircraft electronics and military computers, among other things. Though Eisenberg seldom talks to the press, he told an interviewer for Britain's Financial Times last month, "People think I am an arms dealer, but I only did it for Israel. I hate the military business, and I don't do it in other countries." By all accounts that is the truth. Other Israeli firms are opening offices in China now, and Eisenberg is moving on, putting together major deals in India and the former Soviet republic of Kazakhstan. For Eisenberg, the wheeling and dealing never stop. Like many self-made men, he puts others off with his intense focus. "He's a very tough man," says another ex-employee , "very demanding, very aggressive." Eisenberg has no hobbies, doesn't go to the theater, doesn't have leisurely dinners with friends. "The only thing that interests him," says David Lisbona, Eisenberg's personal assistant in Israel, "is his work. He enjoys bringing these things together--which is why he is still doing it. He doesn't need the money." Even if he does not watch movies himself, the Eisenberg story could easily inspire one. It would tell the tale of a penniless German Jew who lands in Japan during World War II, goes into business, builds a trading empire in Asia and becomes one of the world's richest men. In 1938, when Eisenberg was 17, his parents, two brothers and a sister left their home in Munich and fled to Shanghai, where a growing European Jewish community sought refuge from the Nazi regime. Eisenberg followed in 1940 but found no business opportunities in China that time around. So he sailed for Japan, thinking he might make it to the U.S. But in Japan he met a family active in the steel business and began selling iron ore principally to their company, Nippon Steel. A year later, he married Leah Freudlsberger, whose father was an art lecturer at a Tokyo university and whose mother was from a distinguished Japanese family. When the war ended, Eisenberg's fortunes took off. He sold the U.S. army of occupation kitchen and bathroom equipment made of aluminum from downed aircraft, and continued brokering the iron ore and other imports Japan needed to rebuild its ruined economy. As soon as the Korean War was over, he opened an office in Seoul, got to know the most important political and military leaders, put together reconstruction deals and took a big slice of the profit. For years after becoming an Israeli citizen in 1949, Eisenberg had a connection with the Jewish state that was mostly symbolic. But all the while he was living in Tokyo he played an active part in the Jewish Community of Japan and served several terms as its president. He built a synagogue in Tokyo in honor of his parents and contributed millions of dollars to Jewish charities. In 1962 Eisenberg moved with his family--wife, a son and five daughters--to Israel, where he wanted them to grow up and serve in the army. Israel's high taxes kept him from moving his corporate empire there until 1970, after the Knesset passed the so-called Eisenberg Law, exempting offshore-trading income from taxes. Today the Eisenberg Group, with 40 offices around the world, is divided into two main holding companies--the Israel Corp. and Panama-registered United Development Inc. The Israel Corp., of which Eisenberg is chairman and major shareholder, is based in Asia House, an elegant office block he built in central Tel Aviv. The corporation has an annual turnover of more than $2.5 billion. United Development does not release such figures but has roughly the same revenues. One of Eisenberg's trade secrets, his associates say, is his extraordinary mind. "The guy was never in a school of business or anything like that," says one ex-staff member. "He did everything himself. He's exceptionally clever and has an amazing memory." Eisenberg speaks fluent German, Japanese, Yiddish and European-inflected English. Eisenberg has also made a point of hiring executives with a record of achievement, people who are already powerful. Among his current employees is Moshe Arens, the former Defense and Foreign Minister. In the past he has employed Ilan Tehila, the former military adviser to Defense Ministers Ezer Weizman and Ariel Sharon, as well as a retired armed forces chief of staff and a onetime director-general of the Foreign Ministry. "He has a weak spot for military men," says another ex-employee. There may be more to it than that. Eisenberg often says that "business is like war." An Eisenberg staff member explains: "He talks about his employees as being `my soldiers.' People from military backgrounds are used to working hard and giving pretty much undivided loyalty to their superiors. That's the way Mr. Eisenberg likes it." When Rabin left Beijing last week, Eisenberg stayed on at his 35th-floor office in the China World Hotel. He was host at two banquets the same night--one for a provincial governor and the other for officials of China's state television network. Two days later, he flew to India, where the Ministry of Power wanted to talk with him about building some electric power plants. </body> </article> </text>