Kobi Alexander – not who you thought
Business world roiled by Kobi Alexander scandal, as Comverse Technologies founder is to face money-laundering charges in US after being arrested in Namibia. Why did FBI bring out the big guns in its search for Alexander? Alexander's personal friend Gabi Kessler says Comverse CEO is not the greedy criminal portrayed by Americans, offers alternative explanation for US authorities' motivations
Proper disclosure: The writer of this text is friend of Jacob (Kobi) Alexander. Take my words with a grain of salt, or reject them completely. But read and ask yourself if all the facts the FBI and US federal prosecutors tried to feed us last week are congruent with the judicial, public, economic and ethical logics.
Can everything be explained by simple claims of greed, or are the US federal authorities' claims against Alexander questionable?
We tried to answer these questions after the scandal came to light, especially when the fugitive Alexander refused to appear before a court to defend himself.
Alexander is accused of manipulating Comverse share options. Many argue that the practice is common in Wall Street. Is it true that "everyone" does that?
Not all, but Comverse, headed by Alexander, was not the only company to carry out backdatings. Securities and Exchange Commission Chairman Christopher Cox told Congress that his team is investigating over 100 companies, and some estimate the number at 2,200, for backdating share option granted to employees.
Apple and Home Depot are among the big names investigated.
So if many companies did so, why are charges being brought against Alexander and Comverse?
The Securities and Exchange Commission knows that it cannot try the CEOs of more than 100 companies, but it seeks to, once and for all, bring an end to the backdating of stock option grants. So, what's the solution? You target one, two, maximum three firms, put their CEOs on trial, pin severe, multi-clause indictments on them, and see that they go to prison for many years. That is enough, that is all you need. No executive in the United States will dare deal with backdating ever again.
So why was Alexander chosen as the scapegoat? This isn't clear. Perhaps because he is an easy target. Alexander is an Israeli citizen. He does not have a congressman to protect him, he does not contribute to the American election campaigns and does not have connections in the administration, like so many of the major American companies' execs. Alexander is a foreigner as far as the Americans are concerned, "not one of us," and therefore it is easier to indict him than, say, Apple's Steve Jobs.
But the Federal Bureau of Investigation stated that Alexander holds dual American-Israeli citizenship.
This is just another nasty trick used by the FBI in the course of the hunt for Alexander. Kobi does not hold, and never held an American nationality, only Israeli citizenship. He lives and works in the United States under a resident status and holds a Green Card. The FBI, of course, knew this. But when they decided to go on an international hunt for Alexander, it was convenient for them to portray him as an American citizen, although this was a distortion of the truth. It is easier to convince other countries that you are seeking the extradition of one of your own citizens than the extradition of a foreign national. And to prove this – only on the day that he was apprehended in Namibia and the global search for him was called off did the US authorities "discover" that Alexander did not actually possess an American citizenship, and admitted that the FBI made a mistake. A curious coincidence.
This is just one example for the manipulations carried out by the FBI and the federal prosecutors, in a bid to convince public opinion in the US, and the world, that Alexander was guilty. Another example?
Alexander's placement on the FBI's most wanted list. When it became clear to the FBI that Alexander was not returning to the US, he was put on the organization's "wanted" list. At first his picture was placed at the top of the FBI website's homepage, even above the photo of arch- terrorist Osama bin Laden, who is considered the most wanted man by the US.
Several days later, Alexander's picture was taken off the homepage and added to the list of the other wanted suspects. However, instead of adding his name to the list of white collar wanted suspects, his name was instead put on the "Crime Alerts" list alongside suspects wanted for rape, murder and racketeering. What was the reason for this? Only the FBI knows.
What about the charge that Alexander smuggled USD 57 million from the US to Israel?
This is another example for the intentional inflation of the prosecution against Alexander. One of the 32 charges he faces concerns money laundering offenses and the smuggling of USD 57 million out of the US to Israel, in a bid to conceal his option revenues from the American authorities. In actuality, these USD 57 million were Alexander's personal savings, which he accumulated over the years after having paid taxes, and were not profits related to the backdating options grants (the indictment itself states that Alexander's personal profits from backdating amounted to USD 6.4 million).
Both the US and Israeli law stipulate that a person is entitled to funnel any amount of money he wishes from one country to the other, as long as it is not undeclared capital gained through illegal activity or which taxes were not paid for. So, where is the smuggling and money laundering in this case?
Apropos, the FBI seized the money Alexander left behind in the US – USD 45 million, and demands, in the framework of the indictment, that Alexander pay back USD 138 he earned from "kosher" options.
Is it hard to believe that the federal prosecution in the US would do something like this? These things happen there every day. The prosecutors in the US are elected by the public, and are therefore eager to show results by bringing criminals to justice. A prosecutor who would be able to boast of sending a senior executive like Alexander to many years in jail will be considered a successful prosecutor. Therefore, such a prosecutor would not hesitate to employ every possible trick in order to get a conviction and a severe sentence.
First of all, one must admit that Alexander's conduct hasn't always been flawless, especially no in hindsight. After it has been shown that Alexander has become an example and symbol of the stringent treatment of executive managers who have allegedly transgressed, Alexander decided that it is best for him to wait outside the US and to see the results of the investigations of the rest of the companies, and what kind of punishment was handed down to the managers of other companies who behaved in a similar manner.
The possibility that he, a foreign national in the US, would be tried first in the scandal and would take all the heat apparently scared him so much that he decided it best that he hide.
It is probable also that his lawyers tried to cut a deal with the prosecution and Alexander saved the extradition card as a part of the deal. It went something like this: It's better that we lighten his sentence so that he would at least be in our hands than he hide some place in the world thus completely avoiding punishment.
Why didn't he stay in Israel, preferring to fly to Namibia?
The reason for this is simple. The moment Alexander decided not to return to the US, there was no sense in staying in Israel, who has a mutual extradition law with the US. Alexander went to Namibia because it doesn't have an extradition clause with the US.
Since arriving in Namibia with his family, Alexander has not tried to hide his identity because he is sure that he won't be extradited to the US. His big mistake was that he didn't consider the FBI's determination to capture him and bring him back to the United States.
From the moment the FBI knew of his whereabouts, the US government has put pressure on the Namibian government, convincing it (with money? some other form of support?) to change within a day its law to include the US on the list of countries to which Namibia is prepared to extradite people.
Until a few months ago, Kobi Alexander was one of the heroes of the new Israel. His contribution to the Israeli economy measures millions of dollars. In 2001, Alexander was granted the Industry Prize. Some 25 years ago he was one of the founders of the Israeli hi-tech industry.
Comverse, the company he founded in 1982, has grown to be the largest company in the world in the field of voicemail, and its sales in 2005 approached close to a billion dollars. Comverse today provides for close to 5,000 families, 2,200 of which are in Israel, and at least 200 of its employees have become millionaires from the (legal) stock options they received at Comverse.
I have known Kobi Alexander personally for decades. I haven't met many people in my life who are as honest as Kobi. More than once I have heard him say that it is forbidden to get caught up with the American IRS and SEC.
Is it logical that a person worth millions of dollars would risk everything he had earned in life, and at his age (54) would risk 25 years in prison, only to earn another USD 6.4 million? I don’t buy it. Whoever knows him and his work has no doubt that Alexander did not plan, did not intend, and did not know that he was breaking the law. He is not free of mistakes and erroneous actions, but this is not fitting of the manhunt the FBI and the federal prosecutors have been conducting for months.