Like so many of the acronyms that glibly rolled across tongues during the boom, the use of MBO has faded as trillions evaporated on Nasdaq. Israel's last notable management buyout a leveraged takeover of a company by its managers was that of Jacob Burak and Ofer Neeman, who borrowed money to buy out shares held by the public and founding investors in the Evergreen venture capital fund, which they ran. Within three years they had created a flourishing, unusually lucrative hi-tech enterprise. Hefty dividends from the company enabled Burek and Neeman to repay their loans. That kind of MBO is a rare animal over here. The way it usually works in Israel is exemplified by the virtual MBO of Housing & Construction by Uzi Vardy-Zer and Efhraim Sadka. In that typically Israeli gambit, the hired management of a publicly-traded company belonging to nobody in particular secretly colludes with a buyer, which leaves the management in place and rewards it with options, raises and other goodies. The management is ostensibly no part of the move it takes no risks, borrows no money, but usually lends a hand from the inside to close the deal. Vardy-Zer and Sadka set up an MBO of that kind for the Arison group. Benny Gaon did the same for Shamrock when it bought control over Koor Industries (NYSE:KOR). In both cases the seller was the Histadrut labor federation, and in both cases the managements wound up clutching a coupon of tens of millions of shekels. Recent events at the state-run national phone company Bezeq give off whiff of that kind of Israeli MBO. And Shamrock, the Disney family investment arm run by Stanley Gold, is involved again. The prime minister and communications ministry are dying to privatize Bezeq. They'd do anything to sign a deal. But Israel's collapsing status in the world, coupled with the recession and with the telecommunications crisis, have scared off or bankrupted most potential contenders. Yet some appeared and two months ago the list of contenders was closed. Then lo! a new group popped up and knocked on the door: Shamrock, hand in hand with the billionaire media mogul Haim Saban. Shamrock is no ordinary candidate: It knows Bezeq and its managers inside out. Actually, for almost two years now, it might as well have been part of Bezeq's management. In late 2000 Shamrock bought 50% of Pele-Phone Communications, Bezeq's mobile communications subsidiary, from Motorola (NYSE:MOT) in a bizarre deal led by Bezeq CEO Ilan Biran and chairman Ido Dissentshik. They did not want Bezeq to buy out Motorola's stake in Pele-Phone because that would have officially made the subsidiary a government company. And that would have reduced their control over the company, making it harder to manage, they explained. Although the state offered various breaks for Pele-Phone that would have made it a government company only in name, Biran and Dissentshik insisted on the convoluted transaction, in which Bezeq and the banks lent Shamrock the money to pay for half of Pele-Phone. Many including TheMarker warned the deal would give Shamrock improper leverage if in the future it tipped its cap at Bezeq, because it would be invested in Bezeq's subsidiary and be linked to its management. Worry not, Bezeq reassured: Shamrock, it explained, had signed a commitment not to contend in the future for control over Bezeq. Like all commitments made to the State of Israel in the communications industry, this one wasn't worth the paper it was written on. In less than two years, it was thrown out. On Tuesday the prime minister's director-general, attorney Dov Weisglass, accepted the opinion of another attorney, Communications Minister Reuven Rivlin, that the crystal-clear rock-solid contractual commitment Shamrock made could be shrugged off. Sure Shamrock could join the party and bid for Bezeq! One can guess how the other contenders felt. Clearly, the state has total contempt not only commitments made by companies, but its own too. Most amusing is the consternation of the Israel Corporation which lost the tender to buy the 50% stake in Pele-Phone Communications from Motorola two years ago to Shamrock, and now finds Shamrock sashaying in late to the race for Bezeq, in which Israel Corporation is contending. Israel Corporation CEO Yossi Rosen may feel he's been had. Yet he's nobody to talk: he's also trying his hand at gaining special favors from the state regarding their partnership in the Zim shipping company and Oil Refineries. The sad part of the saga is that although the Shamrock-Saban collaboration over Bezeq arouses uneasiness, and mocks the privatization process; although Shamrock's proximity to Bezeq's management stinks of an Israel-type MBO, in which the potential buyer is already deeply rooted in the target company all we can do is pray that Shamrock-Saban wins, for lack of serious alternatives with adequate financial clout to handle the deal. With inconvenient commitments already shredded, we can only hope that the state will ensure that the Bezeq privatization is done using real money the buyers bring from abroad, or is financed using their own equity, as opposed to the usual Israeli method. The usual Israeli method, you ask? It is the kind of thing we saw with the privatization of Bank Hapoalim, or the sale of a 20% stake in Bezeq itself to businessman Gad Zeevi - it's when most of the financing comes from Israel's banks, some of which are controlled by the government, most of which are monopolistic. It's when the ones assuming the risk are the banks and the Israeli public, while the control, the management and the chance to make a buck remain with the buyers.