George Herscu

Israel ben Jacob Liza (Hebrew: ישראל בן יעקב, February 1928 – 12 December 2013), known professionally as George Herscu, was a Romanian-born entrepreneur best known for his large-scale commercial developments in Australia and the United States. He entered the realestate business during the post-war boom of the 1950s, and later served on the board of prominent companies Hanover Holdings (between 1969 and 1979) and Hooker Corporation (between 1986 and 1990).

Biography

Early life George Herscu was born in 1928 at Bucharest, the capital city of Romania. At age 10 he left school to making furniture with his father. The family were persecuted by German troops for their Jewish faith and interned at various concentration camps around Europe. Herscu survived The Holocaust, along with his parents who emigrated to Israel. He was dispatched to the Bonegilla Migrant Camp in early 1950, later becoming a salesman for realestate agents AV Jennings. Then he partnered with Zygmunt Singlust to open a milk bar in Yarraville. They refurbished and soon sold for a profit, soon entering the property development sector. By the late 1950s, Herscu had also become involved with the local abattoir trade, building up a significant portfolio of wholesale delicatessens around Melbourne. His first blueprint for greater success was the construction of American-style car-orientated strip shopping complexes in Melbourne's suburbs complemented by some home building. By the late 1950s, he had partnered with Maurice Alter. By the 1980s, Herscu had come a long way from his humble beginnings. He had "redefined extravagant living" with a Rolls-Royce, a Cadillac, and a Jaguar for his Gold Coast condo, along with a luxury apartment with million-dollar views above Circular Quay in Sydney, where he and his wife, Sheila, and their three children would stay when visiting the city.

Side ventures

Associates

Lifestyle

In New York, he secured an apartment on Central Park South. Herscu also bought an executive jet but was embarrassed when he realised it was just a Hawker 900—smaller than the corporate jet owned by John Elliott. Not one to settle, he then purchased a $15-million Gulfstream G100. Herscu frequently flew with his associates on his private jet, taking trips from New York to Pasadena for the Super Bowl or up to Minnesota for a World Series game.

However, it was his mansion at Whernside Avenue in Toorak, nestled among the homes of the wealthy, that truly stood out. He designed it after Tara, the grand estate from his favourite movie Gone With the Wind. Even in the downturn of Melbourne’s property market, the house fetched nearly $2 million when the receivers auctioned it off. Herscu recalled: "I asked the builder to build double of everything... inside jacuzzi, outside jacuzzi... The outside one is so big that when I first got in it, the water lifted me right up into the air. This is Hollywood..."

Career

Early employement After arriving in Australia,

Realestate career

In 1964, they were assessing some shops at Paul Fayman's half-built Forest Hill Shopping Centre. Fayman explained the deal, Herscu suddenly interrupted with: "Why just buy the shops? I want to buy the whole centre." It was an impulsive decision that paid off. Herscu, Alter, and Fayman ventured into the regional shopping centre development business, and their company, Hanover Holdings, quickly became a dominant force in the industry. However, like many of Herscu's past partnerships, this one was short-lived. A merchant banker familiar with Hanover noted:"With egos like that they could never work as a team. Fayman thought he was the most cultural. Alter thought he was smarter and wiser. Herscu thought he had more balls than everyone else, and in a way he was right, if having balls means rushing into things without thinking them through."

One of his most notorious legal encounters came in 1982 when Herscu's company, Hersfield Corporation, along with developers Maurice Alter and the Grollo brothers, faced charges of buying industrial peace on their projects by bribing Norm Gallagher, the head of the Builders Labourers Federation. Herscu claimed the Cain Government was targeting him due to his Jewish background and mounted a defence centred around this claim. "I never knew what went on", he claimed. Herscu ultimately admitted guilt, and the four individuals were issued $5,000 good behaviour bonds. The magistrate emphasised that a conviction would have been "catastrophic" for them, as it would have prevented them from holding positions as directors or managers of companies. George Herscu narrowly avoided a ruling that could have ended his career just before his final significant opportunity had even started.

"Should I buy another shopping centre?" asked Herscu. "No, I want to have some fun. I'll go for a company." Like most of what Herscu says about himself, this should be taken with more than a grain of salt. In fact "bullshit" is what a financier involved in the deal spluttered when he was asked about the quote. In 1985, Herscu's shopping centre business was thriving, stretching from Brisbane to the Gold Coast, Sydney, Melbourne and Perth. His portfolio consisted of massive brick-and-concrete structures surrounded by expansive asphalt parking lots on the outskirts of suburban sprawl, reflecting his belief in middle Australia's deep affection for shopping malls. The air was thick with takeover excitement, and Herscu was eager to get involved. That's the official narrative. Behind the scenes, however, Herscu had enlisted a merchant banker, Paul Carter, to scout potential takeover targets. Carter was the one who first pinpointed Woolworths and then the Hooker Corporation as ripe for acquisition. In the end, Herscu chose Hooker, and with the help of a $200 million loan from the ANZ Bank, he secured a controlling stake. His target was a large, conservative company that had failed to provide substantial dividends to its loyal shareholders for years. However, Hooker had acquired vast amounts of outer-urban land in the 1960s, and that land was now ready for development.

When he got to Los Angeles on his first trip to inspect his domain, Herscu was picked up by a chartered jet and flown to Atlanta, Georgia, which was then the company's modest base of operations. "George had never had treatment like this," said one of his lieutenants. "They met him on the tarmac all cheering and wearing these orange day-glow badges saying 'GH/HB The Future Is Now' I was cringing, but George thought it was wonderful. He lapped it up". Herscu's personal style began to wear thin, even among those closest to him. Glover lasted just 10 days before he walked away. By the time Herscu's brief tenure at Hooker ended with the company's collapse three and a half years later, only one or two of the original team of 20 top managers remained. Glover reflected on the situation, saying: "He wanted to be emperor, and I wanted to be king. There wasn't room for both of us. But that left him with a weak board and weak executives. There was no one left who could control him, and in the end, that's what led to the downfall." Forest Fair Mall (2013) 1988, Herscu was quickly running out of credit. His U.S. operation had grown to over a billion dollars, constructing some of the most extravagant shopping malls ever built—massive complexes in overlooked locations like Tampa, Denver and Cincinnati. Despite the chairman's enthusiasm, most of his key team members knew the end was near. Hooker had borrowed from over 50 American banks and was now turning to obscure institutions like the Bank of Nova Scotia, desperately seeking more funds to keep the company afloat. One finance executive remembers flying to five cities in a single day in a last-ditch effort to convince the banks to extend more credit. The issue was this: Herscu had these massive shopping malls, but he couldn't secure major retailers to take the head leases, even with generous incentives. Department chains like Macy's were offered fully-fitted stores, ready for operation, along with $5 million in cash, yet they still turned Herscu down. That was when he made his final, fatal mistake—acquiring chains like Bonwit Teller and B. Altman in an attempt to fill the vast, empty spaces in his hundreds of thousands of square meters of vacant shopping centres. "Mr. Herscu maintains that Israel cannot live without the support of diaspora Jewry and says we must educate our children and future generations to keep on supporting the Jewish State.",'' one journalist stated.