The Israeli Securities Authority’s Investigations, Intelligence, and Market Surveillance Department has uncovered numerous scandals and fraud at the Unite Credit Financial Services Ltd., implicating several senior officials, including former board chairman and finance minister Moshe Kahlon, in a series of crimes.
The findings of their investigation have been forwarded to the prosecution’s office.
This extensive and multi-suspect investigation involved the collaboration of the Tel Aviv District Prosecutor’s Office. resulting in the collection of substantial amount of evidence. Numerous witness interviews were conducted, and multiple searches were carried out in homes and offices.
What acts of fraud and other crimes were committed at Israel’s Unite Credit?
The investigation is based on the suspicion that controlling owners Yitzhak Azer, Shay Panso, and Shlomo Isaac, the also controlling owners of Unite Credit, have committed crimes the Securities Law and Penal Code. These include reporting offenses, insider trading, fraud, forgery, false registration in corporate documents, breach of trust within the corporation, obstruction of justice, and money laundering, among other crimes.
Furthermore, senior officials within the public company, such as Yoav Zabar (deputy CEO and compliance officer), David Ben Naim (former CFO and adviser), and Moshe Kahlon (former board chairman), along with other company officials, are suspected of committing reporting offenses under the Securities Law, as well as fraud and breach of trust within the corporation under the Penal Code.
The two main cases center on the controlling owners, with the assistance of other parties, allegedly fraudulently transferring tens of millions of shekels from the publicly-traded company to a private company.
The first case revolves around a transaction involving two million shares of the public company. The controlling owners were supposed to transfer NIS 50 million to the public company in exchange for the shares. However, it is alleged that the transaction was a fraudulent attempt to solve a bond payment problem of the private company. The controlling owners, along with other suspects, allegedly devised a plan to receive shares without actual cash payment by transferring funds back and forth between the public and private firms. They intended to sell some of the shares at a higher value in the future to repay the bond payments.
In the second case, the controlling owners are suspected of illegally receiving at least NIS 2.4 million from the public company. Additionally, approximately NIS 10-15 million was found missing from the public firm’s northern branch. Allegedly, the controlling owners, including Kahlon, Zabar, and Ben Naim, were aware of the serious deficiencies and irregularities in the northern branch but failed to report them to the board. Some of the missing funds, including two checks worth NIS 5 million, allegedly benefited the controlling owners.
Lawyer Eran Shaham Shavit, representing Shlomo Isaac, emphasized that there is no connection between the investigation of Unite Credit and Isaac’s public role as president of the Israeli Chamber of Insurance Agents. He asserted that Isaac acted diligently as a member of the board and acted according to the law.