The Tele Aviv Magistrates Court today released Ministry of Communications director general Shlomo Filber to 14 days of full house arrest extending until Wednesday, July 26. During this time, he is barred from contacting anyone involved in the Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) affair. The Israel Securities Authority will hold his passport for 180 days, and he will post NIS 400 million in bail.
Filber was earlier questioned again in the Securities Authority offices, following his first interrogation yesterday on suspicion of involvement in the Bezeq affair. Filber is suspected of fraud and breach of trust, corruption, and offenses against the Securities Law. He is suspected of improperly disclosing information to Bezeq controlling shareholder Shaul Elovitch.
Bezeq controlling shareholder Shaul Elovitch was placed under house arrest for nine days; Bezeq CEO Stella Handler was also placed under house arrest for nine days; and Bezeq VP for investor relations and business development Amikam Shorer was placed under house arrest for eleven days.
A Securities Authority representative also presented a document at the court hearing allegedly showing that a mechanism for receiving confidential information had been created, and that such information had reached a party that should not have received it. "The change in the allegations is extremely significant," the representative said in the hearing.
The most sensitive matter in the State Comptroller's report published yesterday focused on the letter that Filber sent to Bezeq, as a result of which Bezeq announced its merger with DBS Satellite Services (1998) Ltd. (YES) and the deregistration of Yes at the Registrar of Companies. What had been previously unknown, and which was revealed by "Globes" following the publication of the letter sent on December 21, 2016, was the fact that Elovitch had to have Filber's letter, in which he supported elimination of the corporate separation between Bezeq and Yes, in order to obtain an investment commitment from Bezeq, and so that Elovitch would be able to obtain proceeds that were contingent on the Bezeq-Yes deal. The letter, which was ostensibly innocent, dealing with corporate separation in Bezeq, appeared to be professionally impeccable, and as such, to have been supported by the profession echelon in the Ministry of Communications.
The State Comptroller found that not only had the professional echelons not been a party to the letter, but that they had opposed the change in policy that it proposed.
Furthermore, Filber stated that Bezeq had told him that the letter was designed to help it use Yes's losses to offset its taxes, and therefore required the elimination of corporate or structural separation. The question arises, however: since when does a regulator in a government ministry take into account in his decisions the offsetting of taxes for companies under his supervision? Furthermore, when the State Comptroller contacted the Israel Tax Authority and asked about the matter, the Tax Authority completely denied what Filber had said, meaning that Bezeq was probably responsible for having planted this incorrect information in the first place.
Will Elovitch have to return the money?
The contingent proceeds were divided into three payments totaling NIS 170 million. The calculation was simple: depending on elimination of corporate separation or the amount of Yes's cash flow, the final payment could be brought forward and paid together with the second payment. In the end, following the disclosure of this trick, Elovitch was unable to obtain the third payment. Furthermore, now that the investigation is taking place, and it is clear that the elimination of structural separation at Bezeq will not take place this year, it is highly likely that Elovitch will have to return the money he received.
Published by Globes [online], Israel Business News - www.globes-online.com - on July 13, 2017
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