China's Central Commission for Discipline Inspection (CCDI) is investigating suspicions that executives in the state-run corporation Bright Food - the Chinese government's food-related investment branch - received direct or indirect bribes from Israeli parties profiting from the sale of Tnuva. This was also reported to investigative agencies in Israel, investigative website News 1 reports.
In 2014, Bright Food's huge deal to acquire a 77% stake of Tnuva was led by Guo Benheng. It was acquired from Apax Partners, headed by Zehavit Cohen and from Mivtach Shamir Holdings Ltd. (TASE:MISH), headed by Meir Shamir. Last week, it was published that Guo, who had been appointed Tnuva CEO on behalf Bright Food and disappeared a year ago, was sentenced to six years in prison for corruption charges. The deal was made at a NIS 8.6 billion company valuation, a price inflated by NIS 2-3 billion. This has become apparent in the past few years, when it turned out that the Chinese, including executives who received personal benefits amounting to millions of dollars, had been presented with inaccurate input, which resulted in the deal being closed at a high price.
This does not relate to a decreased value resulting from a deterioration in Tnuva operations since the deal has taken place two years ago, but the real company valuation after the 'curtain was lifted' on the entire Tnuva corporation. The CCDI's Shanghai division coordinates the handling of this affair, which is considered highly sensitive in China. The Chinese authorities already reported in June 2016 that Guo had been arrested for what was labelled as "disciplinary violations," but the past few weeks have seen these 'violations' turn into graft charges. Several other executives have also been questioned and arrested for severe offences.
This is not the first time Bright Food has come into the spotlight. In August 2014, former chairman Wang Zongnan was put behind bars for graft and fraud charges. As mentioned above, Apax and Mivtach Shamir reaped the main benefits from selling their Tnuva stake at such a high price, but so far no direct evidence of violations by Cohen or Shamir, which would have demanded their investigation in person, have been reported.
The investigation and suspicions against Israeli nationals are known to several entities in Israel.
Apax responded to this report, "This is a complete nonsense. Our professional ethical and business conduct are based on doing business in a fair and legal manner. Bright Food declined to comment, but sources close to the company said, "This report is probably unfounded. The affair in China probably has nothing to do with Tnuva." The Tel Aviv District Attorney (taxation and economics) denied any information on this affair.
Published by Globes [online], Israel business news - www.globes-online.com - on December 18, 2016
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