Ortam Sahar Engineering Ltd. (TASE:ORTM), controlled by Amir Nahum, has had a hard year with heavy losses, in which the company's market cap sank to a mere NIS 55 million. It now appears that the company's troubles are only beginning; criminal proceedings are looming. It was reported today that Nahum was being questioned at the Israel Securities Authority on suspicion of misleading investors, aggravated fraud, fraud and breach of trust, money laundering, and tax violations. Nahum, who was released on restrictive conditions, denies all the suspicions. The Securities Authority and the Israel Tax Authority conducted a joint investigation, which allegedly established grounds for suspecting Nahum of concealing his business and private connections with company suppliers that should have been disclosed. Nahum is also suspected of inflating costs for services received by Ortam Sahar, thereby causing distortions in the company's financial statements. It is suspected that these false representations resulted in Nahum and others raking in NIS 4 million for their personal use.
Nahum's involvement in a criminal investigation follows a series of recent criminal and other entanglements by controlling shareholders in real estate companies, including Or City Real Estate controlling shareholder Inbal Or and Adama Logistic Group controlling shareholder Oren Kobi. In Nahum's case, however, a public company is involved, and the alleged deception in this case was against the company's investors, who are public shareholders, not purchasers of apartments or rights, as in the cases of Or and Kobi.
Ortam Sahar operates through various subsidiaries for contracting, civil engineering projects, and residential construction. Ortam Civil Engineering is a private company that manages, supervises, and provides engineering consulting in both construction work and communications. It holds 45% of the capital registered for trading in Ortam Sahar. Nahum is the controlling shareholder in both Ortam Sahar and Ortam Civil Engineering. Under the management agreement between these companies, Nahum is CEO of Ortam Sahar through Ortam Engineering, of which he owned 99% during the period relevant to the investigation.
The investigation involves suspicions that Nahum, together with others, concealed from organs of Ortam Sahar the network of his business and private connections and his private affiliations with its suppliers, thereby causing false presentations in the company reports and financial statements in 2012-2015. It is also suspected that as a result of misleading representation of the costs of the services received by Ortam Sahar from its suppliers, compared with the actual cost, Nahum caused distortions in Ortam Sahar's financial statements. It is suspected that Nahum's actions resulted in his receiving NIS 4 million, including the use of Ortam Engineering's accounts, at the expense of Ortam Sahar.
It is suspected that others transferred the excess amounts charged to Ortam Sahar to Nahum's private use through Ortam Engineering's accounts.
Conditional release
Nahum was questioned yesterday in the Securities Authority offices in cooperation with Tax Authority investigators. Nahum was later brought to the Tel Aviv Magistrates Court for release under restrictive conditions. According to the Securities Authority, additional developments are expected in the affair.
Representing Nahum, Advocates Navot Tel-Zur and Yaron Lipshes said in response, "Nahum, the company CEO, rejects the suspicions attributed to him. Nahum responded in detail to all the investigators' questions, and fully cooperated with the investigation. Nahum is confident that at the end of the investigation, it will become evident that he did nothing wrong, and acted throughout for the good of the company and its investors."
Published by Globes [online], Israel business news - www.globes-online.com - on June 1, 2016
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