Four shareholders in Shapir Engineering and Industry Ltd. (TASE:SPEN) - Harel, Israel, Gil, and Chen Shapira, the company's CEO and managers of its activities - have been summoned for questioning under caution by the police on suspicion of involvement in bribing foreign public officials in Romania in order to promote the company's projects in the country.
The police today raided the offices of Shapir Engineering in Petah Tikva, conducted a search, and confiscated documents and computers. The company reported these developments to the Tel Aviv Stock Exchange (TASE), and said, "To the best of the company's knowledge at this time, the search concerns activity by the company in Romania that has been discontinued."
Revealed in "Globes": €175,000 for a mayor in Romania
An exclusive "Globes" report on February 20, 2017 said that the State Attorney's Office was investigating a bribery affair involving the Shapir group. Avraham Morgenstern, former manager of Shapir Engineering sub-subsidiary Shapir Structures Romania, a company that is no longer active, is suspected of giving a mayor in Romania €175,000 in order to ensure that the company would win a residential project in the mayor's city.
According to information obtained by "Globes," the State Prosecutor's Office conducted a formal inquiry in Romania for the purpose of collecting evidence from the Romanian authorities about the alleged bribery. The Israeli authorities thereby joined an investigation on the subject that the Romanian authorities have been conducting since 2014. According to the information obtained by "Globes," the international department in the State Prosecutor's Office contacted the Rumanian prosecutors early as June 2015 with a request for documents, correspondence, court documents, and any other information about bribes allegedly paid by Shapir Structures Romania.
The Romanian media reported that Morgenstern paid Radu Mazare, mayor of the city of Constanta, €175,000, allegedly to ensure that his company would win a contract/tender for building a residential project in the city worth an estimated €10 million.
The information obtained by the State Attorney's Office, which led to the opening of an investigation, pertained to payments transferred through another Shapir Engineering group company, Larton Consultants, to a company incorporated in Lichtenstein and controlled by an Israeli businessperson. Three bank transfers were made from there to two banks accounts: one in the name of Mazare, suspected of being the main receiver of bribes, and the other was to an Israel Discount Bank (TASE: DSCT) account in Israel in the name of his brother, Alexander Mazare.
The draft prospectus published by Shapir Engineering ahead of its IPO in late 2014 stated, among other things, "Up until June 30, 2014, the company operated in Romania through Shapir Structures Romania, a fully owned subsidiary of Larton Consultants, a Cypriot company belonging to the Shapir Engineering group." The draft prospectus continued, "Starting in April 2014, the authorities in Romania have been conducting a criminal investigation against a former manager at Shapir Structures Romania into suspicions of an alleged bribe in connection with a project carried out by the group." The draft prospectus adds that Shapira Structures was required to furnish documents to the Romanian investigative authorities, and that the former manager had been barred from leaving the country.
Morgenstern's trial in Romania for tax evasion (VAT and corporate tax) continued for the past three years. He was recently convicted and sentenced to 12 years in prison, as reported by Shapir Engineering two weeks.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 8, 2018
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