Slice pensions affair takes toll on savers

Slice special manager Efi Sandrov  credit: Migdal
Slice special manager Efi Sandrov credit: Migdal

Pensioners with no access to their money are suffering financially and mentally, and receiving scant attention from politicians.

NIS 4.3 billion - it’s hard to get one’s mind around it, certainly when its a matter of the pensions and savings of 105,000 people built up over many years. Their access to the money has now been completely blocked, and for thousands of them it’s not at all clear whether they will ever see their money again.

The Slice affair is emerging as the greatest pensions imbroglio in Israel’s history. More than NIS 800 million is involved. Of that amount, the whereabouts of at least NIS 500 million are unknown. "Globes" spoke to people who have fallen victim to Slice and to the proceedings against it, and who have lost their financial anchor overnight.

First of all, a recap of the affair. In February 2022, the Capital Markets, Insurance and Savings Authority began to receive complaints about Slice. Savers claimed that insurance agents had sold them loans in return for transferring their money to the provident funds management company. Six months later, an application was made to file a class action, and after another two months "Globes" reported that the Capital Markets, Insurance and Savings Authority had raided Slice’s offices and opened an investigation.

In November 2023, despite the investigation, the Capital Markets, Insurance and Savings Authority renewed Slice’s license to sell savings and investment products. In a discussion at the Knesset last week, representatives of the Authority said that the renewal was "technical." For the savers, it was an indication that things were apparently being run properly. A month later, the lid was lifted. The regulator removed the company’s senior managers and appointed CPA Efi Sandrov as special manager in their stead. He froze all of the company’s activity.

Since then, the full dimensions of the affair have started to become clear. Slice is a digital provident funds management company owned by the Goldberg and Tocatly families that presented itself as a specialist in personally managed provident funds (IRA). This is a savings product that allows savers complete control over the management of their investments, unlike the "shelf products" of financial institutions, that offer uniform investment tracks to all customers. Of the NIS 4.3 billion managed by the company, NIS 3 billion are in these funds.

The money at Slice divides into three degrees of risk. The first is traditional pension funds, amounting to NIS 1.2 billion, that are apparently unharmed. The court approved the sale of these funds, and they await a buyer. The second is what are called the "white funds": NIS 2.2 billion in the personally managed funds. The special manager believes that these were managed correctly. The remaining NIS 890 million, at the highest degree of risk, are in the "red funds". This money was invested in IRA funds, but mainly in overseas funds that it is feared were not managed correctly. At present, it is not clear what has happened to the money. So far, only NIS 60 million has been located. All the money at Slice, on all investment tracks and at all degrees of risk, has been frozen, and the savers have had no access to it for six months.

Many of the people affected to whom we spoke describe severe financial, psychological and health damage, sleepless nights, feeling cut off from their environment, and resort to pills. The Pandora’s box opened up at the same time as the outbreak of war, itself an event that forced many people to adjust financially. But for those who saved with Slice, when the rainy day came, the money wasn’t there. The testimonies reveal how investment products were sold to customers without explanation of what they comprised and where the money would actually be invested.

Agents, many of whom the customers had known for a long time, persuaded, and sometimes even pressured, people to transfer their money to Slice, with promises that this was a safe investment, or in return for loans. In the class action filed in August 2022 by Adv. Adiel Zimran and Adv. Nimrod Eliahu Levi, the lawyers described precisely this pattern of agreement to transfer savings in return for loans on easy-looking terms. The customers did not know that in fact the loans would be financed out of their own savings, which might never be seen again.

"It started when I went into the Slice website and I had no access or password," one woman who transferred savings to Slice in return for a loan recounts. "When I contacted them, they started to tell me dubious stories. A months went by, and then two months, and every time I tried to talk to Slice there was no answer." At some stage she was referred to the fund manager, and he himself sent her a code and password, but with an indirect link. "When I brought up the numbers, I saw that they weren’t normal. I had much less than I had transferred." When she asked about this, she was told that she was charged management fees four years in advance.

The testimonies bear similar outlines. First of all, there is the reliance on seemingly trustworthy agents, but also the confidence that everyone placed in the regulator and the state, which proved misplaced. The authorities woke up more than a year after the initial complaints were filed.

Hannah is a 76-year old pensioner. Shimon, her husband, who is older than her, suffers from cancer. For years, Hannah’s pension savings were at a large investment house and managed via an insurance agency. Their daughter relates that the insurance agents who came to her parents’ home "were very pleasant and inspired confidence," and persuaded her parents to trust them. "One day, we simply received a letter notifying us that the money had been transferred to Slice," Hannah says. Money saved over 25 years was put into overseas funds - the "red funds". Hannah says she had never heard of the company beforehand, but that she trusted the agent. "He said that they were investing the money in a very reliable British fund, and that there would be no problem with that." According to Shimon, at first the money accumulated good returns, but one day the information about it stopped coming. "You try to contact them, and don’t succeed. When we asked around, we were told that they were in trouble." When they sought to transfer the money, they were no longer able to.

According to the daughter, her parents’ investment portfolio was substantial. "It’s money they saved shekel by shekel, a large investment portfolio that they were depending on for a dignified retirement, without having to ask for favors or to think twice before consulting a doctor privately or if they needed drugs not in the public health basket. And now, they have reached the point at which they require drugs and treatments that are not in the basket, and need this money, and it’s not there. This anxiety now, when my father has cancer, is really the last thing they need."

The agent was like one of the family

Shlomit Yitzhaki, a pensioner who worked for years as a nurse at the Carmel Hospital in Haifa, describes a trusting relationship with the Finbert insurance agency, which brought her to Slice. "My husband left me three years ago, and he was the one who dealt with cars and money. Suddenly I was left a little helpless after the division of the property, and I didn’t exactly know what I was doing. It was a sort of naivety, of trust," is how she describes it.

"A pleasant sounding women phoned me," Yitzhaki says, recalling how she got to know an agent on behalf of Finbert. They met at her home, and she says that from then on the agent visited her many times, and became like one of the family. "She was very persuasive," she says, and, with her approval, transferred her money to Finbert.

"I wanted to preserve the value of the money, so that it wouldn’t decline. She (the agent, N.S.) said that it was an Israeli insurance company. I didn’t know that the money would be transferred abroad. None of us knew." But that is exactly what happened with more than NIS 400,000, which were all her savings, and which ended up in the "red funds", the fate of which is unknown. But one morning, talking with an acquaintance who happened to be a former banker, Yitzhaki realized what had happened. "When I told her where I had invested, her face went as white as chalk. She told me, ‘Withdraw the money and put it somewhere else,’ but by the time I tried, everything was blocked."

All the money is frozen

Besides those invested in the "red funds", tens of thousands of other savers are having to cope with the complete freezing of their investments. Yossi Geifner is one such, as is his wife. Both invested their pensions with Slice. "I have had several financial advisers over the years, and they all knew that I was prepared just to preserve the value of the money, not to make profits, but not to lose either." During 2022, they sustained large losses on fixed income tracks because of the Russia-Ukraine war. "So we turned to the agent to find us a track such as short-term deposits, and she brought us to Slice," he says. "She found a bonds track for us. I had no idea what it was about. I thought that bonds was something from the government. I certainly didn’t know that the money could be invested overseas. We transferred the money there, nearly two million shekels, a pension from 38 years of work." Among other things, they had earmarked this money for the purchase of an apartment for their disabled daughter.

In December, the Slice affair reached the headlines, and they realized how they stood. "I contacted the agent, and she tried to be reassuring, and said, ‘It’s all rumor. You know how it is, a newspaper article is published and everyone gets alarmed, but if you want, for the sake of peace of mind, I’ll move your money,’" he relates. "’What peace of mind?’ I said. ‘Everything’s burning!’" That day he gave a transfer instruction, but it was too late.

"For the first three months it was sleepless nights. Mo grandchildren, no children, no communication with our surroundings," he says. "Just suffering. No amount can compensate for what we have gone through. We’re pensioners. Do we have the strength for fighting battles? To wait for years?"

Geifner is one of those who money was invested on "traditional" tracks, but is frozen nevertheless. "It’s absurd. We did nothing wrong, and we have to justify ourselves? To ask for our money? To provide approvals? Reasons? It’s unbelievable. This is money I have saved all my life."

Last week, the court approved the release of money for those aged 70 and over, at the request of Adv. Yael Havassy-Aharoni of the Clinic for the Rights of Holocaust Survivors and the Elderly at Tel Aviv University. The special manager, however, sought to narrow the ruling, and so far no judicial decision has been forthcoming. At the same time, the Knesset discussed the Slice affair last week for the first time, at a session of the Finance Committee. MK Meirav Cohen (Yesh Atid) described the story as "the Trade Bank affair on steroids", referring to the collapse of Trade Bank in 2002 as a result of embezzlement of some NIS 250 million by the bank’s deputy head of investments Etti Alon, to help her brother, Ofer Maximov, to pay gambling debts. The committee chairperson, MK Moshe Gafni (United Torah Judaism) admitted that he had heard of the affair for the first time, and that he was surprised by the numbers. The Capital Markets, Insurance and Savings Authority was asked to put together a document within a month that would answer a host of questions. No follow-up session has been scheduled yet, and no parliamentary committee of inquiry has been formed.

Finbert Insurance Agency stated in response to the report: "Moneys belonging to customers of the Finbert agency that were invested are in the investment accounts and in the investments themselves, and our legal obligation is to ensure that the savers who placed their trust in us will see their money back."

Slice, its managers, and the agencies mentioned, have not been accused of any crime, and are entitled to the presumption of innocence.

Published by Globes, Israel business news - - on June 30, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Slice special manager Efi Sandrov  credit: Migdal
Slice special manager Efi Sandrov credit: Migdal
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018