Last update - 00:00 08/08/2007
Despite allegations of fraud, no criminal probe into Heftsiba
By Etti Aflalo and Carmel Ben-Zur, Haaretz Correspondent
The police, in conjunction with the Justice Ministry, has decided not to launch an investigation into Heftsiba at this time. A police spokesman told TheMarker that no complaints had been filed regarding the bankrupt real estate developer. The police are not obligated to wait for a member of the public to file a criminal complaint if there are suspicions of criminal conduct.
Knesset Finance Committee Chairman Stas Misezhnikov Tuesday demanded in a letter to Police Commissioner David Cohen that a criminal investigation be launched. Financial institutions seeking to seize collateral at the beginning of the week, raised claims of criminal conduct in petitions filed with various courts. Bank Hapoalim wrote in its petition: "Apparently there is a substantial difference between the group's presentations and its data regarding its inventory of unsold apartments, raising heavy suspicions that apartments were illegally sold by group companies in violation of financing agreements. Apparently moneys from the sale of these assets were not deposited in corresponding accounts, and were possibly smuggled out of the companies by management."
Bank Jerusalem said: "Contrary to the Heftsiba group declaration regarding the existence of an inventory of dozens of apartments in several projects, those apartments were apparently sold based on false presentations. There is serious concern that these deeds, actions and omissions not only violate bond contracts, but constitute actual fraud."
Despite these extreme statements, neither Hapoalim nor Bank Jerusalem went to the police. Bank Jerusalem stated: "The bank is operating in complete cooperation with the court-appointed receiver for the collapsed Heftsiba. The receiver and the banks are engaged in measuring the gaps between the data we have and the situation in practice. We will act on that information, including filing a police complaint."
Bank Hapoalim stated it had not yet uncovered evidence that required police involvement.
Attorney Avner Cohen of Cohen and Wilchek said that when liquidators or investigators are involved, the main aspect of the investigation is financial and civil. Even if fraud did occur and the investigator did discover this in the course of the investigation - the only help he can offer is to bring the material to the police.
"Hopefully, with the help of that information, the police may be able to build a better case," Cohen explained. "However, the officeholder's aim is to locate the money to return it to the creditors. Rumor has it that it's unlikely the money in the Heftsiba affair will be found, as it was allegedly intentionally smuggled out."
Do you think the police should act - even if no complaint has been filed?
"I do not know police procedure well enough, but I have no doubt the police are entitled to act even without a formal complaint. As far as I know, the police don't usually investigate without one though. However, there is nothing stopping them initiating an investigation."
Do you believe the police are trying to avoid dealing with the affair?
"I don't know. I hope that if the police do act, it won't be in the newspapers. Either way, I hope they do something quickly as I am not optimistic about the police's ability to help the poor creditors. If someone has taken the trouble to conceal funds, smuggle them abroad and hide them in anonymous bank accounts - the chances of finding sums to cover the debts, are very small."
Are the police able to handle a case like this?
"I hope the police can handle a case like this. The fact that this involves a large sum of money, doesn't necessarily render it a complicated investigation. I imagine a handful of people were partners to the secret and the way to get that kind of information is to get someone to talk."
Do you believe the police should get involved?
"Yes. I think it is in the public interest that the police exhaust the investigation into the matter