In a broad operation yesterday the police detained eight suspects, including people linked to three manpower agencies, on allegations of exploiting workers from China.
The eight, who specialized in referring Chinese workers to the Israeli construction industry, appeared yesterday in the Rishon Letzion Magistrate's Court. The arrests followed an undercover police investigation carried out over several months with the Tax Authority and the Interior Ministry.
The manpower companies whose staffs are under suspicion are the firm Edgar Meitav, formerly known as Resido, Gesher Hasson and a company that goes by the Hebrew initials Kaf Aleph Zayin.
The detainees allegedly charged Chinese laborers up to tens of thousands of shekels per worker rather than the maximum NIS 3,401 allowed by law to arrange a position for a foreign laborer. Law enforcement officials believe that the suspects used fake invoices in operations that allegedly involved a total of tens of millions of shekels.
Tax evasion and money laundering
Among the suspects is Peretz Tubi, a manager at Odan, a firm that provides services to manpower companies employing foreign workers. Tubi is accused of tax evasion and money laundering, among other allegations. He says, however, that he simply provides services to other firms, and that he does not directly employ workers or receive money from them.
Construction workers are considered the highest paid of foreign workers, so they are considered to have the highest potential to pay fees, as far as the manpower agencies are concerned. It is known that in some instances, workers financed the fees from loans from their employers, from foreign workers who had been in the country longer and on the gray market.
The investigation only became public yesterday with the arrests of the suspects; there were also searches of the suspects' homes and offices, and of currency-exchange outlets. Law enforcement officials said the investigation was designed to curb the overcharging of foreign workers and to tackle tax evasion by construction firms employing foreign laborers, mainly foreign construction workers from China.
Big firms in the industry
Jacques Chen, a lawyer representing one of the suspects, Meir Piso of Kaf Aleph Zayin, said at yesterday's court hearing that the police were dusting off a 2009 police investigation file involving allegations dating back to the years 2006 through 2008. He said the allegations were without foundation.
The three manpower firms implicated are among the largest of 31 companies involved issuing work permits to foreign laborers in the construction industry. There are currently about 5,800 foreign workers in this industry in Israel.
This year, Kaf Aleph Zayin was issued 450 permits for workers from abroad in construction. Hasson Gesher has received 436 permits and Edgar Meitav 425. The workers are in Israel despite a 2008 decision to stop the employment of foreign workers in the construction industry.
The Worker's Hotline, a nonprofit organization that fights violations of employment terms by employers, said it was not surprised by yesterday's arrests. Complaints are pending in labor court against Kaf Aleph Zayin and Resido that include non-payment of wages, delay in payment of salaries over a period of months and non-payment of overtime and social benefits, according to the group's construction industry coordinator, Dana Shaked.
"We have been warning about the phenomenon for a number of years, and since then we have witnessed transaction fees that have just gone higher and higher," she said. "It's a shame that similar [law enforcement] steps were not taken in the past. We could have avoided unnecessary payments on the workers' part."
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