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Details of the Pelephone-Shamrock deal in Bezeq's financial reports for 2000 and 2001 may have been incomplete, according to CPA Boaz Yifat. Failing to enter all the relevant information is a criminal offense.

In the reports, Bezeq failed to mention that, in addition to the loan Shamrock had taken from it to buy Pelephone from Motorola, Shamrock had taken a $375-million loan from Bank Hapoalim and that the bank had priority over Bezeq should the need arise to foreclose on Shamrock's stock in Pelephone.

In the financial report for 2002, which Bezeq released at the beginning of March, the company provided complete information. Since Hapoalim's loan has priority, the value of the collateral provided by Shamrock for the loan (bonds issued by a Shamrock subsidiary whose only business is to hold Pelephone stock) was put at zero, causing Bezeq to write off NIS 1.2 billion in its reports for 2002.

The way in which Bezeq entered the deal in its books, the explanations provided for the reports and the revision in the reports of 2002, give rise to concerns that Bezeq had deceived its investors, Yifat said.

At the end of 2000, Bezeq gave Shamrock a $240-million loan for the acquisition of 50 percent of Pelephone from Motorola. Bezeq holds the other half of Pelephone. Bezeq had the right of first refusal, but had it acquired all of Pelephone, the latter would have become a government corporation and as such would have been subject to strict tender requirements and wage restrictions.

Bezeq, under Ilan Biran's lead, preferred to find another buyer - Shamrock - which promised to sell the stock to Bezeq once it is privatized.

Almost all the consideration paid to Motorola was financed by generous loans from Bezeq and Bank Hapoalim. The only collateral used was Pelephone stock.

After Passover, one of Bezeq's stockholders filed a $240-million derivative suit (suit brought on by a shareholder on behalf of the company to protect it against wrongdoings) against Bezeq and its directors. The plaintiff alleged that negligent conduct of Bezeq and its officers and directors in the Pelephone-Shamrock deal have caused Bezeq a loss of $240 million.

Bezeq has refused to comment on the allegations of false entries in its reports, because of the pending lawsuit. No comment could be obtained from the Securities Authority.