Police Suspect West Bank Settlement Developer of Bribery, Tax Fraud

Send in e-mailSend in e-mail
Send in e-mailSend in e-mail

Police are investigating a company involved in developing West Bank settlements on suspicions of bribery, embezzlement and tax fraud to the tune of over NIS 10 million.

The Central Company for the Development of Samaria is co-owned by the Samaria Regional Council, which governs many settlements in the northern West Bank, and by several cooperative associations that run various settlements. Its main activities are construction and project management, mainly but not exclusively in the settlements; it also runs a fleet of bullet-proof buses.

Samaria Regional Council head Gershon Mesika serves as chairman of the board, and the CEO during the relevant period was Haim Ben Shushan. In 2007, Ben Shushan ran against Mesika for the post of regional council head, but quit the race at the last minute and backed Mesika, who then appointed him to head the development company.

Documents obtained by both the police and Haaretz show that for the past five years the company has been a sinkhole for public funds. But police are investigating three specific incidents.

The first relates to several contracts worth tens of millions of shekels that the company won in 2010 to build bomb shelters in kibbutzim near the Gaza border. The projects were poorly managed, resulting in missed deadlines and heavy losses. Police suspect that to conceal these failures, the company paid a NIS 250,000 bribe to construction engineer Dr. Uri Shaked, whose company, Construction Consulting, was hired by the Housing Ministry to supervise construction of the government-funded bomb shelters.

The Samaria development company allegedly paid the bribe by hiring Shaked to supervise an unrelated project that it was carrying out in the settlement of Tapuach. This in itself entailed a severe conflict of interests, since Shaked was now working for the very company he was supposedly supervising. Even more suspicious, however, is that the development company originally contracted to pay Shaked NIS 39,000, but later upped his fee more than six-fold, paying him another NIS 250,000.

The second incident revolves around irregular payments to an outside contractor. In 2008, the development company hired a friend of Ben Shushan’s, without a tender or even a contract, to serve as the contractor on a project to build a sports center in Oranim. It first paid him an irregular “advance” of hundreds of thousands of shekels, and then, when he proved so incompetent that it threw him off the project, it declined to sue for damages. Moreover, the development company “accidentally” paid him the sum of NIS 320,000 twice over for another project, in Nir Yitzhak, but never sought to correct this “error.”

The development company’s lawyer and accountant both concluded that these payments to the contractor raised suspicions of embezzlement and ought to be reported to the police. But Mesika, the board chairman, refused to do so. He also rejected the lawyer’s recommendation that the company sue its CEO, and Ben Shushan finally resigned only in February 2013.

The third incident involves suspected tax fraud via fictitious receipts. Inter alia, the development company issued an NIS 18,000 check to a company that doesn’t exist, ostensibly to purchase iron piles. The check, which wasn’t restricted to the payee only, was then cashed by a third company. Police suspect that the goal of this and other fictitious receipts was to evade value-added tax.

Mesika responded that the company is “a private company in every respect” and said he had handled the accountant’s report appropriately. “I took a dead company and advanced it,” he added. “The person who’s smearing me caused losses of tens of millions himself. I have a lot of material, and everything will come out in court.”

Samaria Regional Council head Gershon Mesika.Credit: Tomer Appelbaum

Click the alert icon to follow topics:

Comments