The Rishon Letzion Magistrate’s Court yesterday evening lifted the gag order on the name of the real estate company being investigated for allegedly laundering 60 million shekels for the Abergil crime syndicate.
B. Yair Building Corporation said in a laconic announcement to the Tel Aviv Stock Exchange last night that on Monday night, police had searched the company’s offices and collected documents, and “to the best of the company’s knowledge, several employees were questioned and detained.”
Crime boss Yitzhak Abergil and four B. Yair executives, including two of the company’s owners, are being detained in connection to the case. Abergil is currently in prison for his role in the murder of an Israeli drug dealer in the United States, along with other crimes.
Even though the gag order was lifted only at 7:30 P.M. last night, some investors apparently knew or suspected that the company involved in the affair was B. Yair, and acted on that information. B. Yair’s stock fell 21% in trading on Tuesday and a further 6% yesterday before the share was suspended from the stock exchange at 10:30 A.M. The suspension was accompanied by a curt announcement about “ a lack of clarity in the company’s affairs.”
The company agreed to forgo the gag order after executives met with officials from the Israel Securities Authority.
The Israel Securities Authority had urgently appealed to the court, seeking that the gag order be lifted, so that B. Yair could be pushed to issue an immediate report. Unequal information among investors was making trade impossible to sustain, the regulator added, and this trumped the value of leaving the gag order in place.
B. Yair stated yesterday, “ The company is continuing with work as usual vis-à-vis its thousands of customers in residential and commercial projects.” The company will continue serving its customers and bondholders loyally, it said, adding, “In the near future it will become clear that the suspicions against the company, as published in the media, are baseless.”
The Israel Tax Authority opened an investigation in 2011 into irregularities in one of B. Yair’s projects in Eilat, Sun Village, but no indictments were filed. A few months ago, in light of intelligence information the police’s international crime unit received, the case was reopened and the police discovered a connection between the company’s management and Abergil’s criminal organization.
The suspicion is the company reported losses on the project in Eilat and used the subcontractors who built the project to funnel the funds to Abergil’s organization.
The B. Yair executives are suspected of corporate fraud, false reporting, corporate management offenses, money laundering, planning and construction offenses, and tax offenses.
B. Yair was founded in 1988 and currently has 10 projects in construction and marketing, with a total of 1,044 housing units. Some 750 are already sold.
Real estate sector sources speculated that the affair could spell disaster for the company by shaking the confidence of banks and home buyers, a real estate company’s two main sources of financing.
No bank would lend to the company now, and buyers will stay away, speculated one source.