Bezeq group chairman and controlling shareholder Shaul Elovitch has been blocked from the company’s offices for the next 30 days, the company stated Wednesday afternoon.
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Elovitch and other Bezeq executives are in the middle of an Israel Securities Authority investigation into allegations of fraud and breach of trust.
Elovitch stated earlier on Wednesday that he would be temporarily stepping down as Bezeq chairman. David Granot, an independent board member at the company, would be replacing him, he stated.
Bezeq released an announcement stating that Elovitch would be facing a series of restrictions until July 27. He cannot enter the offices of Bezeq or of its multichannel television subsidiary Yes, and he cannot make contact directly or indirectly with employees of these companies regarding their work there.
Furthermore, if Elovitch needs to conduct any business relating to the Bezeq group, it must be through the CEOs of Bezeq or its subsidiaries, or through Granot.
The Israel Securities Authority suspects that in 2015 and 2016, executives at Bezeq and Yes acted in ways that duplicitously manipulated the company’s financial reports. The investigation is continuing and senior employees are being called in to make statements.
On Monday, the Tel Aviv District Court placed a gag order on any new details of the investigation that have not already published so far, due to ISA concerns that publication could compromise the probe.
Granot will be taking Elovitch’s place until the investigation reaches a significant development. He has been an independent board member at Bezeq since May.
Granot has served as CEO of Israel Discount Bank, Union Bank of Israel and First International Bank of Israel. He has served in a number of senior positions and on the boards of directors of numerous prominent Israeli companies.
Meanwhile, the investigation has taken a heavy toll on Elovitch’s business. The Eurocom group, which Elovitch owns in partnership with his brother Yossi and through which he owns the controlling share in Bezeq, has seen the net value of its assets drop to between 100 million and 300 million shekels ($28.5 million to $85.5 million) since the investigation against Elovitch began.
Eurocom, which owes over 1 billion shekels, could find itself facing liquidity problems as a result. It does not have significant cash reserves and it cannot pull dividends from subsidiaries.
The banks are apparently aware of the group’s difficulties. Discount and Hapoalim have transferred 650 million shekels in loans to Eurocom Communications to their departments that handle problematic debt.
Eurocom has some 100 million shekels in payments to banks coming up over the next year.