Israeli Supermarket Titan Rami Levy Detained in Bribery, Fraud Probe

Three others, not involved in Levy's grocery business, also questioned by police in connection with Mevasseret Zion mall

Rami Levy
Rami LevyCredit: Ofer Vaknin

Rami Levy, Israel’s discount-supermarket king, was in legal trouble again on Sunday after police detained him and three others on suspicions of bribery, fraud and breach of trust in connection with a shopping mall in the Jerusalem suburb of Mevasseret Zion.

The others taken in for questioning by the police’s Lahav 433 special-investigations unit were Yoram Shimon, head of the town’s local council; a second businessman; and the editor of a local newspaper. The latter pair’s names were barred from publication by the Rishon Letzion Magistrates Court.

Levy was released to three days’ house arrest. “We are relying on the investigative authorities to do their work faithfully and that they will reach the conclusion that there was no flaw in of Mr. Levy’s actions,” said Levy’s attorney, Gadi Tal.

Shimon’s lawyer, Uri Keinan, expressed similar views. “I am certain that after the police have competed their work faithfully, they will reach the conclusion that Shimon did nothing incorrect.”

Shimon was released to five days of house arrest and barred from local council offices or contact with other suspects. Trading in shares of Rami Levy, the supermarket chained 45%-owned by Levy, was briefly suspended on the Tel Aviv Stock Exchange Sunday morning and when it resumed they dropped sharply, ending down 6% at 172 shekels ($49.07).

Although the company told the TASE that the investigation involved a “private asset owned by the company’s controlling shareholder and another person” and not the publicly traded grocery chain, he is the founder, CEO and entrepreneur who guided it from a single shop in Jerusalem’s Mahane Yehuda market into one of Israel’s biggest grocery chains.

First reported on TV in March

Although investigators released few details of the probe, which was being conducted in secret until Sunday, it appeared they were looking into suspicions raised in a Channel 2 television report aired last March in connection with the development of the mall.

According to the report, the opening of the shopping center was being delayed for lack of certain permits and Shimon made a personal appeal in July of that year to the local planning and building committee to allow the mall to open, citing its importance to the local economy.

The facility, in fact, did open in September, but shortly afterwards Levy sought permission to enclose the mall and were told they would have to pay a 21-million shekel betterment tax to do that. At that point Shimon intervened, even though most of the tax revenue would have gone to the local council he heads, and urged the planning committee to reconsider the tax assessment. He even said the committee should retain a new property assessor.

Ruti Schwartz, chairwoman of the committee, told Channel 2 she was invited to a meeting on the matter with Shimon, only to find the mall’s owners, including Levy, there. She recalled that Shimon yelled at her that the assessment for the tax was too high while Levy and the other mall partners urged another assessor be brought in.

Shimon’s wife Shelly is marketing manager of the mall and his former aide, Oded Bar Zvi, is now the mall’s CEO.

Levy is a business folk hero, who started from modest beginnings and made his fortune by offering lower prices than rival supermarket chains and speaking frequently to the media to keep his profile high. In 2015, he was given the honor of lighting an Independence Day torch.

More recently, he has sought to extend the Rami Levy brand to include downturn grocery stores, an internet-television package in cooperation with Hot Telecom, and said last week he wanted to enter the retail pharmacy segment by buying a few New Pharm stores being put up for sale.

However, not long after his Independence Day honor, he and managers at Rami Levy were alleged by police to have used private information about business rivals and employees with whom they were in disputes, and which was obtained through the company’s cellular telephony subsidiary. He was also accused of trying to cover up a case of sex harassment at the company.

The police file has been passed on to the state prosecutor, but no decision has been taken on it.

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