It was major news on Sunday when the police and Israel Securities Authority revealed that Shari Arison, Israel’s wealthiest woman, was one of two people questioned in connection with a probe into alleged bribery by Housing & Construction Limited.
But sources told TheMarker that it was unlikely that Arison, who until a week ago controlled the giant construction firm, was involved in the company enough to be aware of the any illicit activity. Banking sources, meanwhile, said regulators would not act to rescind the license allowing her to control Bank Hapoalim, Israel’s biggest lender and her main asset.
Both Arison and Efrat Peled, the CEO of Arison’s holding company Arison Investments, deny they were involved in any improper behavior, although they were both questioned under caution, meaning police believe she could become a suspect.
An heiress to the Carnival Cruise fortune, Arison has an estimated net worth of over 20 billion shekels ($5.5 billion). But one source close to her, who asked not to be named, said Arison did not get involved in Housing & Construction’s day-to-day affairs.
“I don’t know if she was aware of things or not, but as a general rule, Shari didn’t get involved in the company’s decisions. She’s not is simply not that kind of person,” the source said. “Just as the company’s successes weren’t connected to her, neither were its failures.”
Police questioning of Arison and Peled, who is a close personal associate of Arison, is the latest development in a probe that began nearly six months ago when investigators raided the company’s offices and detained a group of current and former executives.
Investigators allege that Housing & Construction’s overseas unit SBI and SBI’s Swiss parent company paid bribes to African government officials to win contracts worth hundreds of millions of dollars.
More recently investigators have said the alleged bribes involved officials outside of Africa as well. The World Bank, which is conducting an audit of Housing & Construction projects, has said its examination includes projects in Guatemala as well as Africa.
The investigation has caused Housing & Construction shares to plummet by as much as 39%. Although they have since clawed back much of that loss they were still down 17% from last February at 6.952 shekels on Wednesday. Last month, Arison agreed to sell her controlling 47% stake in the company to Naty Saidoff, an Israeli-American real estate entrepreneur, for a bargain price of 1.1 billion shekels. The deal was completed last week.
Vis a vis Arison’s 20.06% controlling stake in Bank Hapoalim, the Bank of Israel has declined to make any comment, but officials are reportedly monitoring the situation and expected to seek clarification concerning Arison and Peled. Banking sources told TheMarker that the central bank would not act to rescind Arison’s license so long as neither she nor Peled were indicted.
In any case, Arison has for some time been seeking to sell all or part of her Hapoalim stake. Last year she reached an understanding with an unidentified group of U.S. investors to sell 49% of Arison Investments, but the two sides failed to reach a final agreement.
Arison is reportedly still seeking a buyer for the Hapoalim stake, which is worth about 6.7 billion shekels. If she failed, she may end up selling the share to the public on the Tel Aviv Stock Exchange.
The view that Arison had no role in the alleged bribery seems to be shared by police and ISA investigators.
If investigators feel they have a strong evidence against a suspect in a major criminal case, they will arrest him or her and often seek to extend the remand – a move that inevitably generates large media coverage – even in the case of powerful businesspeople, like Shaul Elovitch, the former controlling shareholder of telecoms company Bezeq. Arison, however, was allowed to appear for questioning at her own convenience. The only restriction placed on her was a ban on leaving Israel for seven days.
Others questioned in the Housing & Construction investigation, including former CEOs Ofer Kotler and Yaron Karisi; former chairman Ravit Barniv; auditor, Ruby Lazarov; and current chairman Moshe Lahmani, have had their remands extended or sent to house arrest.
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