Trustees of the holding company, Behifah Holdings Ltd., are set to file a massive lawsuit against accounting firm Deloitte Israel for damages of hundreds of millions of shekels. The trustees, attorney Raanan Kleer and accountant Yitzhak Idan, blame Deloitte Israel for a series of deficiencies that contributed to the collapse of the company and its debts exceeding NIS 200 million.
Deloitte Israel is a part of the global firm Deloitte, which is the largest firm in the world for management consulting, financial consulting, risk management consulting, and more. With approximately 1,200 employees, Deloitte Israel is one of the four largest firms in the country and provides services to leading companies both in Israel and internationally.
Last week, the District Court in Tel Aviv approved the trustees’ request to file a lawsuit on behalf of the company’s bondholders against those responsible for the company’s collapse. The trustees submitted a detailed report highlighting the alleged failures of Deloitte Israel as the auditing firm for Behifah Holdings Ltd.
The report accuses Deloitte Israel of disregarding the group’s work, overlooking obvious problems and shortcomings, and approving bad conduct. The trustees claim that Deloitte Israel neglected to check any backup client until July 2022 and failed to recognize the flawed credit processes within the group. They argue that Deloitte Israel should have noticed the practice of improper credit rollover and uncovered the concealment of bad credit.
The trustees further state that Deloitte Israel did not request crucial information, such as a breakdown and summary of recurring bounced checks and unpaid checks. They argue that if Deloitte Israel had known about the high volumes of bounced and unpaid checks, they would not have endorsed the group’s reports that painted a misleading picture of excellent credit quality.
Deloitte Israel responded to the trustees’ claims, stating that their report presents a one-sided and biased perspective. This is not the first time that Deloitte has faced allegations of negligence in auditing a public company, as they were previously linked to the collapse of Ortam Sahar.
The trustees of Behifah Holdings Ltd. are determined to proceed with the lawsuit, seeking substantial compensation from Deloitte Israel for their alleged negligence. The court has granted bondholders until August 20 to voice their agreement or disagreement with the lawsuit.