Following the financial irregularities discovered in the non-bank credit company United CreditWhich led to the resignation of the Chairman of the Board Moshe KahlonCompany executives are trying to “improve attitudes” and blame each other for the shortcomings of millions of shekels, and perhaps even more, in the activity of discounting checks and loans of the company.
Last Thursday, former Finance Minister Moshe Kahlon announced that he was leaving the chair of Yonet immediately after less than a year in office. Additional findings that he was unaware of in the conduct of the company, and sought to detach himself from what was happening in the company.
Kahlon is not the only one who claims that he did not know what was going on in the business of United Credit . As far as is known, the day before his resignation, Shlomo Isaac, the company’s founder and one of its owners, sent a letter to board members, including Chairman Kahlon, in which he explains that in light of the tests presented so far to the board, he as director (Isaac) feels exposed to lawsuits.
Isaac owns about 10% of Yonet’s shares privately and about 24% together with his controlling partners, Shai Panso and Tzachi Azar, through the private Yonet Credit company. In a letter from the board of directors, he demanded the assistance of legal advice and another firm of accountants, who will examine the findings in depth and explain what has happened in the company since it became public, and especially in the past year.
The current investigation at Yonet began about two and a half weeks ago, after the preparation of its financial statements for the first quarter of the year revealed deficiencies in the amount of NIS 8 million in Yonet’s check activity at the Nazareth branch compared to the book entry. Preliminary investigations conducted following the deficiencies also revealed that the company’s CEO and one of its owners, Tzachi Azar, took a sum of about NIS 70,000 from Yonet Credit’s money without reporting it, which led to his taking leave of absence until the matter was clarified.
“The findings fell on Isaac like thunder on a clear day”
Several days passed and further investigations revealed that Lyonet had additional financial exposure, the extent of which she did not specify, but was defined as “significantly higher in relation to the company’s previous reports.” It is estimated that these are amounts of millions of shekels, and perhaps even tens of millions, given by the company as loans that will be difficult to repay. Some of those loans were given by her on the guarantee of the controlling shareholders of the company.
A document published by the rating company S&P Maalot on March 28 this year, about two months before the affair broke out, states that “as part of the demarcation agreement between the private company and the public company, both of which are controlled by the company, five loans totaling NIS 55 million were transferred to Public Credit “To a limited number of borrowers, which as of December 31, 2021, constitute about 30% of the total credit portfolio.”
While in the case of the missing checks at the Nazareth branch, the controlling shareholders undertook to cover the amount that will be missing from their pockets at the end of 2022, this is a much higher existing exposure.
“The findings fell on Isaac like thunder on a clear day,” his associates say. “Although he signed as guarantor of the loans and checks for which the test was conducted, things were not communicated to him along the way and what he does not know as a director, he could not decide on, and he is no different from the other directors. “In the findings of the expert appointed by the board. As a shareholder and one of the controlling shareholders, he was surprised and had to see how his investment was harmed.”
They say that Kahlon was an active chairman of the board, and dealt with the company’s day-to-day affairs, and they also mention that the company appointed Yoav Sabar, former director of the control, enforcement and legislation department, as a compliance officer, when he was also supposed to oversee the regular conduct. .
Yonet executives hold a liability policy for officers and directors (renewed on the day the company’s irregularities were discovered) with a liability limit of up to $ 5 million for one case or for an entire period.
Where are the accountants, and where is the Securities Authority
Yonet Credit reports are supervised and audited by the accounting firm Ernst & Young Israel (Kost Forer Gabay and Kassirer). Yonet’s general meeting even extended the agreement with the ministry on May 1 this year. The findings of the tests carried out by Alkalai CPA will raise the question of why there were no suspicions of irregularities in the company’s finances during the regular tests performed by the accountants over the past year. Ernst & Young said in response that the matter was under investigation.
The Securities Authority has not yet officially announced whether to open an investigation into what is happening at Yonet Credit, but it seems that such an investigation is only a matter of time, after the company reported more and more irregularities in its recent conduct, including robbery with gun threats on a courier. Shortly before reporting the missing millions in its check activity in Nazareth. It seems that the Securities Authority will be obliged to open an investigation, especially when the final stamp is received from the external auditor’s findings.
The person who will ultimately decide to open the investigation is the chairman of the authority, Anat Guetta. Although Guetta herself was appointed to the position by Kahlon, as finance minister, this does not prevent her from announcing the examination, not on normal days and certainly not if They did occur before Kahlon took office, as the former finance minister claims.
Will Giza cancel the investment agreement
At the height of the storm around the company, three days before Kahlon’s resignation, the company published a report according to which the controlling shareholders of Yonet, Shai Panso and Shlomo Isaac, signed an agreement to sell 18% of their private holding in the company to the consulting firm Giza, for about NIS 10 million.
In light of recent developments, there are estimates in the market that Giza may announce its withdrawal from the deal in the coming days. So far no final decision has been made at the consulting firm, and they will wait for the final test results. However, if there is a suspicion of committing criminal offenses in Yonet’s conduct, or a suspicion that Giza will later be forced to conduct as a controlling shareholder or shareholder in Yonet claims against third parties for events that have occurred in the past, it will dismiss the paper of principles it signed.
Either way, trading in the Yunet stock, which has returned investors a 75% loss in the past year, was suspended by the stock exchange on Thursday for the next few days (at least until the stock exchange board meeting later this week). The value of the company before the suspension of trading was only about NIS 44 million.