Delek Motors general manager Michael Ron and his deputy, Gil Agmon, were arrested today and released on bail, under restrictive conditions, by the Jerusalem magistrates court. The two are under investigation on charges that Delek Motors evaded paying NIS 100 million in taxes. Delek Motors is the Mazda importer to Israel.
In 1993-97, full taxes were levied on every car imported to Israel outfitted with air conditioning, at a rate of 95% purchase tax, plus 7% customs duty. The rate of customs duty on air conditioners alone is 10.5%.
The appeal for arrest and release on bail, submitted to the court by Customs Authority investigators Michel Biton and Ofer Soferi, stated that in practice, Delek Motors imported the air conditioner separately, out of tax considerations. Installation was then done in Israel. Examination of the import records shows that air conditioner prices, as declared to the Customs Authority, represented 20% of the car price. The Customs Authority says that, on the face of it, the matter appears dubious.
According to the Customs Authority, an undercover investigation of the company and its managers was conducted, after which an overt investigation was carried out on Tuesday. Several documents were uncovered during the investigation, at the company’s offices and the suspects’ homes, which gave rise to suspicions that car prices were discounted during importation, while air conditioner prices were inflated. Another suspicion raised by the investigators is that the price of air bags and automatic braking system (ABS), were inflated and presented as higher than their true price. These systems are both tax-exempt.
The investigation findings also raise suspicions that Delek Motors, through the two suspects, evaded tax payments amounting to NIS 100 million. A stay of exit from the country was issued against both men, who were released on NIS 5.5 million bail.
Ron and Agmon denied all charges made against them, but agreed to the terms of their release on bail. Sources within the company claimed today that, as far as they knew, similar investigations are being conducted against at least one other car importer.