This morning, the State Attorney announced that it has formulated draft indictments for violations of the Securities Law against Israel Phoenix Assurance Company chairman Joseph Hackmey and general manager Bar Kochva Ben Gera in the La Nationale affair. By contrast, the draft indictment against La Nationale CEO Moshe Pereg included fraud charges, based on the penal code.
An Israel Phoenix statement this morning said the charges refer to misleading details in the La Nationale financial reports and prospectuses issued during the 1992-95 time period. The charges are relatively minor, as they allege violations of the Securities Law, rather than more serious Penal Code violations.
Legal sources expressed their astonishment at the intention to submit indictments while Pereg’s trial, presided over by Haifa District Court Judge Gideon Ginat, is still underway. They said it is virtually certain that the verdict in the Pereg trial will have a direct influence on the indictments against Hackmey and Ben Gera. La Nationale deputy general manager Micha Rosenblatt is a co-defendant in the Pereg trial.
If Pereg is completely exonerated, it would not be logical to put his superiors on trial. Even if Peleg is found guilty, the Court may still rule that he hid his acts from superiors, in which case there is no reason to indict them.
The statute of limitations will not affect the Hackmey and Ben Gera cases, because the investigation ended three years ago, and the statute of limitations law allows people to stand trial for crimes committed up to seven years before the conclusion of the investigation. Pereg’s trial is now in the defense stage, which can be expected to end in a few months. The verdict will only be handed down in 2002, in light of the complexity and amount of material in the case, currently amounting to 20,000 pages of protocol.
The La Nationale affair occurred in 1992-95. Misleading details, including exaggerations of the number of actual policies sold, were published in the insurance company’s financial reports and prospectuses about the sale of insurance policy packages to kibbutzim and moshavim. The company also allowed kibbutzim to postpone payments for several years, without noting these details in the company’s financial reports. When the payments came due, many of the insured had not paid their debts to the company, thereby causing heavy losses, which ultimately resulted in La Nationale being taken over by Hadar and Israel Phoenix.
Published by Israel's Business Arena on 13 May 2001