Insurance companies Israel Phoenix and Hadar Insurance, along with their managers will pay NIS 7.2 million in fines and back taxes to the Income Tax and Property Tax Division, Israel Phoenix announced today. The move will bring the tax authority's investigation of the so-called La Nationale affair to a close.
The tax authority was investigating payments made by Israel Phoenix and its subsidiary Hadar to reinsurers, the now-defunct insurance company La Nationale, after allegedly bogus policies were issued. This was done under former La Nationale CEO Moshe Pereg. The current Israel Phoenix general manager, Bar-Kochva Ben-Gera, was at that time general manager of Hadar, parent company of La Nationale. The CEO of Israel Phoenix Insurance at that time was Itamar Borovitz.
Ministry of Finance Income and Property Tax Division claimed that due to false records of payments made to the reinsurers, Israel Phoenix evaded paying NIS 20 million in taxes. At the time the affair came to light, Ben-Gera and Borovitz were arrested and released on bail. Israel Phoenix's current controlling shareholder Jacob Shachar signed Ben-Gera's bail bond.
Israel Phoenix will pay NIS 1.5 million to conclude the criminal proceedings, while Hadar Insurance will pay NIS 1 million. Israel Phoenix will pay NIS 2.8 million to conclude the civil proceedings, and Hadar will pay NIS 1.7 million.
In accordance with the companies' wishes, Ben-Gera and Borovitz will pay NIS 100,000 each. All payments will be made without an admission of guilt from either the companies or their managers regarding the charges levied against them, justified by their need to retain the group's good name, and avoid long, drawn-out legal deliberations.
Published by Globes [online] - www.globes.co.il - on 13 October 2003