Agrexco liquidators sue State of Israel

Agrexco  photo: Tamar Matzapi

The liquidators allege that the state behaved "like the lowest of thieves" in the bankruptcy of Agrexco Agricultural Export Co. Ltd.

The State of Israel behaved "like the lowest of thieves" in the affair of the insolvency of Agrexco Agricultural Export Co. Ltd. (which traded as Carmel Agrexco), abandoning the company and its creditors "with a shrug of the shoulders". This was after decades of using the company as a tool for promoting the state's policies, at the whim of successive ministers of agriculture, "as though the creditors had outlived their usefulness and could be sent away, without their money." These are some of the allegations in a suit filed against the state recently by the liquidators of Agrexco, which collapsed with a crash five years ago, claiming that the state was responsible for the collapse.

In the lawsuit, the liquidators attribute responsibility for Agrexco's debt, amounting to some NIS 500 million, to the behavior of the representatives of the state who managed the company, among them successive agriculture ministers, and request the court to lift the veil of incorporation between Agrexco and the state, the Plant Production and Marketing Board, and the Egg and Poultry Board, which they claim caused the company's collapse.

The state and the boards' indifference, the liquidators say, meant the swift disappearance of a company that for decades had been the State of Israel's flagship in agricultural exports, and had been one of the largest and most respected agricultural produce marketing companies in the world.

"There is no doubt that the abandonment of Agrexco by the State of Israel, and the abandonment of its creditors to huge losses, is one of the most serious affairs that the Israeli economy has ever seen. Sadly, after three years of inquiries and thousands of hours of investigations by the liquidators, there is no avoiding the conclusion that the state's behavior in this affair amounts to legal and financial degeneracy on the part of the state (particularly insofar as the state's failed attempt to hide, cynically and unlawfully, behind Agrexco's corporate veil is concerned) and a betrayal of values by the state (which in legal language is sometimes called extreme lack of bona fides)," the statement of claim says.

According to the liquidators, headed by Dr. Shlomo Nass, the state, the Plant Production and Marketing Board, and the Egg and Poultry Board "behaved towards Agrexco and its creditors unyieldingly and insensitively, out of complete indifference to the damage they caused by their acts and/or omissions to savers and investors in bonds, to hundreds of farmers, suppliers and service providers who lost their money, and some of them even their livelihoods, through their reliance on the state and its bona fides, and this despite calls by the courts and the pleas of the various Knesset committees that dealt with the matter and with the creditors who were collapsing financially."

The liquidators' lawsuit is based on the report of an investigation submitted to the Tel Aviv District Court two weeks ago, details of which were not allowed to be published until today.

In the report, the investigators come to the conclusion that the state, the Plant Production and Marketing Board and the Egg and Poultry Board, which controlled Agrexco, holding an absolute majority of the shares and the rights in it before it failed, made improper use of the company to promote national interests and other interests of theirs; caused it to act contrary to business ends; interfered unlawfully in its affairs; caused it to make forbidden dividend distributions; and caused it to be run with a dangerously low level of shareholders' equity, to the point that it collapsed.

Published by Globes [online], Israel business news - www.globes-online.com - on May 25, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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Agrexco  photo: Tamar Matzapi
Agrexco photo: Tamar Matzapi
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