ISA grills El Al managers in insider trading affair

El Al, photo: Sivan Farag

El Al shareholder and director Pini Ginsburg has been released to house arrest.

The fog surrounding the Israel Securities Authority (ISA) investigation of an insider information affair at El Al Israel Airlines Ltd. (TASE: ELAL) has begun to disperse. Yesterday and today, people connected to the airline, among them company officers, were questioned at the ISA's offices in Tel Aviv, some as suspects and some as witnesses. Among those questioned was Pinchas (Pini) Ginsburg, who owns 8% of El Al (a stake worth some NIS 46 million), and who is also one of the owners of the Hillel Tours travel agency.

Ginsburg was indicted by the ISA on charges relating to the cartel of memorial trips to Poland. He is accused of, among other things, operating a cartel, fraudulent receiving in aggravated circumstances, money laundering, and bribery.

The indictments in that affair attribute to Ginsburg and the other accused the commission of crimes in aggravated circumstances because of the long period of time in which the alleged acts were committed, the benefits that the accused derived, and the nature of the product - trips by Israeli high school students to Jewish and Holocaust sites in Poland - and its educational aspect.

In the current affair, Ginsburg is suspected of offences connected with insider information. He has been released to house arrest with the ISA's agreement.

Besides Ginsburg, the ISA has questioned El Al CEO Gonen Usishkin, El Al VP Maintenance and Engineering Yosef (Yossi) Barazani, deputy CFO Ariel Schwartzberg, and company treasurer Yacov (Yancale) Shahar. It is still not clear which of these people was questioned as a witness and which as a suspect, and whether arrests will be made.

No response to the report has been received from El Al. El Al is controlled by Knafaim Holdings, owned by David Borovich and Tami Mozes-Borovich.

El Al's share price has declined by more than 20% so far this year. Its market cap is NIS 580 million.

Exposure of the ISA investigation comes just days before El Al is due to release its third quarter financials. In the first half year, the airline lost $62 million, 4.5 times its loss in the first half of 2017, because of rises in fuel and wage costs.

Adv. Ofir Straschnov of Cohen, Straschnov & London, who represents Barazani and Shahar, said, "Mr. Barazani and Mr. Shahar were questioned as witnesses only, and they are not suspected of anything. Both of them cooperated fully with the enforcement authorities."

It is stressed that the investigation is in the early stages, and that all all concerned are presumed innocent until proven guilty in a court of law.

Published by Globes, Israel business news - en.globes.co.il - on November 15, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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El Al, photo: Sivan Farag
El Al, photo: Sivan Farag
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