A well-planned fraud that includes fixing a tender for operating duty-free stores at Tel Aviv's Ben Gurion Airport, covertly helping another company win a tender for operating duty-free stores at Sydney Airport, secret, forbidden deals, passing confidential information, and illegally blocking one of the bidders in the Ben Gurion Airport tender - these are the claims in a NIS 500 million lawsuit filed in the Tel Aviv District Court yesterday against James Richardson. The lawsuit claims that James Richardson illegally conspired with German company Gebr. Heinemann to skew a tender held in 2013 for operating duty-free stores at Ben Gurion Airport.
The suit was filed by a company incorporated in Luxembourg called Alfa and controlled by Alexander Mashkevich. Kazakh-Jewish businessman Mashkevich, now an Israeli citizen, is one of the richest people in Israel. His wealth mostly derives from metals and mining.
At the heart of the lawsuit is the tender held in 2013 for operating duty-free stores in Ben Gurion Airport. In normal times, with over 22 million passengers passing through the airport annually and annual revenue of some $350 million, the duty-free concession at Ben Gurion is among the most profitable in the world.
The lawsuit, filed through Gil Brandes, Yoav Razin, Matan Kovacs, and Ram Pardes of Naschitz Brandes Amir, claims that in 2012, Gebr. Heinemann made a strategic agreement with Alfa to cooperate on duty-free retailing and participation in the 2013 tender to operate duty-free stores at Ben Gurion Airport. The existing concessionaire at that time, and in fact for decades until then, was James Richardson. James Richardson was the main competitor to the Alfa-Heinemann partnership in the tender.
According to Alfa, shortly before the deadline for submitting bids, Heinemann suddenly insisted on a substantial reduction in the Alfa-Heinemann bid. Although Alfa tried to persuade Heinemann that the lower bid could not win the tender, and even offered to raise it at its own expense, Heinemann refused.
As Alfa foresaw, the Alfa-Heinemann bid failed to win the tender. The winner was James Richardson, with a bid slightly higher than that of Alfa-Heinemann.
The concession awarded to James Richardson was supposed to be until 2020, but in 2017 the company threatened to pull out of the airport, alleging that the royalties collected from it were too high, and the Israel Airports Authority issued a fresh tender.
James Richardson announced that it would bid in the tender with Alfa's former partner Heinemann. The pair won the new tender, and was awarded the concession for ten years. According to Alfa, both this win and James Richardson's win in the 2013 tender were part of a well-planned fraud.
According to the lawsuit, a year after losing the 2013 tender, Heinemann won a tender to operate duty-free stores at Sydney Airport. Alfa claims that it was assumed that James Richardson, as an Australia-based company, would bid in this tender. It had participated in the previous tender in 2006 and had been taking steps to expand its business and win back duty-free activity in Australia, and had received concessions in several other places in the country. When it came to the time to submit bids, however, James Richardson refrained from doing so.
For its part, Heinemann called its win in the Sydney Airport tender "the cherry on the cake". Thus, Alfa alleges, the circle was completed: James Richardson helped Heinemann win the tender in Sydney by refraining from participating in it, as a quid pro quo for Heinemann's assistance in the 2013 tender in Israel.
Alfa alleges that James Richardson's actions constitute a breach of fiduciary duty together with subornation and assistance for breaching it, breach of contract, fraud, negligence, lack of bona fides, unlawful enrichment, and possible criminal breaches of competition law.
James Richardson stated in response: "James Richardson completely denies Alfa's claims, which are false, misleading, and baseless. James Richardson stresses that in all its conduct in relation to the Israel Airports Authority tenders in 2013 and 2017 for operating the duty-free stores at Ben Gurion Airport, as in other tenders, it acted precisely in accordance with the requirements of the processes and of the law. James Richardson will examine all legal steps in response to these false allegations."
Published by Globes, Israel business news - en.globes.co.il - on April 27, 2020
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