The illegal clearance of billions for gambling and pornographic websites by Israel Credit Cards Ltd. (ICC-Cal), and the grave suspicions referred to by the State Attorney's Office as "bribery, fraud, and money laundering amounting to billions of shekels" still give rise to several unanswered questions about those involved in the affair. For example, why were no proceedings instituted against businessman Nathan Jacobson, one of the leading figures in the affair, who is suspected of bribing former ICC-Cal CEO Boaz Chechik for ICC-Cal's clearance of the gambling and pornographic websites of Paygea, owned by Igada, and what happened to the estimated NIS 200 million raked in by somebody as a result of the "side venture" initiated and operated by Chechik, his good friend Albert Alhadaf, and Jacobson?
Meanwhile, a legal proceeding is taking place in Canada between Jacobson and his former lawyer, who is making allegations about Jacobson's supposed links with the FBI and the Mossad. The fact that the State's Attorney's Office is keeping mum about Jacobson adds to the air of mystery surrounding the affair.
Confidant of Netanyahu, sponsor of Maccabi Tel Aviv
Nathan Jacobson is a Jewish-Canadian businessman, about whom his lawyer said, "Few know how much money my client has donated to needy people in Israel in particular and to many organizations which help Israel, out of his genuine love for the country and its people."
Jacobson, who has contributed to a number of institutions in Israel, is proud of his close connection with Prime Minister Benjamin Netanyahu and, and is close to the leadership of the Canadian Conservative Party. He also portrayed himself as a liaison between Netanyahu's office and the Canadian Conservative Party, to whose candidates he donated money. He organized joint events of Israeli and Canadian politicians, and attended a political event at the Ottowa parliament in March 2012 with Netanyahu and Canadian Prime Minister Stephen Harper. In a press interview several years ago, he also boasted of having introduced Canadian Minister of Immigration Jason Kenney to Netanyahu.
In 2007, around the time Jacobson was suspected of Internet clearance violations in the US, he began clearance operations in Israel. He founded the Paygea clearance group, incorporated in Gibraltar, and began intensive activity, offering businesses attractive commissions. Paygea was also a sponsor of the Maccabi Tel Aviv soccer team. At the same time, Jacobson established a close relationship with then ICC-Cal CEO Boaz Chechnik.
A series of investigative articles published in "Globes" on the ICC-Cal affair also revealed a business initiative by Chechnik and Jacobson. In mid-2008, they decided to establish a clearance agency in which ICC-Cal would be a partner with Jacobson and businessman Albert Alhadaf, a friend of Chechnik's active in real estate in Croatia. This deal was not reported, and was not approved by the Bank of Israel and the ICC-Cal board. Publication of the initial particulars concerning it in "Globes" caused consternation among ICC-Cal directors and at Israel Discount Bank (TASE: DSCT).
According to information obtained by the police, the form of this changed a number of times. It was initially agreed that Jacobson would establish a central clearance corporation that would receive a relatively low buy rate from ICC-Cal, and charge businesses a relatively high sell rate, with the balance to be divided between Jacobson and ICC-Cal.
When they realized that such a deal would not be approved by ICC-Cal management, however, they looked for a different arrangement. The turnabout occurred when it was decided to establish an independent "side venture" in the framework of ICC-Cal's clearance system without presenting it to ICC-Cal management, and without obtaining authorization for it. Under the agreement, which was oral, Alhadaf was brought in, and it was decided that Jacobson would get 47.5% of the profits and Alhadaf would keep 52.5% in a trusteeship, of which 10% would be kept for him in return for maintenance services. Following the initial report of this deal in "Globes," VP finance Shahar Sagiv (who is not among those expected to face charges) was fired for not noticing the activity of the "side venture."
The police attempted to estimate the monetary value of the "side venture" that operated under ICC-Cal's nose for three years, from 2008 until 2010. Professional sources said that amounts had been cleared ranging from NIS 500 million to NIS 1 billion a month. The clearance margin for the entrepreneurs was 2%, so that Alhadaf should have received 1% of the clearance. A cautious estimate was that Alhadaf had probably made NIS 200 million on the "side venture," but it is now unclear how the money was distributed, and to whom. The "side venture" affair was investigated by the Israel Police Lahav 433 economic crimes division in Lod headed by Superintendent Yossi Tzafir. Following the recommendation by the police to indict, the State Prosecutor's Office announced last week that it intended to indict Chechnik and Alhadaf for accepting bribes in this affair. No such intention, however, was announced concerning Jacobson, who was also allegedly involved.
"A threatening management regime"
The State Attorney's Office announced, "In the affair, Chechnik and Albert Alhadaf, his good friend, solicited and received a bribe with the help of VP Steve Greenspan from Canadian businessman Nathan Jacobson, owner of the Paygea company, which incorporated under it dubious Internet commercial websites, which Jacobson asked ICC-Cal to clear.
"As part of his job as CEO of ICC-Cal, Chechnik made the agreement between ICC-Cal and Paygea contingent on Alhadaf receiving a controlling interest in Paygea from Jacobson and the resulting share of its profits. Alhadaf received millions of shekels in this way without contributing in any way or playing any role in the company's management.
"It is suspected that ICC-Cal fraudulently cleared businesses incorporated under Paygea, the vast majority of which consisted of high-risk electronic commerce, such as drugs without a prescription, pornographic content, dating websites, and tourism websites with an exceptionally high cancelation rate. In order to avoid sanctions by the international credit organizations against clearance for the exceptionally high rate of cancelations at businesses of this type, Chechnik and Greenspan developed a complex system of false representation to Visa Europe, which enabled ICC-Cal to continue clearing transactions for those businesses amounting to at least hundreds of millions of shekels.
"In the framework of this affair, Chechnik and Greenspan instituted a management regime of threats against their employees at ICC-Cal and its subsidiary, forcing them to go along with what they were doing. Chechnik and Greenspan's behavior led to four consecutive resignations by risk managers whose job it was to prevent the recording of irregular clearance activity." The State Attorney's Office announced that it intended to indict seven persons in the ICC-Cal affair, including Chechnit, Alhadaf, and Greenspan. The State Attorney's Office said that Chechnik and Alhadaf would be indicted for bribery, but the announcement made no mention of any intention to indict Jacobson, the third party involved in bribery in the framework of the "side venture."
In response to a question from "Globes" about why no action was being taken against Jacobson, the State Attorney's Office said, "The State Attorney's Office sent letters to the suspects in the case, and the press release disclosed all the particulars that can be provided at this stage."
It is unclear at the moment where Jacobson is residing. The Canadian press recently reported that he was in Russia. Jacobson's lawyer did not respond to a query from "Globes."
Greenspan's legal representatives, Advocates Yael Grossman and Sally Licht, said in response, "We will present our arguments at the hearing, and we trust and are confident that the State Attorney's Office will make the right decision."
Chechnik's legal representatives, Advocates Navit Negev-Ram and Iris Niv-Sabag, said, "All of Boaz Chechnik's actions were legal and in good faith, for the company's benefit. We believe that after consideration, the State Attorney's Office will see that Chechnik has committed no crime."
No response from Alhadaf could be obtained.
An ICC-Cal spokeswoman said, "We are studying the State Attorney's Office statement, and we will state our position to it. We believe that after considering the matter, the State Attorney's Office will accept our position, and decide against filing an indictment against the company." Adv. Natan Simchony represented ICC-Cal.
Published by Globes [online], Israel business news - www.globes-online.com - on April 28, 2015
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