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Thursday, February 6, 2014

Five top Israeli real estate developers accused of bribing government

A gag order was lifted on Wednesday on the identities of five real estate developers who allegedly bribed lawyers who worked for the city governments of Rishon Letzion and Rehovot.

Under investigation for fraud, bribery and breach of trust are cousins Roni and Mishael Yitzhaki, who have a controlling stake in the Yitzhaki group; Manor Gindi and Uri Levy, the controlling shareholders and joint CEOs of Gindi Investments; and Ami Peretz, the controlling shareholder at Bonei Hatichon Civil Engineering & Infrastructures. The name of an additional suspect was not released for publication.

The case involves three projects, two in Rishon Letzion and one in Rehovot. The developers are suspected of bribing Royi Bar, an outside legal counsel for both towns, to expedite approval of the projects by local zoning committees. On Wednesday afternoon five of the suspects were released to one week’s house arrest.

Peretz was questioned and released on Tuesday, without being brought before Lod District Court Judge Shira Ben-Shlomo. Bar was also released on Wednesday, after being ordered previously to remain in custody through Thursday. Bar is married to Roni Yizhaki’s sister.

The police said the early release of the subjects to house arrest was based on the “appropriate balance between the needs of the investigation and the rights of the suspects and is not related to the developments in the investigation or the evidentiary basis upon which the court made its decision to extend the remand.”

Gindi denied engaging in illegal activities. “Gindi Investments is a company that operates with transparency and honesty,” he said after his release, adding, “I believe the truth will come to light. The company was included in the affair by mistake. We have no part in the affair. I have no doubt this is what will be found in the end and the company will be found innocent.”

In a filing to the Tel Aviv Stock Exchange on Wednesday morning, Gindi Investments said the firm’s third controlling shareholder and joint CEO, Eyal Friedman, was also questioned by police in connection to the case.

“To the best of the company’s knowledge ... no improper activities occurred and when the facts are established it will be shown that [Gindi, Levy and Friedman] were wrongly accused,” Gindi Investments said in its filing.

Bar’s lawyer also proclaimed his client’s innocence.

The largest of the projects implicated is the Yitzhaki group’s Hatzerot Hamoshava development in Rehovot, where 432 homes were originally planned. The group acquired the building site and winning a tender with a bid of 71 million shekels ($20.1 million). In June, the local planning and building committee approved an expansion of the project to 620 units, on condition that some of the apartments were to be sold at below-market prices.

Mishael Yitzhaki’s lawyer, Jacques Chen, said his client never provided illegal improper favors to a lawyer for the city − an apparent reference to Bar − and this would be clear to the police from their investigation.

The two Rishon Letzion projects were completed years ago. One is the 25-story White project with 77 apartments, in which Gindi acquired a half-interest in 2006. Gindi Investments issued a statement denying any wrongdoing, adding that it was not involved in the public bidding process for the development and only got involved after planning approval had been obtained.

The final project implicated was Bonei Hatichon’s Rishon Haktana development, comprising three buildings with 216 apartments, construction of which began in 2004. In a statement, the company denied any wrongdoing, adding that the allegations relate to a project carried out about 10 years ago.

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