State summons Elovitch, other ex-Bezeq executives for pre-indictment hearing

The State Prosecutor’s Office on Sunday summoned Bezeq telecom’s former majority shareholder Shaul Elovitch to a pre-indictment hearing to respond to charges of fraud, obstruction of justice and violations of Israel’s Securities Law.

Several other former Bezeq employees and senior members were also summoned on similar offenses, including former CEO Stella Handler; Elovitch’s son and former company director Or Elovitch; former secretary Linor Yochelman; the former CEO of Yes, Bezeq’s satellite TV subsidiary, Ron Eilon; former Yes CFO Mickey Naiman; and former strategic adviser Eli Kamir.

According to the State Attorney’s Office’s Taxation and Economics Division statement announcing the move, Handler and Kamir are suspected of having committed fraud and breach of trust for their conduct in a pair of corruption cases that led to the probe known as Case 4000.

In that case, Prime Minister Benjamin Netanyahu is suspected of an illicit quid pro quo with Elovitch — who was also the owner of the Walla news website — that continued for about four years, until early 2017. The alleged understanding saw Elovitch ensure favorable coverage of Netanyahu at Walla, Israel’s second largest news site, and critical coverage of Netanyahu’s rivals, especially in the 2013 and 2015 election periods.

Prosecutors say that, in return, Netanyahu intervened in regulatory and other business decisions relating to Bezeq that benefited tycoon Elovitch to the tune of NIS 1.8 billion — some $500 million.

Netanyahu is scheduled to attend his own pre-indictment hearing on October 2-3, which will also cover two other corruption probes in which the prime minister faces additional fraud and breach of trust charges.

Last month, state prosecutors held a pre-indictment hearing for two key suspects in Case 4000, Elovitch and his wife Iris.

The first of the two probes that led to Case 4000 concerns the fraudulent expense of NIS 110 million ($31,154,750) out of a possible NIS 170 million ($48,148,250) from Bezeq’s budget as an exchange for Elovitch selling his shares in Yes to Bezeq in a 2015 stakeholder transaction.

In his recommendation to indict Netanyhu in Case 4000, Attorney General Avichai Mandelblit wrote that the prime minister sought to expedite that shareholder transaction in exchange for positive coverage from Walla.

The Taxation and Economics Division believes there is sufficient evidence to prove that senior Bezeq executives finagled the company’s performance to show that they had met their quarterly objectives in order to have the deal fast-tracked. In exchange, they were given bonuses and promotions from Elovitch.

The second probe that ushered in Case 4000 surrounds allegedly fraudulent committees that Elovitch set up at Bezeq to approve transactions of stakeholders he wanted. This was done through the telecom firm’s leaking of sensitive business information to the other parties in the transactions, which were often private companies under his control.

Among the agreements approved in this fashion was the merger of Bezeq with Yes, a development that eventually went ahead and is said to have earned Elovitch hundreds of millions of dollars.

Elovitch’s attorney Jack Hen criticized the timing of the State Attorney’s Office announcement, saying it could have waited until Case 4000 proceedings against Elovitch had been completed.