Elbit Ltd. charged in the US for corruption allegations in Romania deal

Anca Alexe 14/03/2018 | 12:25

The Securities and Exchange Commission in the US (SEC) announced that it has charged Israel-based Elbit Imaging Ltd. for violating the books and records and the internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA).

According to the institution, Elbit and Plaza Centers NV, an indirect subsidiary over which Elbit has functional control, paid millions of dollars to third-party offshore consultants and a sales agent purportedly for their services related to a real estate development project in Romania and the sale of a large portfolio of real estate assets in the US.

The real estate development in Romania that the SEC refers to is the abandoned building known as “Casa Radio”, in the Eroilor neighborhood of Bucharest, which Elbit had planned to acquire in order to turn into a shopping mall.

The SEC continues: “Elbit and Plaza made these payments even though they lacked evidence that the consultants and the sales agent had actually provided the contracted for services. In addition, they failed to devise and maintain sufficient internal accounting controls to provide reasonable assurances that the companies’ funds would only be used as authorized, rather than the funds being embezzled or used to make corrupt payments.”

Without admitting or denying the findings, Elbit agreed to a cease-and-desist order and to pay a USD 500,000 civil money penalty.