Construction Generations: Approval of Enforcement Arrangement with Securities Authority – Capital Market

The Administrative Enforcement Committee approved an enforcement arrangement between the Securities Authority and Dori Construction, as part of the administrative procedure in its case, which dealt with the inclusion of misleading details in six financial statements. After admitting the details, the company was imposed a financial sanction of NIS 1.5 million in practice and a sanction of NIS 1.5 million on probation for transfers.

As part of the arrangement, the company admitted to including misleading details in six financial statements of Dori Benya that were published in the years 2012-2014. The misleading details that were discovered resulted in Dori Banya being forced to perform a “restatement” of the reports during 2014, totaling hundreds of millions of shekels. The errors in the statements were due to the deliberate use of improper accounting practices in determining the Company’s cost and revenue estimates.

The following enforcement measures were imposed on the Company for these offenses: NIS 1.5 million, actual financial sanction, conditional financial sanction in the amount of NIS 1.5 million, measures to prevent the recurrence of violations, including the formulation of a reported procedure with emphasis on preparing financial statements, within three months of approval of the arrangement. By the composition of the Administrative Enforcement Committee.

As part of the arrangements approved by the committee, actual fines of NIS 200,000 were imposed on Avrahamov, as well as a similar conditional sanction, and the prevention of the tenure of a senior official in an actual supervised body for two years. The accountant Kimchi was charged with two of the six violations, a financial sanction of NIS 150,000 in practice and a similar amount on probation.

Between the years 2012-2014 Dori Banya was a public company and traded on the Tel Aviv Stock Exchange. The company was part of a chained group of companies and was considered one of the largest construction companies in the country. The company was engaged in the management and execution of construction work for residences, offices, industry, commerce and hotels and more. According to the statement of claims, the company worked during the relevant period on about 35 projects totaling more than NIS 40 million, each. In previous years, control of the company was transferred from the Gazit Globe Group to the Luzon Group, and today the company is a private company, and not a reporting corporation. In July 2019, trustees were appointed under the Insolvency and Economic Rehabilitation Law, and a temporary stay of proceedings was issued against her. It should be noted that the enforcement arrangement was concluded eight months before Dori entered the freezing process.