Question

Choose a firm that has been involved in a recent Foreign Corrupt Practice Act violations or the Sarbanes Oxley law violations controversy ( get 2018 recent event) - Analyze in 300-500 words

a) Describe the firm's operations

b) Identify the firm's CEO, CFO and external auditors

c) Denote the circumstances surrounding the violation.

Answer 1

a) Elbit Imaging Ltd. (Elbit) - an international holding company with activities focused on real estate development based in Petach Tikva, Israel . Also active in real estate, medical imaging, hotels, shopping malls, and retail.

   Its Major Holdings in various sectors are :

1) Shopping malls -

             Plaza Centers N.V. - a developer of shopping and entertainment centres in the Central and Eastern Europe region.

2) Hotels -

             The Company has 2,332 rooms in operating hotels, in the UK, Netherlands, Belgium and Romania.

3) Bio-tech and medical devices -

• Insightec Ltd.
• Gamida Cell Ltd.

4) Mega projects -

• Casa Radio (Dâmboviţa Center), Bucharest, Romania
• Dream Island, Budapest, Hungary

5) Hi-tech -

• Olive Software Inc. (18.33% holding) - a leading provider of digital edition and digital archiving solutions for the publishing industry.
• Easyrun Ltd. (47.79% holding), a provider of call centers software solutions.
• Varcode Ltd. (31% holding) a provider of Smart-Barcode solutions for logistic food supply-chain.

6) Retail -

Elbit Trade and Retail Ltd. - holds the Gap (clothing retailer) and Mango (clothing) franchises in Israel.

B) CEO - Mr. Ron Hadassi

    CFO - Mr. Yael Naftali

    External Auditors - Ernst and Young Israel – Kost Forer Gabbay and Kasierer (“Ernst and Young Israel”), a firm of certified public accountants in Israel and a member of Ernst and Young Global

C)

According to the SEC Cease-and-Desist Order (the Order), from 2006 to 2011, Plaza attempted to obtain development rights in the Casa Radio Project, a large real estate development in Bucharest, Romania. In August 2006, a key company executive who owned 50 percent of Elbit's equity, served as Elbit's CEO and Plaza's Executive Director, and sat on the board of directors for both companies (the Executive), directed Plaza to enter into an agreement with a third-party consultant (Consultant 1). Plaza allegedly engaged Consultant 1 to help obtain an invitation from the Romanian government to participate in the Casa Radio Project and to acquire the necessary government approvals to perform development work. In February 2007, the Romanian government allowed Plaza to purchase a 75 percent interest in the Casa Radio Project for approximately $40 million. Plaza also agreed to develop a Romanian public authority building at Plaza's expense in exchange for the interest in the Project.

In September 2011, the same Executive allegedly directed Plaza to enter into another contract with a third-party offshore consultant (Consultant 2) to assist in acquiring governmental approvals and to help Plaza purchase an additional 15 percent interest in the Casa Radio Project.

According to the SEC Order, neither Consultant 1 nor Consultant 2 underwent due diligence. Between 2007 and 2012, Plaza allegedly paid Consultant 1 and Consultant 2 approximately $14 million. The SEC noted that both Consultants were paid despite having no supporting documentation that they performed services.