The Securities and Exchange Commission announced on Friday that it charged Israel-based Elbit Imaging for violating the books and records and the internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA).
According to an SEC settlement order, Elbit and Plaza Centers NV, an indirect subsidiary, 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 real estate portfolio in the United States.
The SEC said that Elbit and Plaza made the $27 million in payments even though they lacked evidence that the consultants and the sales agent had actually provided the contracted-for services.
In addition, Elbit and Plaza “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.”
Plaza’s legal department had limited involvement with or supervision of contracts entered into between Plaza and third-party consultants or agents, the SEC said. In addition, Elbit and Plaza did not have policies and procedures in place to detect corruption risks and provided little, if any, anti-corruption compliance training to employees during the time the payments occurred (2007 to 2012).
Elbit is an Israeli incorporated company with its headquarters located in Petach Tikva, Israel. Its shares trade on the Tel Aviv Stock Exchange and NASDAQ.
Plaza, an indirect subsidiary of Elbit, is a Central and Eastern European developer of shopping and entertainment centers. It is incorporated in the Netherlands and its securities are listed on the London Stock Exchange, the Warsaw Stock Exchange, and the Tel Aviv Stock Exchange.
Without admitting or denying the findings, Elbit agreed to a cease-and-desist order and to pay a $500,000 civil money penalty. In determining to accept the offer, the SEC said, it considered “Elbit’s self-reporting, cooperation, remedial acts, and that it is in the process of winding down operations by selling its principal assets.”