Three banks gave

Noga Electrotechnika (TASE:

NOGA

) and

Noga Electromechanical Industries (TASE:

) NIS 11.15 million in bank guarantees, paid to the order of three companies that are not listed in the Companies Registrar, to cover work on a Be'er Sheba commercial center that doesn't exist.

The banks that provided the five guarantees were

United Mizrahi Bank (TASE:

MZRH

),

Union Bank of Israel (TASE:

UNON

) and

Bank Hapoalim(TASE:

POLI

).

It is unclear where the money went or who benefited from it, or if Noga's ensuing credit line was fully exploited and by whom.

The Noga group received a stay of liquidation proceedings from Tel Aviv District Court on Tuesday and the court-appointed trustee urgently asked the court yesterday to instruct the banks not to redeem the guarantees whose first repayment date was slated for yesterday. The court granted a 21-day reprieve.

The trustee noted that under usual circumstances, the stay order would have protected the companies from any bank measures. But the incident may justify revocation of the guarantees as they were apparently not used in good faith.

The request indicates the guarantees were taken to cover construction of one or possibly several commercial centers in Be'er Sheba.

The beneficiaries are Shlomo Haver Ltd, GIL Ltd, and GEL Ltd, all represented by Haifa attorney Yaacov Haver.

However, the trustee found in the past two days that the Noga group has no commercial center construction projects in Be'er Sheba for the three companies. Moreover, the review found the companies do not appear in the lists of the Registrar of Companies.

The trustee fears, based on still-unsubstantiated information, that the work guarantees essentially served as collateral for credit injected into the Noga conglomerate. It is unclear what use was made of the money, if it was ever received.

The trustee estimates that under these circumstances - with the reason for Noga's request of the guarantees mysterious and the deal irregular - it is unlikely the proper approvals were received.

It appears that the Noga conglomerate, recognized by the banking sector as a real estate developer, managed to obtain guarantees to enigmatic companies for a fictitious real estate project, without a thorough examination by the banks. The trustee plans to further investigate the affair in the coming days.