The Israel Securities Authority is probing
Shrem, Fudim, Kelner (TASE:
) and its managers over financing for a settlement that the company reported in its financial statements.
That's according to Shlomy Golovinsky of
, who reported that a group of Floridan reptile hunters and skin merchants, had sued SFK and its chairman, Itschak Shrem, claiming breach of a marketing contract inked in 1997.
In its second-quarter report, SFK notes that it, Shrem and others had been sued for $1.2 million by the Floridans, and that the lawsuit had been averted by a $487,000 payment made by SFK. Thus far, the facts.
The ISA, Golovinski wrote, was probing suspicions that SFK had forked over money to make the lawsuit go away, even though it was not a party to the proceedings. Only its chairman was. The ISA, Golovinski continued, wondered whether SFK had paid to relieve its chairman of a personal encumbrance, whether it received the appropriate permits to do so, and whether it properly disclosed the whole affair.
An investigation by TheMarker has failed to show whether the ISA is merely looking into the matter, or if it officially opened an investigation. In any case, SFK denies any contacts from the ISA on the matter. But several interesting things did come to light.
Prey for lawyers
The story of SFK, Shrem and the crocodile hunters is being handled today at two levels. One is in the Florida courts. The other is at the Tel Aviv District Court.
The connection between the two lawsuits touches on one company: Clal Crocodile Farms, which used to belong to Dovrat-Shrem, a defunct partnership between Itschak Shrem and Aharon Dovrat. Today the private company belongs to an Israeli named Shlomi Ranot.
Clal Crocodile Farms, or CCF, was, according to the claim being heard in the U.S., the one that signed the agreement in 1997. The hunters claim that since the company then belonged to Dovrat Shrem, whose operations were taken over by SFK, the SFK is a legitimate target for their complaint, and so is its controlling shareholder, Itschak Shrem.
The agreement in 1997 was ultimately signed when a CCF representative came to Florida to buy merchandise from them, the hunters say. At first they turned him down, based on his unsavory reputation. Then, after learning that Dovrat Shrem had joined CCF, and after they obtained a favorable opinion of Itschak Shrem and his erstwhile partner Dovrat they deigned to ink the deal.
After that quarrel landed in the Florida court, an NIS 7 million lawsuit was filed in Tel Aviv by CCF and its current owner, Shlomi Ranot. The many defendants include two companies, Mangus and Biscay, which CCF claims belong to the SFK group.
In this suit, CCF says it was founded by the Clal conglomerate in the early 1990s. Then, Clal had been owned by Dovrat-Shrem. In 1992, CCF says, it was purchased by Biscay, which, it claims, is controlled by SFK.
Now: CCF says its operations include several crocodile farms around the world, and a marketing outlet in Italy for their pelts and other exotic skins. After the crisis that pelted the skins market with blood in 1997, CCF claims, Itschak Shrem wanted out.
Shrem agreed that his partner, Ranot, buy out CCF, which would retain its croc production operations. But the marketing business in Italy would be transferred to a new company, Carmel Crocodiles, owned by the Shrem group of companies.
Ranot and CCF claim that agreements were breached regarding the sale of control over CCF, and use of the company's name. They claim, among other things, that right after signing the agreement, the defendants violated it and went into business with the Florida hunters.
CCF did not directly sue SFK and Shrem in Israel, despite its claims against them. It sued companies that it claims belong to SFK, namely Mangus and Biscay.
But because CCF is being sued by the Florida hunters, it filed a "third-party notice "against SFK and Shrem, which serves as a claim against them in Israel, based on roughly the same allegations as raised in its suit against Mangus and Biscay.
Mangus and Biscay, meanwhile, claim to have no connection with SFK.
Who are you, anyway?
In their defense, Mangus and Biscay charge CCF with deliberately misleading the court in order to extort SFK, which is completely unconnected with the whole matter. "As the plaintiffs know perfectly well," they write, "Mangus' controlling shareholder is a foreign company registered in the Dutch Antilles. The shareholder of that company is Dovrat Shrem, registered in Luxembourg, whose shareholders include inter alia Itschak Shrem and Yair Fudim."
They claim that CCF is also misleading regarding Biscay, which also held shares in CCF, for the same reason. Biscay's shareholder is again that Luxembourg company Dovrat Shrem. Therefore, Mangus and Biscay say, they have no connection with SFK. The only association is that SFK and they have some of the same shareholders.
Moreover, they point out, CCF explicitly noted in its suit that SFK does not control or have an interest in Mangus or Biscay.
Meanwhile, after reaching a settlement with the hapless reptiles' hunters, SFK and Itschak Shrem filed a petition in the U.S. not to hear the third-party suit CCF filed against them, on the grounds that CCF filed exactly the same claim in Israel, and demands the same remedies.
The upshot is that SFK paid some half-million dollars in the United States to settle a lawsuit by a group of skin hunters against it and against Shrem. Yet in Israel the two companies co-owned by Shrem - Biscay and Mangus - claimed, in their defense in a related matter, to have no connection in any way with SFK, and that SFK was entirely uninvolved in the whole deal.
In the settlement reached in the U.S., during the proceedings in which SFK agreed to pay that half million, the lawsuit was dismissed. Therefore, technically speaking - SFK never did admit to any involvement in the crocodile affair.