“No Accountability”: Objection Filed Against Proposed Slice Affair Settlement

The “Lobby 99” organization has filed an objection with the Tel Aviv District Court against the proposed settlement in the Slice affair, presented by the Finbert insurance agency's members, after the settlement faced opposition from the appointed administrator, CPA Efi Sandrov. According to the settlement request, Finbert savers will be able to choose between receiving about 51% of their investment within 18 months or continuing to manage the investments in Georgia for 5–6 years. Choosing either option will also lead to a waiver of future claims against the parties to the settlement.

The Slice affair was exposed at the end of 2023 after serious deficiencies were found in the management of savers' funds. About 850 million shekels of members' funds were transferred to private funds, dubbed “the red funds,” in violation of the law. The Finbert agency is part of the entities that raised the funds of Slice members for overseas funds.

In the objection filed by the lobby to Judge Sigal Yaakobi, it is argued that it is not at all clear who the parties to the agreement are and that there is no justification for business confidentiality, as requested by the counsel for the investor group. It is further argued that the identity of the funds is unknown and they are not signed on the agreement at all. “The Finbert agency itself, the primary wrongdoer in the cluster, is not required to pay a single penny under it, as it is not part of it.” Another argument refers to the fact that the memorandum of understanding does not impose any liability on the wrongdoers of the Finbert cluster. “Although it is the primary wrongdoer in this cluster — there is no expression of its liability or that of other parties involved in the cluster.” It is argued that those involved from Finbert “seek to benefit at the expense of their thousands of victims once again — not only did they leave them destitute, but they are cynically standing on their distress,” without bearing any responsibility.

“Those who do not want the settlement are not allowed to vote against it”

Another reason for the objection concerns the fact that two options are offered to the members, without offering a third alternative to oppose the settlement. “Members who do not want the settlement at all are not allowed to vote against it.” It is further argued that the second alternative, for the investment of funds by the funds, is “a bad alternative by definition. It lacks information, suffers from uncertainty, and grants the funds absolute freedom of action, unlimited in time — to cause members to choose by necessity option A, also a bad alternative by definition, lacking information, which entitles them to a low and unacceptable rate of the funds they were persuaded to invest.”

The appointed administrator informed the court about two weeks ago that the settlement is unacceptable to him and that it raises fundamental difficulties. Among other things, it is argued that the applicants present a false representation that a final agreement has been formed between the members and the “mysterious” funds, but in practice, there is a condition in the agreement that the consent of the funds must be obtained.

Attorneys Eitan Erez and Mor Ben Shushan, who filed the settlement request, responded to the objection: “We represent hundreds of members from all Slice clusters, including a significant portion of Finbert fund members. For the past three years, we have worked to return the members' funds. Unfortunately, nearly three years after the collapse of Slice, not a single shekel has been returned to the members, while the costs of the special management have reached tens of millions of shekels, and the appointed administrator has been forced to take out huge loans at the expense of the members. For over a year, negotiations were conducted with the participation of the appointed administrator, Finbert funds, and the members' counsel. The signed agreement is largely based on the understandings reached within its framework and on comprehensive checks we conducted in Georgia.”

The attorneys added that “the settlement is not forced on anyone. It will be brought to the decision of the members, who will receive full information and will be able to choose between receiving about 27 million dollars in a relatively short period, while preserving their rights against other parties, and continuing to develop the projects with the goal of achieving a higher return in the future. It would be appropriate for the opponents to also present to the members what is the alternative they propose, what are its timelines, and what are its chances of success. As long as there is no practical alternative, one should seriously consider the responsibility of thwarting the possibility of bringing the settlement to the members' decision.”

Motion for contempt of court against those involved in Finbert

Last week, the appointed administrator filed a motion with the court to impose a fine of 100,000 shekels on Idan Neftaji and Alit Motola — signatories in the funds to which the savers' funds were transferred, and a fine of 200,000 shekels on Gabriel Kukashvili — the controlling owner of the Finbert venture — on the grounds of contempt of court. The three are signatories in the funds to which the savers' funds were transferred. This comes after it was discovered in the proposed settlement that the funds in the Finbert cluster are withdrawing members' funds from the accounts in the funds, contrary to the court order that prohibited reducing members' assets and prohibited adding signatories to the accounts. “The subject of this motion is a blatant and ongoing violation of explicit orders issued by the honorable court for the preservation of the Finbert fund assets and the prevention of a change in the situation of control and management in them,” the motion stated. The appointed administrator requested to set an urgent hearing in light of the damage to the members' assets.

Attorney Oded Savorai, representing the three, responded that this is a “baseless motion,” and that so far the appointed administrator has not provided any applicable and effective solution for returning funds to the members.