EAK Partners Confronted CEO Ronen Elad Over Millions in Unauthorized Withdrawals
In 2019, partners confronted EAK Holdings CEO Ronen Elad over millions in unauthorized withdrawals. Elad repaid the funds, bought out his partners, and continued his business career.
The atmosphere in the glittering Tel Aviv law office on a December day in 2019 was tense. Four individuals sat around the table: a senior lawyer and the three partners owning the EAK Holdings Group Ltd. — Hillel Kobrinsky (a businessman close to Yesh Atid chairman Yair Lapid and the party's campaign manager), Erez Elrai (formerly CEO of Shahal Telemedicine), and Ronen Elad, who served as the group's CEO at the time. The lawyer immediately went to the heart of the matter. In recent weeks, he told the partners, it had become clear that huge sums of money had been withdrawn from the group of companies. "I cannot say whether it is 9 million or 15 million shekels," the lawyer said, according to a person exposed to the meeting's content, and then detailed where, according to the audit conducted, the funds were transferred — to Elad's wife, for "homes of yours in Greece," for the acquisition of the Shilav retail chain (a deal Elad executed at the end of 2017 unrelated to the group), to joint companies of Elad with an external investment body, and more.
The Discovery and the Confrontation
"The two people sitting here (Kobrinsky and Elrai — R.Z.) did not want to understand this until we finished thoroughly investigating it with all the parties involved," the lawyer continued. "We brought them to admit to everything, to give us all the information and data, and to say that everything was under your instruction. Also an instruction of yours not to tell these two respectable people (...). The results (we discovered) are very difficult (....)" According to the person exposed to the meeting's content, it was important for the lawyer to emphasize that if it were up to him, the incident would have been handled differently, but the two partners wanted "to fence in the incident because they have no interest in tearing apart your life." The lawyer did not explain how he would have handled the "incident" but mentioned that according to the findings of the audit conducted, some of the funds reached companies that are "under public offerings."
«We have evidence, ledger cards, everything you need,» the lawyer added, «but I think you know better than all of us (...). If you need time, think about it, but do not give me explanations and excuses. I am not interested.»
Elad denied the allegations. "What funds were transferred to my wife?" he asked. "I am telling you that funds were transferred to your wife's account," one of the attendees answered, nearly 200,000 shekels. Later, another added cynically that the wife's name was written on the transfer form in English, "so we could read it." The discussion continued to other funds that left the companies. Elad tried to explain that they were used for some transaction, but the attendees rejected his explanations. "You cannot launder this," one of them told him, and another added that he still finds it hard to believe and hasn't slept at night.
Control of Central Companies
In 2019, EAK held full control over a series of companies including Mivgun Technologies, Astragal, Tred Engineering, Weisboard Supply, Ronen Wolf Industries, and Habreshet Ruhama. These are companies operating in various fields including control, electronics, and industrial manufacturing, and some of them are considered very central in their fields of activity in Israel. The partners discovered the withdrawal of funds by chance when Elad was abroad and a certain approval was required from the financial officer of one of the companies. In a conversation held by one of the partners with that financial officer, the transfer of funds was observed.
A lawyer and an accountant were appointed to secretly investigate the issue, and the findings, as emerged from the document presented to Elad at the meeting, were harsh: funds were transferred to his wife, to various parties in Greece, to lawyers who worked with him, to Pari Phone company (which was under Elad's control), and to several other companies owned by him. The money went to various purposes, not all of which are known, but at the meeting, according to the person exposed to its content, it was claimed that the audit findings indicate that part of it was used, among other things, for the purchase of the Shilav chain — a 100 million shekel deal executed by Elad as part of his separate business.
The Agreement and Subsequent Career
The day after the meeting, Elad arrived at a second meeting with his partners and opened with a request: five minutes without lawyers. When only Kobrinsky and Elrai remained in the room, he apologized. According to the person exposed to the meeting's content, he explained to his partners that "the numbers confused me, the desire to impress you confused me, I wanted to bring better results." Later, he complained about "yesterday's threatening lawyer" and mentioned his difficult reality as a CEO facing suppliers and complex management. At this stage, he offered the two that he would buy their joint stake in the company (65%).
Kobrinsky and Elrai consulted and agreed that Elad would immediately return the funds he took from the companies and buy their stake in the company based on a company valuation of 43 million shekels. The agreement between the parties was signed in late December 2019. The introduction describes the background as follows: "Whereas it was discovered to Hillel and Erez that during the years 2016-2019, Ronen performed transfers of funds from the companies in the EAK group to various third parties, including companies under his control or related to him or in which he serves as an office holder or to his family members or to various suppliers who do not maintain business relations with the group, and all without their knowledge and without their approval (hereinafter 'the prohibited withdrawals')."
Elad, a former Shayetet (naval commando) combatant and former owner of Hapoel Petah Tikva football club, paid his debt and, thanks to partners who were hurt but loyal to keeping the secret, continued his career as a successful businessman. Since then, he has made investments, including in Synergy Cables, Plastopil, Office Depot, and recently received court approval to acquire the wipe manufacturer Dynamic for 178 million shekels. However, Elad's most prominent investment is the public drone company Aerodome. Since its inception in 2014, the company has experienced ups and downs, and in recent weeks Aerodome has been dealing with a demand by the Ministry of Defense for compensation of about 30 million shekels after the company allegedly failed to meet an agreement signed with it in 2024.
Ronen Elad: This Is a Business Dispute
From Ronen Elad's representatives, it was stated: This is a business dispute between partners from about 8 years ago which ended in a relatively swift compromise. Elad denies any claim regarding actions outside the framework of regular business conduct. One can wonder about the interest in raising this small and old issue precisely at this time. Elad is a businessman who insists on proper corporate governance in all his extensive work. Until now, the response of Kobrinsky and Elrai has not been received.
