"The amount taken by the controlling shareholders jumped to 2.2 million": Best stock loses 6.5%

The Best Group has updated its shareholders that the internal audit opened due to suspected irregularities has led to two material conclusions: the amount taken by the controlling shareholders, the Tanous family, from the subsidiary's funds is larger than initially reported and stands at approximately 2.2 million shekels. The company is required to restate its financial statements for 2025 and the first quarter of 2026, the very same reports that were included in the prospectus based on which the company raised about 400 million shekels from the public last June.

Investors are reacting to the report and driving the stock down by about 6.5%.

The affair was exposed by chance, through an audit conducted by VAT authorities at a subcontractor of a subsidiary wholly owned by the group. Chairman of the Board Rafi Bisker, who is not among the controlling shareholders, initiated an independent audit and appointed internal auditor Shlomi Drori as the "independent examiner," accompanied by external lawyers. The preliminary report from August 20 spoke of a taking of 700 thousand to 1 million shekels, which the controlling shareholders described as having reached them "by mistake."

The draft audit report submitted now paints a more serious picture. According to the findings, between September 2025 and June 2026, bills were paid from the subsidiary's funds concerning private works carried out on properties owned by the controlling shareholders and their relatives, in a cumulative amount of about 2.195 million shekels (including VAT), without the controlling shareholders being charged for them.

In other words, this was not an "accidental glitch" of transferring funds, but the financing of works on private properties at the expense of the subsidiary. With the addition of interest at the maximum rate paid by the company, the amount reached about 2.286 million shekels, and the controlling shareholders repaid it in full immediately and without appeal.

In accordance with decision 99-4 and legal position 105-24 of the Securities Authority, Best concluded that this is a material error in its reports, not quantitatively but qualitatively.

This point is interesting precisely because the correction is expected to add profit, not subtract: according to initial estimates, an additional net profit of about 310 thousand shekels for 2025 and about 468 thousand shekels for the first quarter of 2026, alongside an update of the controlling shareholders' current account balance.

Alongside the worsening, there is also partial relief. The amount of about 2.2 million shekels previously suspected as a transfer to third parties turned out to be a payment related to the project itself, even if not according to procedures. On the other hand, about 100 thousand shekels were found to have been paid to a third party unlawfully, and a suspicion regarding an additional amount of about 1 million shekels is still being checked and will be closed before the publication of the second-quarter report.

The bottom line is mixed. On one hand, the money was returned in full, the controlling shareholders have not been present at the audit discussions since the examiner was appointed, and the company is acting with transparency. On the other hand, the restatement of reports that were in the prospectus is an unusual event, which highlights how loose the controls were during the private period. For the institutional bodies that hold the stock for the public's pension and savings money, the question remains open: is this a chapter that has closed, or is a more in-depth investigation of the money trails in the group still required? The audit, it must be remembered, has not yet ended.