Welfare and Social Services Minister Haim Katz (Likud) has been summoned and questioned by the Israel Securities Authority on suspicion of involvement in a new insider trading scandal. Katz is suspected of using privileged information to profit on the stock market, one of the most serious crimes under the Securities Law of 1968. The scandal revolves around a merger between Nitsba Holdings 1995 Ltd. and the Airport City industrial and business park. The merger was reported to the ISA on July 5, 2015, shortly after Katz became welfare minister. After being called in on Monday, Katz was not summoned for further questioning or arrested. Associates of the minister said they were "certain that the picture would clear up in the next few days." Katz is not the only figure suspected of involvement in the scandal. Financial adviser Moti Ben Ari, who is close to businessman Kobi Maimon -- who also has business dealings with Katz -- was also detained and questioned. Ben Ari was given a conditional release and instructed to deposit his passport with the ISA for 180 days to prevent him from leaving the country. An injunction against his leaving the country has been put in place until Nov. 16, and he has been ordered to deposit a bank guarantee of NIS 1 million ($262,000) by the end of the month. "My client denies the suspicions [against him] and denies the accusations made against him, but he agrees to the conditions of his release," Ben Ari's attorney said. The Israel Securities Authority confirmed that Katz had been questioned in the ISA offices on suspicion of insider trading, and said he had cooperated. According to the ISA, "The attorney general [Avichai Mendelblit] signed off on the questioning, and it was overseen by the Tel Aviv District Attorney (Taxation and Economy)." The documents attached to the request for Ben Ari's release say he learned of the merger in his role as financial adviser to both Nitsba and Airport City, a position he had held since 1999. "This investigation addresses the suspected crimes of using privileged information that were committed by various figures involved in the negotiations Airport City held with Nitsba. ... As a result of that illegal activity, the suspects Katz and Ben Ari made illegal profits of about NIS 290,000 [$75,500]," one document said. Ben Ari is suspected of purchasing stock in Nitsba before the merger was announced, "despite the explicit prohibition by the company against doing so. In addition, Ben Ari allegedly gave Katz privileged information." The day the merger was announced, Nitsba's stock jumped, and continued to rise in the days that followed. To make a profit of NIS 290,000, it was necessary to purchase over NIS 1 million worth of the company's shares. Nitsba deals with real estate management, including offices, shopping centers, and central bus stations in cities such as Jerusalem, Tel Aviv and Netanya. The controlling partner in the group is the JOEL Company, controlled by Maimon and Haim Tzuf. In the deal, Airport City merged with Nitzba and became a private company whose bonds are still traded. Katz's personal wealth is estimated at tens of millions of shekels, including reported holdings in the gas and oil exploration company Isramco, which owns part of the Tamar offshore gas field. Isramco is controlled by Tzuf, and according to some reports, Maimon also owns part of it. In 2009, the ISA conducted an investigation after suspicions arose that Katz had bought stock in Isramco based on insider information, prior to the official announcement of the gas discovery off the Haifa coast. The investigation did not discover any criminal activity and the case was closed.
