It was also noted that the Company's financial statements made misleading disclosure regarding its equity, assets, liabilities and results of its operations, in order to present a representation as if the Company complies with the terms of the bonds and to prevent them from being made available for immediate repayment (ibid.). Moreover, in the framework of Barlev's opinion, the improper "accounting policy" claimed by the liquidators was detailed in the statement of claim - according to which grants and benefits granted by Agrexco to growers over the years were presented in its financial statements as assets, in contravention of the accepted accounting rules (ibid., at pp. 24-26).
As part of their arguments in this context, the liquidators noted that Barlev's opinion did not include a reference to Kost's involvement in the existence of defects in the company's financial statements, and therefore it was not possible to disclose - from the information included in it - the existence of a cause of action against it. I did not find this argument to be true. There is no dispute that the fact that Kost served in those years as Agrexco's auditor was known. Therefore, the fact that such serious defects were found in the company's financial statements over many years indicates the involvement of the company's auditor. This was done either by actively cooperating with the presentation of the misleading representations included in the reports, or by negligent in checking the accuracy of the data presented to him by the company before giving an opinion confirming the veracity of the reports.
The Barlev opinion therefore clearly pointed to significant and serious defects that occurred in Agrexco's audited financial statements in the relevant years and misleading representations that were included in them in relation to the company's financial situation. The opinion also noted the damage caused to the creditors as a result. There is also no dispute that the creditors (and liquidators) knew that Kost served as the company's auditor in those years. From all of this, it follows that there is no escaping the conclusion that with the submission of Barlev's opinion, facts were brought to the attention of the creditors (and the liquidators) that form a cause of action with a real chance against Kost; All the more so as to the existence of the cause of action that requires further in-depth investigation. A review of the statement of claim that the liquidators ultimately filed against Kost also strengthens this conclusion, since the main facts included in it were already mentioned in the opinion of Barlev.