However, in order for this possibility to serve as a basis for imposing liability, a coherent factual starting point is required: Who are those elements in the company that did not know, and how is this possible when the plaintiffs themselves do not attribute improper conduct to senior officers in the company, do not allege internal misconduct against it, and even refrain from suing it? If the management acted properly, as claimed, and it approved the policy, signed the reports and knew about the accounting records made in the company's books, then even if a "red flag" had been raised by the defendant, it was not clarified to whom the defendant should have been warned, and what was the internal mechanism that was supposed to arise in light of a warning about a matter that the management already knew and adopted before it was employed by the defendant at all.
- In these circumstances, an attempt to attribute negligence to the defendant because it did not prevent the company from continuing to operate conflicts head-on with the boundaries of the position: a reasonable accountant should not be expected to step into the shoes of management, replace its business judgment, or manage the company in its place. The implied demand of the plaintiffs' claim that the defendant, as the auditing accountant, will force the company to cease operations or change its policy against the will and decision of its organ is not only far-reaching; It is illogical and inconsistent with the fundamental distinction between management's responsibility for preparing the reports and managing the company's business, and the role of the auditor in auditing the reports in accordance with the auditing standards. Therefore, in the absence of a clear basis for the information being concealed from an authorized entity within the company, and in the absence of an allegation that the company's management engaged in improper business conduct, the ground is dropped from under the argument that it was the defendant's failure that prevented real-time disclosure or enabled the continued accumulation of losses in the sense claimed by the plaintiffs. Therefore, this internal contradiction in the Applicants' arguments cannot be accepted, as is also evident from their arguments in the parallel proceeding in the claim against the State in essence - Civil Case 55482-05-15. I will explain in detail my determinations below.
- The first question that must be asked in this context is whether the company would have ceased operations sooner had it not been for the registration of the special payments as an asset. My conclusion is that the plaintiffs have not been able to meet the burden of proof required for this claim.
- First, we learn this from the fact that when irregular data were presented in the company's financial statements, the bond trustee did not raise a red flag at all. In other words, the calls for help were directed into the empty space. Thus, the bond trustee, as the person entrusted with protecting the rights of the bondholders (Civil Appeal 352/23 Estate of the late Yuli Ofer - Zvi Efrat v. Nimrod Rinot, 59 and 64 [Nevo] (October 14, 2024), noted that the investors invested in the company solely because of the state's involvement in it and that they had no interest in the capital data, which severs the connection between the manner of accounting registration and the decision whether to make the debt repayable. This is what emerges from his interrogation (Transcript, p. 635, questions 2-16):
"Q: I refer you to page 56 for your numerator, to the top of the page. First of all, I present to you, this is a meeting from June 23, 2011, okay?