It will be said right now that they should not be accepted. As the evidence shows, there is sometimes a built-in tension between the technical management personnel – the project personnel (or the factory personnel) – and the procurement bodies responsible for the engagement and procurement at the end of the process. Project personnel can emphasize the availability of the technological solution, schedules, and more, while the procurement personnel can focus on the financial aspect and obtaining the best price in the circumstances, and can request to examine alternatives for this purpose, conduct additional tests, and receive price quotes from a number of parties. The procurement bodies have independence and are not obligated to make do with the position of the project personnel (for example, the testimony of Vered, who served as a project head in a different project than the one discussed here, p. 6390, paras. 1-3, p. 6391, s. 9-19, p. 6395, s. 20-32, p. 6400, s. 17-19). Actions taken by the suppliers in the early stages vis-à-vis the project personnel were perceived as marketing efforts – as actions intended to increase their foothold in the project, their involvement in it, and the chance that they would be the ones to win the execution of the project and the supply of equipment at the end of the road. However, as it turned out, they were not a promise of engagement. At the end of the day, the procurement bodies can choose another supplier, for example, due to considerations of price differences (e.g., Peretz's testimony, p. 1593, paras. 4-10; p. 1607, s. 12-p. 1608, s. 2). Sometimes, disagreements arose among the procurement personnel as to the best course of action and the supplier with whom to engage (ibid.). In any event, the claims do not support the actions it took vis-à-vis the project personnel and the pilot it conducted to justify coordination or to legitimize it.
- The central figures in the matter of the third indictment now under consideration are: Yitzhak Kandelstein (Kandelstein) and Shlomi Knitwerk (Knitürk), both from IAI. Kandelstein served as the head of the IT and projects team at the Elta factory, i.e., he is from the technical side of the project (p. 731, paras. 18-25). At the relevant times, KinTurk served as a buyer and head of the buyers team at Elta, i.e., he is on the procurement side of Elta (p. 312, paras. 2-23).
- At the beginning of the process, starting at the end of October 2009 and possibly even earlier, the technical director of the project was dealing with Wei. Oshri was very involved and worked in this context with Kandelstein from the project. At the beginning of November 2009, on November 2, 2009, November 7, 2009, and November 9, 2009, Oshri sent Kandelstein quotes for the VMware project for the venture's laboratories (N/245; N/246 and N/67 in the sum of $55,932; N/68, and N/20 for a slightly lower sum of $55,532; in the e-mail correspondence it was noted that Wei had reduced the price component of the NetApp system in the proposal, and it is possible that Wee's offer was more expensive in this component than another offer received at the time – N/245 (above); and see also N/74). At a certain point, Wei began to establish a pilot laboratory to test the equipment in the project, which we will refer to below.
- On November 11, 2009, a general agreement was signed between the Civil Appeal and Harel regarding the purchase, maintenance and support of VMware software by Harel and IAI. Harel undertook to give the civil appeal a significant discount of 51.8% of the IBM price list in accordance with the Comptroller General's agreement between the parties (P/44). Oshri later explained that in his understanding, Harel believed, on the basis of the agreement, that it could offer attractive prices for the VMware components in the project here, and hope that its offer in the whole would be attractive enough, even though Harel has inferiority in the net-up component (p. 4522, s. 13 - p. 4523, s. 8).
- On November 18, 2009, Knitork was appointed as a negotiator for the purpose of conducting a competition between the suppliers Wii and Harel for the purpose of purchasing the equipment in question, including the equipment manufactured by VMware and NetApp (P/56; in the series of comments in the letter of appointment, it was noted that a civil appeal had signed an exclusivity agreement on the subject with Harel).
- In between, Wei worked to establish a laboratory in Elta and to conduct a pilot with the project manager. Among other things, a technical person on behalf of Wei carried out mainly on November 19, 2009, November 24, 2009 and December 2, 2009 the planning and installation of a virtual infrastructure in Elta (N/248, N/249 and see also the characterization document - N/247, and the concentration of hours: N/333 - the first 4 rows). Oshri made sure to update Kandelstein on the matter and to emphasize them in front of him (P/250). At the same time, Oshri tried to incentivize Shahar in order to promote the closure of the commercial side, and testified that for this purpose he even instructed Shahar to stop work until an order was received (P/251, Oshri testimony, p. 4519, paras. 1-7).
The request for quotes from Vi and Harel and the coordination
- We will now present the main facts relating to the coordination arrangement that is the subject of the third indictment: ELTA's request to receive price quotes, email correspondence to coordinate the bids, the bids submitted to ELTA and the order that was issued with ELTA at the end of the road. We will discuss additional facts and the arguments raised by the defendants on their basis.
- On December 15, 2009, Knitwerk simultaneously sent a request for quotes for the VMware lab (P/58, P/59). The request specified the required components in the content of the proposal – including VMware and NetApp components (ibid.).
- The next day, on December 16, 2009, Shachar sent Gilad the proposal that Wei had previously submitted to Kandelstein, the project man, in the sum of $55,532, dated November 9, 2009 (P/298, the email message from Shahar to Gilad). In other words, Wee's last offer to the people of the project was now before Harel and Harel knew the price that Wei had offered.
- On December 16, 2009, apparently a short time later, Shahar sent Gilad an e-mail with the request for a quote he had received from ManiNetwork, on which a price was now listed next to each item, with all the prices amounting, as stated in the document, to a total of $61,942. In the body of the message, Shahar wrote to Gilad: "Tell me if these prices suit you?" (P/62). Later we will address the claims raised in connection with this email message, including from Shachar. It should be noted that this speaks for itself. At the end of the day, and after a number of evasive answers, Shahar testified that he had sent Gilad the prices so that Gilad would submit Harel's offer to Elta with these prices, so that Harel's offer would be higher than Wee's offer and so that Vale would win the project (P, 2699, paras. 1-17, and see the evasive testimony that preceded it; Shahar further testified that he had written to Gilad to check whether the prices that Shahar had mentioned were reasonable to him. so that there will not be a very significant gap between the proposals, ibid.).
- Still, on December 16, 2009, a few hours later, Gilad sent Shahar an e-mail with a price quote from Harel to Connecticut Malta for a total of $61,468. In the body of the message, Gilad wrote to Shachar: "The following is our proposal that was sent to Shlomi" (P/63). In other words, Gilad informed Shachar about Harel's offer to Elta, which was submitted for a sum very close to the one sent by Shachar earlier, a sum that is higher than Wee's offer as it was sent to Gilad.
- Shortly thereafter, Gilad sent Knitürk another bid in the amount of $60,596 (P/566, N/38; this was in response to Knitürk's request to receive an updated bid in accordance with the agreement prices; the update was in one component, ESX Standard, the price of which was reduced by about $1,000; Gilad explained here that the proposal was not preceded by a technical meeting with the project). This correspondence was found as it is in Shahar's e-mail box, and it appears that Gilad also forwarded it in real time to Shachar (possible in a hidden copy) (see paragraph 5 of the 957th Amendment, in the framework of P/562, testimony of the investigator Gadi Perl, p. 3758, paras. 17-20). Later on, we will also address the arguments raised by Harel in this context. At this stage, we note that in their summaries, Zeiger and Harel confirmed that in the aforementioned email correspondence, Shahar and Gilad coordinated prices and Gilad gave up the project to Shahar (paragraph 294 of the summaries).
- On December 17, 2009, Shahar forwarded to Oshri Harel's last offer (in the sum of $60,596). Shachar wrote to Oshri "attached to Harel's proposal" and forwarded to Oshri the chain of email correspondence between Gilad and Kinatork regarding the submission of Harel's proposal, to which the proposal itself was also attached (P/296). Oshri testified that he assumes that Shahar accepted Harel's offer from Gilad (this is what emerges, for example, from p. 4910, s. 7, p. 4911, s. 8-11).
- On December 17, 2009 – at the same time as Harel's latest offer was transferred to Oshri – and as Value knew the price of Harel's bid, Shachar submitted Wie's bid to Knitwerk, in the sum of $55,919 (P/567, the offer is identical to Wie's offer that Shachar had sent to Gilad the day before, P/298, except for the addition of one item at a price of $387).
- On December 23, 2009, Gilad responded to another request from KinTurk and announced that the last offer he had sent on behalf of Harel was its final offer (P/60).
- Wei's offer was therefore the cheapest of the proposals.
- Subsequently, the project's personnel decided to cancel the purchase of the NetApp component, which was initially included in the contents of the procurement, and on December 29, 2009, they notified Knitork (P/64). Wie's bid without this component was $35,142 (N/252).
- On December 29, 2009, a release form for a loan order in the sum of $32,506 was signed in a civil appeal, reflecting an additional 7.5% discount on the hook offer. In the place designated for the reasoning of the purchase, it is written that "... The pilot was established by We. A competition was carried out between We and Harel, with which there was an agreement signed after the work began. As agreed in the meeting with the Maman people, the invitation goes to the We company, which gave the best offer. The transaction meets the objectives of the procurement committee" (P/57). On January 5, 2010, the invitation was issued to Levy (P/65). Subsequently, a retroactive invitation was issued for the payment of a sum of approximately NIS 63,000, inter alia, for the establishment of the pilot, training and support hours (N/332).
- For the sake of completeness, it should be noted that prior to the approval of the order on December 29, 2009, it appears that disagreements arose among the procurement personnel at IAI. Peretz, the head of the server procurement and communications department at Maman, who by virtue of his position also had to approve ELTA's engagement in question for the acquisition of VMware, was of the opinion that the order should be issued to Harel, with which a civil framework agreement regarding VMware should be appealed (N/21, Peretz's testimony, p. 1706, s. 9 - p. 1707, s. 16). Gershon Leshem (Leshem), the procurement manager at Maman, who was in charge of him, ordered the approval of the order for Wei and explained this on the competitive prices offered by Wei (N/21). We will address the arguments in this regard below.
- Interim summary: The picture that emerges from the correspondence between the parties in real time is clear. Shahar sent Gilad Wee's proposal for the project and the prices that Gilad must submit as part of Harel's proposal. Gilad submitted Harel's offer in an amount that closely matched the sum requested – which was higher than the sum of Wei's bid that was forwarded to him – and sent Shahar a copy in order to update him on the submission of the offer (Shahar, p. 2700, paras. 5-8). After the aforementioned, Wei submitted its cheaper offer. It clearly appears that Wee and Harel have reached an arrangement whereby Harel will submit a higher bid than Wee's, which will be the one to win VMware Labs. The parties to the arrangement were, apart from the companies, Shahar and Oshri Movi and Gilad Maharel. Indeed, Oshri was a party to only one correspondence, Harel's proposal, which was forwarded to him by Shahar. However, in the circumstances of the matter as we will see below, it has been proven that Oshri was very involved in the project, in formulating Wee's proposal and in promoting it, that he knew about the arrangement, that the arrangement was on his own mind and consent, that he acted to promote Wee's interest on the basis thereof, and therefore he should be considered a party to the arrangement.
- In the indictment, the defendants were also charged with the offense of fraudulent receipt.
- The procurement officials testified that they did not know in real time about the coordination that was made between Wii and Harel (Maniturk, p. 354, paras. 6-10; Shkedi, head of the components procurement and computing department at Elta, who was in charge of Knitürk, p. 1813, s. 1 - p. 1814, s. 17; Zaguri, head of the procurement administration at Elta, who was in charge of Shkedi, p. 2193, s. 10 - p. 2194, s. 1). These testimonies were not concealed.
The procurement officials testified that, in their view, this was improper and serious conduct, and that if they had known about the coordination correspondence in real time, they would have stopped the competitive process, refrained from any progress with any of the suppliers, and acted to transfer the matter to the competent parties in a civil appeal (ibid.). These testimonies gave a credible impression and no real evidence was presented that could testify otherwise. They are combined with general testimonies of procurement entities in a civil appeal, according to which the price component has significant weight at the time of choosing the supplier with whom one engages (Shkedi, 1810, paras. 5-15; Zaguri, p. 2193, paras. 1-2; and see also the reasoning of the procurement in the order release form regarding the selection of the hook whose offer was the best). The defense argued that even after the coordination was made known to ELTA personnel during the investigations at the Authority, the civil appeal in the engagements with Harel continued until 2017 (e.g., paragraph 628 of the Wii summaries). The parts of the testimonies to which the defense referred do not clearly support the claim (see, Shkedi's testimony, p. 1946, paras. 5-6; Zaguri's testimony, p. 2229, paras. 11-30). In any case, even if the civil appeal continued to work with any of the suppliers, this does not detract from the clear picture that if the procurement entities had known about the coordination in real time, they would have acted differently and stopped the competitive proceeding (see and compare also the Bramley case in paragraph 45 of the judgment of the Honorable Justice E. Stein).
- In these circumstances, the elements of the offense of fraudulent receipt are also presented: fraud by submitting proposals in a bidding proceeding while failing to disclose the coordination of the bids (see paragraphs 27-28 above); Acceptance of the matter – in the assumption of ELTA regarding the validity of the bids and the proceeding and the winning of Wei (see paragraph 29 above), when the causal connection arises from the above testimonies that show that had it not been for the concealment, the procurement entities would have acted differently. Since the acts of fraud are based on another offense – a restrictive arrangement – while harming the competitive process of a public body and public funds, and in view of the systematic nature of the acts, these are aggravating circumstances, in accordance with the criteria set out in the case law (see paragraph 31 above).
A note regarding the content of the correspondence between Shahar and Gilad
- We saw above that Gilad submitted to Elta an offer that matched the prices sent him by Shachar, and that he subsequently forwarded Harel's offer to Shachar's attention.
- In the summaries, the defendants did not raise any claims, at least not in a real way, regarding the content of the email correspondence between Shahar and Gilad. Harel also noted in her summaries that in the email correspondence, "Gilad and Shahar coordinate prices and Gilad waives a project to Shahar" (paragraph 294 of the Zeiger and Harel's summaries, for the claims that Gilad acted against Harel's interest, we will discuss below). This is clearly evident from the correspondence. It speaks for itself.
- It should be noted that Shahar claimed in his interrogation, as well as in other contexts, that the prices he sent to Gilad were in fact a tender offer to Harel, that is, the prices at which Harel could purchase the contents from Vi, and not the prices that Harel must submit in the offer to ELTA.
This version should not be accepted. It has no hold.