Criminal Case (Center) 6040-07-20 State of Israel v. Arkadi Shkovitzky - part 28

The Defendant's Testimony

Main Investigation (Transcript of November 24, 2022)

141. A demand was made to replace the security doors in the Petah Tikva detention center with doors with an insulation layer and an opening for food delivery and handcuffs. Instead of ordering new doors, the defendant preferred to upgrade the existing ones, in order to save costs. He contacted a main contractor, and asked that a locksmith come and work. In the field, he explained the work that had to be done on the doors – opening the door and adding insulation. The defendant received a price quote and added 12% to the contractor (pp. 532-533).
142. Reuven gave the defendant a price quote over the phone, but the price quote was too cheap and illogical. The defendant felt that Reuven did not understand, and contacted the main contractor about the matter. However, the main contractor brought Reuven again, who once again made an illogical offer. The defendant asked to meet with Reuven in the field, and after the meeting in the field, the price came up "because there were many people there, there was a prison commander in the area, or someone there who was in charge asked for special sealing" (p. 551). The defendant did not know how to define a special sealant, so a waterproofing consultant on his behalf sent Reuven the sealing requirements. As a result, Reuven's offer became more expensive (p. 551).
143. The defendant explained that the claim against him regarding a demand for price inflation is not possible, because there are many factors that are more dominant than it in the process of opening the order, in the price quote and in the technical specifications, and everything is examined (p. 558).

It should be noted briefly that the defendant explained that Itzik, the budgeter from the Defense Department, approached him, the defendant drew up a bill of quantities that he forwarded to Itzik, and Itzik contacted the Construction Department for help in checking the bill of quantities. Itzik then opened an order, and the order was forwarded to a number of other parties (the budget of the Construction Department was mentioned) who check the compatibility between the bills of quantities and the budget and locate a suitable contractor. On the professional side, the person who checked the bill of quantities was the representative of the detention center who supervised the project. After he was approved, the order was returned to Itzik. Itzik was involved in all stages of progress, because it was not the defendant's budget, but Itzik's (pp. 556-558).

144. Reuven lost financially in the project, and therefore the claim that he transferred the payment to the defendant in cash is illogical (pp. 558-559). The defendant also wondered where Reuven had cash in order to transfer it to him, in view of Reuven's claim in his interrogations that he never received cash but only bank transfers, and also in view of the examination that revealed that Reuven had not withdrawn cash for three years (p. 559).
145. The defendant added that he could not know how much a subcontractor earned, nor could he even know who the subcontractor was until he was brought in. These are internal matters between a main contractor and a subcontractor, and not the business of a construction officer. A construction officer applies directly to a subcontractor only if it is a work that is not referred to in bills of quantities (it seems that he was referring to the IPS tender book – M. B) (p. 559). To the question of what his influence was on the selection of a subcontractor, he replied that if he had a "history" with a contractor who did a bad job and there were complaints about him, he would not approve the contractor (p. 561). He could not recommend a subcontractor: "Because as far as I am concerned, a subcontractor is like an employee of the main contractor, what do I have to do with it?" (p. 562). The main contractor chooses the subcontractor, and the defendant can approve or disapprove it (pp. 562-563).

Cross-examination (transcript of February 20, 2023)

146. The defendant confirmed that according to Exhibit P/65 (ordering a frame in the project in the sum of NIS 56,980) and according to Exhibit P/63 (Reuven's invoice for upgrading 13 doors), the cost of each door is NIS 3,607 including VAT (p. 565). The plaintiff claimed that later on, Reuven forgot that this price for a door was inflated, and when he was asked about six months later (September 2017) to replace two more doors, he sent a real price quote of NIS 2,340 per door (P/64). The defendant's response was that the price change stemmed from the fact that the IPS's demand had changed due to the addition of insulation to the door. The plaintiff referred to Exhibit P/66, the document in which Reuven corrected the price of the two doors to NIS 7,000 including VAT, and claimed that the defendant asked Reuven to update the price he had written in Exhibit P/64. The defendant reiterated that the price had increased because the IPS's demand had changed (p. 566).
147. Even when the defendant was told that Reuven had also gotten himself into trouble and was punished for giving a bribe, the defendant denied it and claimed that the difference in the price per door stemmed from the fact that there were two different doors (p. 568). He did not tell Reuven to increase the price quote, but rather sent him a sealing detail that needed to be performed, Reuven did not know how to price it, the defendant turned to a sealing consultant who gave him a price quote, and the defendant forwarded this price quote to Reuven. On the basis of this price quote, Reuven increased his offer (p. 568). To the argument that P/64 and P/66 were the same thing except for the price, and there was no difference in the sealing, the defendant replied that he had received details about the sealing from a waterproofing consultant. According to the plaintiff's claim that there is no written mention of the matter, the defendant claimed that he had sent the document "to him" (apparently referring to Reuven – M. B.) the document (p. 570). The defendant was asked whether he had sent it on WhatsApp, and he replied that he had sent it on WhatsApp, and perhaps also in the framework of a meeting (p. 570).

Charge 3 - The accuser's summaries

148. The accuser referred to Reuven's testimony to the police, his confession at his trial, and to his testimony in which he confirmed that he had bribed the defendant in this project. The accuser sought to reject Reuven's attempt to minimize the amount of the bribe (when he claimed that additional doors were included in the project), claimed that there was no evidence of the demand and execution of additional doors as part of the P/65 frame order, and referred to the fact that the amount specified in the order for the frame for 13 doors was identical to the amount paid to the main contractor – if additional work had been carried out, the amount paid would have been higher.
149. The defendant himself confirmed that he had told Reuven that he had to increase the price quote. The defendant tried to excuse this by saying that there was an additional cost of sealing, but he did not present the court with any evidence of an additional demand in the field of sealing.
150. The two different price quotes that were submitted six months later, in September 2017, for two additional doors, also indicate the mechanism of inflating prices. In the first bid (P/64), Reuven offered a real price for the door, before inflating, but after about a week, Reuven drew a line with the defendant and sent him an inflated price quote (P/66).

Charge 3 - Defense Summaries

151. Reuven submitted a price quote for the renovation of existing doors in the amount of NIS 2,884 including VAT, multiplied by 13 doors, for a total amount of NIS 36,972. Later, a demand was received from an insulation consultant to add insulation material for each door, and in light of this, Reuven demanded an additional insulation for the insulation, in the amount of NIS 500 including VAT for each door. His final bid was NIS 43,472 including VAT, and it was approved by the Construction Department. The profit of the main contractor in the project was NIS 13,508, and the total cost of the project was NIS 56,980 including VAT.
152. Throughout his interrogation with the police, Reuven gave different versions regarding the amount of money he transferred to the defendant. Reuven's inconsistency indicates that Reuven acted out of extraneous motives. In addition, the illogical connection between the sums he allegedly transferred and his profit indicates that Reuven lost money in this project (about NIS 14,500), so it is illogical that he transferred money to the defendant. When asked where the cash came from, he confused his answers in a way that showed that these were not authentic things.
153. When a demand for two more doors was received a few months later, Reuven made the same offer he had made for the doors he had made a few months earlier in the Petah Tikva District Court (I will note that this argument ignores the fact that Reuven submitted two proposals in September 2017, the first of which was significantly cheaper).

Charge 3 - Hearing

154. In this indictment, too, we can see a direct connection between the defendant and Reuven, the subcontractor. According to Reuven's testimony, who was reluctant to testify against the defendant, as already mentioned and will be detailed below, he was invited to carry out the work by the defendant, and it was the defendant who told him the amount and the name of the contractor that he had to write down on the invoice. This is in contrast to the defendant's statement that he could not know who the subcontractor was until he was brought in and could not know how much a subcontractor earned. In the framework of this indictment, too, I got the impression that the defendant sought to distance himself from the selection of the subcontractor, when he noted that he had nothing to do with the selection of a subcontractor and did not recommend subcontractors – even though he could "veto" their selection. These statements contradict the testimony of the defendant in the second indictment, according to which Tavorinsky asked him to recommend a subcontractor to him, and at the same time Reuven "walked between his legs" – that is, the defendant confirmed that he was the one who recommended Reuven Latvorinsky. I will also note that the power to veto the selection of a subcontractor may also be very significant and have a clear impact on the ability of a subcontractor to work within the framework of IPS projects.
155. In this indictment as well, it can be seen that Reuven was reluctant to testify against the defendant. In his main interrogation, Reuven testified that he did not remember the cost of the work, and later confirmed that he had transferred a sum of money to the defendant, but he had very qualified his statement and claimed that it was only a small sum, since the work itself had increased following a demand for additional doors. Following these words, Reuven was declared a hostile witness. It can be seen that Reuven tried to show that he was in contact with the main contractor (and not only with the defendant).
156. Regarding the sum that Reuven transferred to the defendant in the framework of the third charge, I prefer Reuven's statements in his police interrogation to his testimony in court, in accordance with section 10a(c) of the Evidence Ordinance. His testimony in court was based on the claim regarding a demand for additional doors beyond the 13 doors (which is not the demand for two additional doors about six months later, in September 2017, which will be heard separately).

I will note that there is no evidence that there was a demand for additional doors at that stage of the project, other than Reuven's words on this matter. It should be noted that the defendant himself did not claim that there was such a demand. There is no evidence of additional work in the relevant documents: in the contract with Mahlab dated November 27, 2016, a quantity of 13 doors was mentioned and a payment in the total amount of NIS 56,980.77; this sum was also stated in the IPS framework order dated January 30, 2017; the same amount also appears in the notice of payment to Mahlab for the replacement of doors in the Petah Tikva District Court (P/65). The conclusion is that there was no demand for additional doors, in the absence of a document attesting to such a demand or additional payment for the additional work.

157. In addition, Reuven's words regarding the demand for additional doors were puzzling and illogical. On April 23, 2017, Reuven issued a tax invoice for "upgrading 13 security doors...", in the amount of NIS 46,900. According to his testimony, at the 90th minute, after the work was completed, the director of the detention center wanted additional doors, the defendant instructed him to prepare the additional doors, and Reuven issued a larger invoice and did not write the addition of doors in it. The questions arise, why did he not write a larger number of doors on the invoice if he had made additional doors? Why did he not mention the matter in his interrogation with the police? And of course, how did the defendant not mention that there were additional doors, if this was indeed the case?
158. Reuven confirmed for the first time in his cross-examination that his price quote for the door had increased due to the defendant's demands for different sealants, etc., which led to an increase in the price of the door from NIS 2,340 to NIS 2,844 (the amounts include VAT). However, this matter did not come up earlier in Reuven's interrogations or in his testimony, in which he claimed, as stated, that there was a demand for additional doors and did not mention a change in the sealing requirements.

In the defense's summaries, it was claimed that later a new demand was received from an isolation consultant, which led to an increase in the price of Reuven's offer (NIS 2844) by an additional NIS 500 (including VAT) for each door – but this additional matter did not come up at all in Reuven's cross-examination... It should also be noted that even the price of NIS 3,344 (NIS 2,844 + 500) multiplied by 13 doors, amounts to NIS 43,472 and not NIS 46,900 (the amount of the invoice submitted by Reuven, P/63).

159. In view of all of the above, I prefer Reuven's statements to the police regarding the sum he transferred to the defendant in respect of this project. The defense's argument regarding an inconsistent version in Reuven's interrogation with the police regarding the amount transferred must be rejected. In the interrogation of November 27, 2018, he did indeed state the sum of NIS 10,000 at first, but later corrected his statement and stated the sum of NIS 15,000. I will emphasize that Reuven insisted that he had spoken the truth to the police, that no one pressured him and that he did not try to please his interrogators.

It should also be emphasized: Reuven did indeed ask in his testimony to reduce the amount he transferred to the defendant, but he did not deny the very transfer of the money to the defendant and insisted that in the framework of this project, price inflation took place. Regarding the sums, as stated, I prefer Reuven's words in his interrogation with the police.

160. The defendant's general argument that price inflation is not possible due to examination and supervision by various parties was discussed and rejected above. The defendant emphasized the centrality and importance of Itzik, the budgeter in the framework of the project that is the subject of this indictment, but did not see fit to summon Itzik to testify in court.
161. As I have already noted, the defendant did not substantiate his claim regarding sealing requirements that led to an increase in the price of the doors. The same applies to his claim that Reuven lost financially in the project. I also do not see fit to accept the claim that Reuven did not have cash to transfer to the defendant. The defendant testified that Reuven claimed in his interrogations that he never received cash in cash and that an examination revealed that Reuven had not withdrawn cash for three years. However, an examination of Reuven's interrogation dated November 27, 2018 shows that Reuven referred to the issue of cash and explained that he waited several days after the checks were paid, sometimes withdrawing cash directly from the bank, sometimes withdrawing cash several times from ATMs, and there were times when he had cash from other jobs (P/74, issue 5).
162. With regard to the price quotes for two additional doors that Reuven sent to the defendant about six months later, in September 2017, I am of the opinion that these price quotes, the matter of which is not included in the indictment, strengthen the accuser's evidence regarding the inflating mechanism. According to Reuven's statements to the police (as well as his testimony in the main investigation), he offered 13 doors as part of the project, at a price of NIS 1,800 before VAT, per door. It is logical that about six months later he offered a price of NIS 2,000 before VAT (NIS 2,340 including VAT), when we were talking about a smaller quantity of only two doors. However, eight days later he offered a price of NIS 3,500 for the same two doors, including VAT for the door. In the price quotes P/64 and P/66 it was stated that "as has already been done in more than ten (sic) doors" (P/64) and "such as about ten (sic) units that I made" (P/66) – which indicates that these are the same doors as the previous 13 doors. As for the claim of Reuven and the defendant that the insulation and sealing requirements have changed, I will note that this argument does indeed come to explain the gap between the two additional offers in September, but it does not explain how the first offer in September is significantly lower than the price of a door according to the invoice P/63 that Reuven transferred in April 2017 – NIS 3,607 per door (when it was explicitly stated that this was work similar to the one already done in the previous doors). In addition, the defense did not present any evidence that substantiates a change in the sealing requirement. The obvious conclusion in this matter is that the first proposal that was passed in September is a genuine proposal, while the second proposal specifies a significantly higher sum, without justification for this. This certainly strengthens the argument regarding the existence of a price inflation mechanism.
163. In light of all of the above, I accept Reuven's statement in his interrogation that the defendant instructed him to inflate the price of the work to the sum of NIS 46,900, including VAT, and to transfer him a sum of NIS 15,000 in cash, of which Reuven carried out what the defendant instructed him to do so that the defendant would allow him to continue his employment as a subcontractor in the IPS – in view of the contractor's ability to influence the identity of the subcontractors in IPS projects. In view of the above, the elements of the offense of accepting bribes and the elements of the offense of theft by a public servant are present in our case.

Beyond that, I will refer to the above discussion regarding the existence of the foundations of the two offenses in the first indictment.