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The Israel Aerospace Industries general council received about NIS 700,000 in bonuses between 2006 and 2010, contrary to Government Companies Authority regulations.

This revelation prompted an investigator from the Finance Ministry wages division to question IAI CEO Itzhak Nissan yesterday.

Nissan recommended that the board grant Yaacov Galazan the bonuses, and the board approved the decision - even though a Finance Ministry representative, Nissim Salman, sits on the IAI board. Salman was recently appointed GCA deputy head.

The IAI said the bonuses were legal since Galazan has a personal contract, which is not part of the collective bargaining agreement, and the contract calls for such bonuses. The payments abide by GCA regulations, it said.

Former IAI board chairman, Yair Shamir, who stepped down yesterday, said the board followed procedures in approving Galazan's bonuses.

The investigation started with NIS 470,000 Galazan received for 2006-2008. When Finance Ministry investigators found out about these unusual bonuses, they reached an agreement that would have Galazan return NIS 350,000. In addition, Galazan's monthly salary was supposed to drop from NIS 62,000 to about NIS 40,000.

But even though the agreement with Galazan was reached only this year, he never mentioned the NIS 250,000 in bonuses he received for 2009 and 2010. When the treasury discovered this, it demanded Galazan return the full NIS 250,000.

In 2006, the IAI started paying its top executives bonuses based on the company's profits. The treasury's regulations allow government-owned companies to pay senior executives bonuses worth up to five monthly salaries, but only if they make less than the CEO. Nissan earns NIS 45,000 a month; Galazan was making NIS 62,000.

Finance Ministry investigators are trying to figure out who approved the bonuses. They will most likely present their findings to a civil service disciplinary court. The court may then censure workers, including by firing them.