The Health Ministry is calling for the ouster of the director general of the Meuhedet health maintenance organization, who was accused of nepotism and other corruption offenses in a comptroller's report released last month.

Roni Gamzu, the Health Ministry's director general, sent a letter yesterday to the head of Meuhedet's board of directors asking them to dismiss Shmuel Muallem.

"The comptroller's report reveals deep-rooted problems in terms of how Meuhedet functions," Gamzu wrote in the letter. "This is a systemic failure, not a specific one. It cuts across various systems, ranks, institutions and officeholders, from top to bottom."

The Health Ministry's request is not binding, but if Muallem does not leave his post within 21 days (subject to a hearing ), the ministry is liable to convene its own inquiry committee, which would have the authority to dismiss the Meuhedet management. That process, however, could be lengthy.

Meuhedet confirmed that the head of its board of directors, Yerahmiel Boyer, received the letter yesterday and said he would convene the board urgently to discuss the contents of the letter and determine a response within the allotted time.

The ministry gave the HMO four months to complete all the bureaucratic processes involved in Muallem's dismissal.

Muallem, who became Meuhedet's CEO in June 2007 after serving as deputy CEO and vice president of human resources, allegedly failed to inform the HMO's counsel and management that two of his children worked for the Israeli branch of Novolog, which supplies drugs to Meuhedet, and that a third was employed by an accounting firm involved in internal audits of the HMO.

The November 15 comptroller's report characterized the failure of several senior executives to report that family members worked for suppliers of the HMO as a "severe and ongoing conflict of interest."

The report also cited another apparent conflict of interest, saying Muallem and his wife attended conferences abroad at the expense of pharmaceutical companies that have a business interest in Meuhedet. Muallem acquired public relations services for Meuhedet without conducting the required tender, the report continued, adding that he also claimed vacation days illegally.

In addition, Meuhedet documents indicate that at least 17 senior employees, including Muallem, received payments for attending the family events of HMO employees. Between May 2008 and May 2009, Muallem reportedly received NIS 66,000 for attending 132 events.

"This cannot be left for the next board of directors [to decide]," Gamzu wrote. "The current board cannot exempt itself from fulfilling its obligation."

The 12-member board has decided to fully support Muallem, who is one of the board members himself, but was not present during the meetings about him.

In addition to calling for Muallem's dismissal, the Health Ministry also wants Meuhedet to take steps against its director of finances, Gil Haimovich, who was also cited in the comptroller's report for inappropriate conduct.

Gamzu is also demanding that Meuhedet implement a decision by its board of directors to cut the salaries of senior officials by 5 percent. Meuhedet, which is the third-largest HMO in the country and covers 1.1 million Israelis, has already decided to dismiss four high-ranking officials (subject to a hearing ) and require another five high-ranking officials to return money for vacation days they wrongly claimed.

In addition, Yehuda Eliash, Jerusalem District director for Meuhedet and the HMO's former marketing communications director, was arrested last month, along with several family members. He is under investigation for awarding supply contracts without a tender to companies that employed relatives, in exchange for bribes.