Finance Minister Abraham Hirchson yesterday approved a NIS 40 million transfer to Israel Military Industries (IMI) to pay the troubled company's January salaries.

Because IMI defaulted on its NIS 250 million government loan, the treasury had decided to deduct the debt from payments for products that IMI supplied the defense establishment. In response, IMI held up paying its 2,900 employees.

In the wake of Hirchson's decision, Histadrut labor federation chair Ofer Eini ordered IMI employees to halt the labor disruptions they had waged in recent days.

IMI CEO Avi Felder, who heard about the unfreezing of funds at yesterday's Caesarea Forum, engaged in a heated conversation with treasury budgets director Koby Haber during lunch. Felder told Haber he did not understand why IMI received only NIS 40 million when he had informed the treasury that he needs NIS 51 million to pay salaries. The CEO demanded the difference, but the Haber responded that there was no chance of getting any more money.

The government decided in 2005 to privatize IMI, which has met IMI employees opposition. Defense Minister Amir Peretz also opposes privatization and instead supports merging IMI with Rafael. ()