Gas suppliers funding college that employs IEC's new director

"A true friend" is what Zvi Arad, president of the Netanya Academic College, called Yitzhak Tshuva after the energy baron donated NIS 8 million to fund scholarships for 300 students.

Speaking at the ceremony at which the scholarships were granted, Tshuva said his company, Delek Group, would continue to explore the region for natural gas. Delek is one of the companies in the Tethys Sea consortium, which found copious amounts of natural gas on the seabed of the Mediterranean at a permit area called Tamar. In the audience were members of Tshuva's family, as well as Gaby Last, chairman of Delek Group, and Delek legal counsel Yaacov Friedgoot.

The dean of the college's School of Insurance is Ziv Reich, 37, who joined the Israel Electric Corporation board of directors as an external director earlier this month - just before the board voted on the utility's purchase of gas from Tamar.

Reich has been on the college faculty for five years and has been dean since 2005. The IEC had been short two external directors on its board.

But an inquiry by TheMarker discovered that Reich could find himself in a conflict of interest because of his affiliations with the people who own the Tethys Sea consortium, and also with those who own the Egyptian-Israeli gas company EMG.

The IEC board must soon decide whether to reopen the terms under which the utility buys natural gas from Egypt. It will also soon be holding its final vote on buying gas from the Tamar field.

Today, Tshuva is an internationally known property developer. But he began his career in Netanya, where he also resides. His son Elad graduated from the Netanya Academic College and Delek has donated money to the college every year. The students who receive Delek scholarships have become known as "Tshuva's children." The Delek scholarship fund is chaired by Gaby Last and its general manager is Yaacov Friedgoot.

There is nothing wrong with corporate sponsorship of scholarships; quite the contrary. But Last and Friedgoot also belong to the college's board of trustees, which supervises the college and its dean of insurance, namely Reich, who is also now a director at the IEC.

Moreover, the college's board of trustees contains another energy-sector executive, who is also tightly tied to the Tamar field: Eli Misgav, CEO of Dor-Gas, which owns 4% of the drilling rights.

Finally, the college's insurance school is named after Margot and Ernest Hamburger, parents of Yair and Gideon Hamburger, who own the Harel insurance company - and also shares in EMG. Harel is the senior partner (50%) in the Israel Infrastructures Fund, which three years ago led a group of institutional investors (including Harel itself) to buy 3.3% of EMG for $100 million.

None of that means Reich has a conflict of interests. But he did not report his ostensibly worrying affiliations to either the committee that vets public-sector appointments or the IEC. The utility, after learning of the college's relationships with the gas suppliers, is now looking into the matter.

Reich is well-known in accounting circles and also in the Likud party. Despite being mentioned in gossip columns as the boyfriend of actress Michal Yanay, in 2003 he married Vivi Gavrieli, daughter of Likud activist Reuven Gavrieli. From 2004 to 2006, he served as adviser to the Postal Authority, which was chaired at the time by Likud member Yossi Sheli.

Reich, Delek and Dor-Gas refused to comment for this report. EMG said it had no idea who Reich is. The college said its board of trustees doesn't appoint deans, so there is no fear of any conflict. The IEC said that it has so far not found any conflict of interests in Reich's case, but its legal counsel is still investigating.