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"The director-general of the Ministry of Trade and Industry, Raanan Dinur, prevented an internal audit of the Small Business Authority." So said the ministry's acting internal auditor, Marlene Cohen Mordechai, in December 2005, when she informed the state comptroller, Micha Lindenstrauss, of the matter.

The trade minister at the time was Ehud Olmert, and Dinur was his right-hand man. The comptroller recently recommended that the attorney general open a criminal investigation against the two over political appointments at the Small Business Authority (SBA). Cohen Mordechai said that Dinur did not allow her to conduct an audit of the Authority, even though one was scheduled for 2004 as part of the ministry's workplan. Dinur's explanation was that the comptroller would be conducting an audit of the SBA.

Dinur wrote to Cohen Mordechai on November 20, 2005: "As you know, the State Comptroller's Office is conducting an audit of the Small and Medium Business Authority, and I do not know why you find it necessary to conduct an audit at the same time."

A week later, Cohen Mordechai answered Dinur that the comptroller had conducted his audit between February and May of that year, and presented his preliminary report in July. "In light of the findings of the draft report of the State Comptroller, and in light of the information received during the audit that raised questions of financial irregularities, I do not think it is proper to postpone the audit," she wrote.

Cohen Mordechai then approached the Comptroller's Office for advice on the matter. At the same time, she also reported that Dinur intended to appoint an internal auditor without a tender, as well as to enlarge his authority to matters of "alternative strategy," seemingly in violation of the law related to internal audits. She further claimed that the appointment of a staff member from within the ministry without a tender was intended to silence the internal auditor, as well as to find a job for a senior official.

The State Comptroller replied to Cohen Mordechai in December 2005 that it would examine the issues she raised. In the meantime, she filed suit in Labor Court against the state over the appointment of an internal auditor without a tender - a position that she herself had intended to apply for.

She won the case, but the state appealed the decision to the National Labor Court, where a hearing on the appeal is scheduled for next week.

Dinur's spokesman commented: "The director-general of the Trade Ministry at the time did not prevent any audit of the Small Business Authority, and therefore the report is competely false. The internal auditor at the time requested to conduct an audit of the authority at the same time as one was being conducted by the State Comptroller. The director-general felt that an additional audit would interfere, and ordered a delay until the State Comptroller finished his work. As soon as the comptroller finished, the director-general informed the relevant authorities that they could undertake the internal audit."