Bezeq Chair Weisglass Joins Gelbard in the Line of Fire

Attorney Yoram Danziger recently completed a court-ordered investigation into irregularities in the allocation of Bezeq options.

At the end of the exhaustive examination of events concerning the allocations, Danziger brought the full story, whose background and details were already known to anyone familiar with the work of Bezeq's board of directors and other similar companies: That in truly important and delicate matters, such as granting tens of millions of shekels in bonuses to a select group of senior executives, the company's board is sidelined. The issue of options and bonuses is decided in direct meetings between company executives and representatives of the controlling shareholders.

Bezeq CEO Jacob Gelbard shuts out even the legal advisor and the human resources manager, for fear they will leak information about wage agreements signed with other executives. Anyone who thought privatization results in better administration is invited to read the report and to discover how deficient Bezeq's administration has become, and especially at the hands of private financial wizards from abroad. The management of Bezeq, according to Danziger's report, more closely resembles the Histadrut labor federation during difficult times than a modern communications company.

Gelbard paid dearly for his controversial management, and he probably will not return to head the company and rake in the millions of shekels practically guaranteed him in a dubious process. Danziger's report contains a series of other faults, too, which are hard to blame on the company's CEO.

How is it, for example, that the material that the board directors bases its approval of the executives' wages is made available to it only a short while before the meeting and taken away immediately thereafter, such that board members cannot seriously examine the proposals they are being asked to approve?

Why was such a sensitive decision made without the presence of the company's legal advisor? (According to sources on the board, "Gelbard asked her to leave to avoid invasion of privacy.") Who allows the controlling shareholders to decide matters concerning wages with their board representatives and the CEO, when such matters should be approved by the entire board? (Sources on the board say, "[Dov] Weisglass was not present at the discussion as he wanted to attend a meeting of the Saban Forum, held at the same time in California.")

The person mainly responsible for this behavior is the board chair, the position held by Weisglass since October 2006. Everyone knows this nimble and easy-going lawyer. Weisglass, who was put at the helm of one of Israel's four largest companies, arrived without former experience in managing large enterprises. He flourished as a talented white-collar lawyer, rubbing shoulders with money and power. He is a likable and charming person, but his business experience involved mainly liquidating companies, and he spent years as the court-appointed liquidator for Hassneh Insurance.

It was natural, however, that the more entangled the Sharon family became in suspicions of criminal activity, the closer this super-lawyer became to then prime minister Ariel Sharon, who made Weisglass his confidant, head of his bureau, a member of the "Ranch Forum" and his official emissary for sensitive contacts in Israel and around the world.

Bezeq's controlling shareholders, who were well-versed in the company and its business environment, understood quickly that they needed someone who knew his way around government corridors. As a company subject to heavy supervision, Bezeq could profit more from regulatory leniencies or strict regulatory application against its competitors than from any streamlining program or trailblazing deal.

They viewed Weisglass as the ideal power broker, and from his point of view, the appointment landed in his lap like a ripe fruit. He never committed to a full-time position, making do with an 80-percent position that enabled him to continue his other pursuits while earning a fantastical salary of NIS 3 million in addition to options (in the meantime delayed) worth millions more.

Senior sources at Bezeq say Weisglass has performed no wonders in the main aspect of his job. Olmert's cronies cleared the prime minister's bureau of Sharon's close associates, and Weisglass lost the source of his power as a wheeler-dealer. Weisglass is also not among Communication Minister Ariel Atias' inner circle.

Bezeq has so far failed in all its attempts to receive regulatory breaks: The ministry has not approved the completion of the merger with Yes Satellite Broadcasting and refuses to grant a permit for video on demand (VOD) services, and these are just two of many breaks Bezeq had hoped to obtain in the past year.

Although Danziger probably did not recommend the ousting of Bezeq's board chair, the report could serve as an opportune document for a reexamination of the qualifications required of a chairman of the board at Bezeq.