A Managerial Failure

At the beginning of this week, Ben-Nun presented his 'reform,' which is in fact the complete opposite of a reform. Instead of stimulating competition, it strengthens the IEC's power as a monopoly.

It was infuriating to hear Uri Ben-Nun, the CEO of the Israel Electric Corporation, explain why he is actually doing us a favor by getting up and going to work in the morning: "My wife is angry, I don't see the grandchildren, and the pay is lousy," he said, and added: "I see my role as being like reserve service. My pension is 2.5 times as much as what I make at the IEC."

If Ben-Nun were more cautious, he would not have reminded us about forgotten events, such as the affair of his pension from Dead Sea Works (DSW). But since he did remind us, it behooves us to remember.

Ben-Nun was the CEO of Dead Sea Works for seven years. He was a "big-time" operator, using forceful tactics. He pressured and pushed for the establishment of a giant plant to produce magnesium, an adventurous move that had never been tried anywhere else in the world. The result was that the originally planned investment of $280 million catapulted to $600 million. To this day, Dead Sea Works is suffering from that adventure, and the concern's management is considering whether to close the plant due to the losses it is causing.

In DSW's courtyard, Ben-Nun "reconstructed" the altar of the ancient Temple in Jerusalem, no less. It is a massive iron structure, 16 meters by 16 meters and 5.5 meters high. "People come and are thrilled, and sometimes cry," Ben-Nun related proudly. What will he build now, in the courtyard of the Reading power plant?

From the moment he was appointed CEO of DSW, Ben Nun acted to raise the employees' salaries and better their working conditions - exceeding the standards of Dead Sea Works' competitors around the world - thus adversely affecting the company's competitive ability in export markets. Nevertheless, he said on one occasion, "when I whistle for my workers, they come."

This state of affairs led Erwin Eisenberg (the owner at the time) to fire Ben-Nun in 1997. Ben-Nun pressed for high severance pay and succeeded in obtaining a large one-time payment as well as a lifetime pension, which his wife will continue to receive after him. The pension began to be paid when he left, at the age of 55, and this week, we learned that it is "2.5 times" his salary from the IEC - that is, about NIS 100,000 a month. So maybe it really is not worth his while to work?

Ben-Nun's confidants at the IEC say that during last month's power outages, he was a brand-new CEO, and so was not to blame. If so, how did he manage, during those two difficult and packed months, to formulate a general "reform" for the country's electricity system? For that he had time, but not for dealing with the outages?

At the beginning of this week, Ben-Nun presented his "reform," which is in fact the complete opposite of a reform. Instead of stimulating competition, it strengthens the IEC's power as a monopoly, which will determine the rates to be paid for the use of electricity on its own, authorize (or not authorize) the establishment of private power stations, enter the fields of water desalination and communications as well, above all, be good to its employees. Just as he did at Dead Sea Works. The Finance Ministry and the National Infrastructure Ministry have rejected the proposal.

The "reform" was published at the same time as reports of the grave conclusions drawn by the commission that examined the June power outages. The commission noted that on May 9, the IEC executive (which Ben-Nun heads) was explicitly informed that during the five months of summer ahead, the reserves would be very low and even negative.

Despite this, the executive did nothing to change the company's maintenance plan, did not seek to immediately activate the Reading power plant, did nothing to activate the Gezer and Alon-Tavor plants (which together supply 700 megawatts of power), did not take steps to return other production units to operation and did not try to reduce demand. The executive stood idly by.

On Wednesday, May 29, the executive received a warning from the Meteorological Service about a "developing heat wave" that would cause a sharp rise in demand. Yet even then, when measures could have been taken to avert the crisis, "nothing was done," and the collapse occurred the following Sunday - a huge failure by CEO Ben-Nun and the relevant managers.

But even when the crisis erupted, Ben-Nun did not take the necessary steps. He declared: "The Electric Corporation is not to blame for the power outages," adding that "Israelis are spoiled" and that in his day, he did not have an air-conditioner in the room.

Of this arrogance, the commission said gently: "The CEO's behavior, at least on Sunday, was inappropriate to the state of emergency and adversely affected the functioning of the corporation's various units during the crisis." No more is needed to mandate a letter of resignation.