Watchdog: Dimona Nuclear Reactor Gave Millions in Business to Ex-employee Without a Tender

Sale was done despite objections of internal comptroller and legal consultant. Comptroller’s report was kept hidden for three years for reasons of ‘national security’ and allowed for publication following Haaretz petition.

A partial view of the Dimona nuclear power plant in the Negev desert.
Thomas Coex/AFP

The Negev Nuclear Research Center in Dimona sold the rights to sell protective equipment for a yearly profit of 3.6 million shekels for just 1.2 million shekels to a former worker – and with no tender, says the state comptroller’s report that was made public on Tuesday. This happened even though at the time the NNRC’s internal comptroller and legal adviser warned against the move.

The comptroller’s report on the subject was kept confidential for three years “so as not to harm national security,” and allowed to be made public in wake of a petition by Haaretz to the High Court of Justice.

The report covers the activity of Rotem Industries, a subsidiary of the NNRC that was intended to sell byproducts of the nuclear activity in Dimona. The chairman of its board is the current director of the reactor, and the management includes workers from the reactor who were transferred to Rotem.

The main incident examined by the comptroller was also described in a Haaretz investigative piece last November, about the sale of the sales division for protective equipment such as gloves, gas masks and protective suits. At the instruction of the Government Companies Authority, it was decided to sell this activity, which made a significant profit for Rotem Industries: In 2007, there were 21 million shekels in sales, with a net profit of 3.6 million shekels.

The division was run by Avi Batash, who was employed at the reactor at the time when his father-in-law Giora Amir was a senior executive there and later the NNRC director in the 1980s. For a reason that is not mentioned in the comptroller’s report, the decision was made to transfer this activity, without a tender, to Batash, who resigned from the reactor and formed a company for this purpose. Batash’s company established another company, Rotem Health and Safety, together with the NNRC and the Barel family’s Shalon Chemical Industries.

At the beginning of 2006, the activity’s value was assessed. It was agreed that Batash would pay the cost of the inventory, and the negotiations would be over the reputation assessment. With Batash himself running the company, he conducted a reputation assessment and set the figure at 3.6 million shekels. The negotiations between Rotem Industries and Rotem Health and Safety went through numerous cycles, and a deal was finally signed in April 2008. In the final deal, a payment of 3.4 million shekels was agreed upon. The state comptroller says that during that time, the company’s sales increased by 79 percent and profits from its activity rose by 510 percent, but the reputation somehow decreased by 6 percent.

According to the comptroller, in order to pay for the deal, Batash did not need to draw on any of his own private capital. On the day the deal for the sale was signed, he also signed another agreement granting him a portion of the company’s profits from the two previous years, even though he was not an owner of the company – for a total of 2.2 million shekels. So in reality, the payment for the sales activity was just 1.2 million shekels, a third of the net profit for one year. The NNRC internal comptroller as well as legal adviser did object at the time to the retroactive payment. The board also concealed the payment from the deputy attorney general, who approved the deal.

In response to the report, the director of Rotem Industries told the state comptroller that Batash “was the whole business and it’s been that way until now. If he were to go, the whole business would collapse. He lost out by retiring from the NNRC at age 50 because at age 55 they gave early retirement. He gave that up and requested the profit – that was the compromise.”

It also turned out that the value assessment did not include a significant future contract that was signed with the Agriculture Ministry, a contract that was also born in sin. In December 2007 the NNRC signed an agreement with the Agriculture Ministry to hold an emergency tender that included consulting, storage, support and product maintenance. Upon the establishment of Rotem Health and Safety, this activity was completely transferred to the company, while the NNRC took 4 percent of the deal that totaled 12.5 million shekels without VAT.

The state comptroller says that there was fictitious communication involved, because the NNRC has no real part in this activity, and in fact the communication is between Rotem Health and Safety and the Agriculture Ministry, with the NNRC serving as a channel for the transfer of funds. “The NNRC’s activity created a situation in which there appears to be a circumvention of the law requiring tenders,” says the comptroller. Following the criticism, the communication was immediately stopped.

The state comptroller’s report was completed in 2013. At the recommendation of the defense establishment’s security director, the comptroller made the report fully classified, using his authority to do so if publication could harm national security. Last February, attorney Tali Liebich submitted a petition to the High Court on behalf of Haaretz requesting that the report be made public. The state responded that it consulted with “security experts” and decided to publish portions of the report. Other parts remain classified and legal proceedings about those sections are ongoing.

After the report was prepared, the NNRC director at the time and chairman of the board Udi Adam decided to end the tenure of Dan Peer, the director of Rotem Industries who spearheaded the sale of the protective equipment division. However, Peer was appointed as director of Isorad, the reactor’s subsidiary in Soreq.

Batash was not available for comment. Peer referred all inquiries to the NNRC.

The Israel Atomic Energy Commission says: “Rotem Industries is a government company that works to develop innovative technologies related to the activity of the NNRC, as is standard at many research institutions in Israel and around the world. We welcome the comptroller’s report and will take corrective steps as warranted. The status of what is being done about the comptroller’s points has been presented to the relevant bodies in the Knesset.”

Regarding Peer, the commission says: “Mr. Peer finished working at Rotem and after he passed all the standard processes and the necessary permits were received, he was appointed as director of Isorad.”