The Israel Electric Corporation decided this week not to fire its internal auditor after his apparently improper attempt to influence the tender for the appointment of his own deputy.
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Instead, the IEC sufficed with issuing the auditor, Yigal Harel, an administrative censure that will go into his personal file. Following the submission of an external audit report that strongly criticized Harel and other senior IEC figures for their involvement in the tender, the company admitted on Tuesday that Harel had made an error of judgment. However, nothing about this mistake would prevent him from continuing his term, the company stated.
The company's announcement that Harel would stay on was greeted with surprise in light of recent reports that the external audit of the matter submitted to the company included unequivocally severe findings. However, the IEC, which has pursued the investigation at a snail's pace, claimed the findings were not so clear-cut.
In July, TheMarker revealed that an investigation was underway at the IEC following information that Harel had switched a negative annual assessment of the candidate he supported for deputy internal auditor, Hai Grinas, with a positive assessment he had written himself. Harel did not report this to his fellow members of the candidate-search committee.
The IEC's board secretly commissioned an external audit from Aliza Sharon & Co. Two months ago, after receiving Sharon and Co.'s report, the audit committee of the IEC's board met and accepted Harel's position that he did not remove or ask others to remove the negative assessment from Grinas' file. They also accepted Harel's admission that he erred in judgment by not informing the search committee members about the existence of the aforesaid assessment.
The original negative assessment had been written by the company's previous internal auditor Shay Rosenstock. The investigation found that Harel reached an understanding with a senior official in the company's hiring department that Rosenstock's evaluation had been biased because of bad personal relations between him and Grinas, and was written a day before Rosenstock's departure from the company. Consequently, the assessment was thrown out and replaced by Harel's own positive assessment of Grinas.
The IEC did not report its investigation of Harel to the Israel Securities Authority until after it was revealed in the newspaper. Harel is the third IEC internal auditor to run into trouble in recent years. Before Harel, there was Eli Sverdlov, who retired in 2007 following an external auditor's report recommending that he be fired and IEC's entire internal auditing unit be outsourced. In 2009, immediately following Sverdlov, Rosenstock was appointed, but he was replaced after coming into conflict with the board.