Israeli State Comptroller Urges Probe of Government Companies Chief

Ori Yogev accused of falsifying document, breach of trust and other improprieties relating mainly to Mekorot.

Director of the Government Companies Authority, Ori Yogev.
Tomer Appelbaum

State Comptroller Joseph Shapira recommended Wednesday that Ori Yogev, the embattled, reformist head of the Government Corporations Authority, be investigated on suspicion of falsifying documents, breach of trust, improper tenders and conflicts of interest in appointing auditors.

The accusation relates to Mekorot, the state-owned water company that comes under Yogev’s purview as head of the GCA, as well as Mekorot’s failed international unit, Mekorot Development & Enterprise.

In a letter to Attorney General Avichai Mendelblit, Shapira said he believed there was reason to open a criminal investigation for at least two of the allegations – falsifying documents and breach of trust.

The state comptroller is obligated under the State Comptroller Law to alert the attorney general if his examinations raise suspicions of illegal conduct. However, given that Mendelblit might have ordered an undercover investigation, it is unusual that Shapira chose to leak the news to the media.

His move therefore might signal that he has little expectation it will lead to a criminal probe and chose instead to leak the accusations to the public.

If so, it comes at a sensitive time for Yogev, who has sought to rid the government’s network of business enterprises – a portfolio that includes some of the country’s biggest companies such as Israel Electric Corporation and Israel Aerospace Industries – of political patronage.

Appointed by Yair Lapid when he was finance minister in the last government, Yogev has been targeted by the current finance minister, Moshe Kahlon, who has been seeking to force Yogev out of his job. Other politicians who resent Yogev’s reforms have joined in the effort and last month the cabinet approved a measure that would ease the way for him to be fired.

On Wednesday, Yogev didn’t respond directly to Shapira’s move, but a source close to him said he hadn’t been informed of it by Shapira and suggested that the accusations were politically motivated.

“Like the rest of Israel, Yogev first heard about through the media, so he can’t respond to the substance of the matter,” said the associate, who asked not to be named. “Unfortunately, there are always interested parties trying to preserve the old and discredited system.”

Ironically, the GCA itself is conducting an examination of Mekorot and its subsidiary on suspicions of improprieties in its relations with outside contractors. In particular, the GCA has retained the management consultant MBT to look into Mekorot Development and its retaining Natan Eshel, a former director of Prime Minister Benjamin Netanyahu’s office.

However, the GCA probe into Mekorot has boomeranged into accusations against Yogev himself that center on four issues.

The first is that Yogev was involved in the company at all, since he was required by law to recuse himself from issues relating to the water industry during the first 18 months he was at the GCA. This is because before he became GCA director, he had been a controlling shareholder at a failed company called Whitewater.

The second alleges that Yogev arranged for Mekorot and its subsidiary to appoint as outsider consultants firms that Whitewater once retained, including the accounting firm Ernst & Young. The third accused him of trying to block the appointment of a new CEO for Mekorot Development, allegedly on grounds he was trying to prevent a political appointment, but in fact to ensure an ally of his would get the job.

Finally, Social Affairs Minister Haim Katz – a political foe has accused Yogev of trying to get another ally, Doron Birger, as a Mekorot director.