Kahlon: I Won’t Approve Privatizing Israel's Monopolies

Finance minister’s remarks come as government committee recommends going ahead with sale of IMI, even with only one bidder.

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The Israel Military Industries site in Ramat Hasharon.
Israel Military Industries site in Ramat Hasharon.Credit: Alon Ron
Ora Coren

Finance Minister Moshe Kahlon said he won’t approve privatization of state-owned companies if he isn’t confident that conditions for a competitive market are in place.

“I’m in favor of a free and efficient economy, which is in line with the public interest – but not at any price,” he said. “A government monopoly isn’t good but a private monopoly is even worse. If we privatize without creating competition and don’t allow more than one player, there won’t be privatization. If there’s going to be a monopoly, better it be a government one.”

His remarks, given at an address to the annual conference of the Government Corporations Authority on Tuesday, came as the GCA’s tenders committee unanimously recommended that the sale of state-owned Israel Military Industries proceed despite there being only one bidder, Elbit Systems, which is already Israel’s biggest defense contractor.

Sources said that Shai Babad, the treasury director general who is responsible for privatization, will probably endorse the recommendation, unless the state comptroller decides that there is a basis for accusations of conflicts of interest among GCA officials.

“We hope to finish [the sale of IMI] in a few weeks,” Ori Yogev, director of the GCA, told Reuters on the sidelines of the conference on Tuesday.

A process that began with five bidders is now down to Elbit. Yogev said Elbit could buy IMI as long as it pays what the government is seeking, which is a minimum 1.1 billion shekels ($277 million).

Of the 87 companies that remain in government hands, the 10 set to be sold generate nearly 90% of their combined revenues, which the GCA said totaled at 69 billion shekels last year. In 2015, the companies earned a combined 756 million shekels, up from 432 million in 2014 and a loss of 600 million shekels in 2013.

Kahlon told the conference that the government must improve the performance of state-owned companies by ensuring seats on their boards were filled.

“We lack 450 directors and 70 chairmen. This is a serious problem. If the law says we need to have a certain number of directors, we need to have it,” he said.

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