Lapid Puts Allies in Key Posts to Do Battle With Treasury Brass

Lapid counting on allies to defeat opposition to new housing company and fulfill Yesh Atid campaign promise.

Finance Minister Yair Lapid, at odds with treasury officials over his plan to form a government company to advance residential construction projects, aims to overcome opposition by appointing an associate as the new head of the Government Companies Authority.

Lapid plans to announce, perhaps as early as this weekend, that Ori Yogev will be the next director of the agency, which overseas government-owned enterprises.

A committee chaired by capital markets commissioner Oded Sarig announced on Sunday that of the two remaining candidates Yogev was its choice for the post.

Treasury officials told TheMarker that there was an understanding that Yogev will move quickly, after taking up his new post, to set up the new company. Uri Shani, another Lapid associate, will then be named to head it.

Lapid, whose Yesh Atid party coasted to a huge election victory on a promise to help Israel's struggling middle class, is under heavy pressure to produce a solution to rising home prices. But he faces strong opposition to the new company, from the treasury budget division as well as from other ministries.

Shani has Lapid's full backing to meet Yesh Atid’s campaign promise to build 150,000 rental apartments within a decade in cities including Tel Aviv, Jerusalem, Haifa and Be'er Sheva.

Civil Service Commissioner Moshe Dayan recently blocked Lapid's plan to give Shani a senior position in the Finance Ministry in order to expedite the plan.

Yogev, 53, is regarded as very close to Prime Minster Benjamin Netanyahu, serving as an informal economic adviser, and in recent months he has also formed close ties with Lapid. It was Yogev who recommended that Lapid tap Yael Andorn to be director general of the treasury.

Among those who oppose Yogev's appointment to such a key role is former Likud MK and Knesset Speaker Dan Tichon. His opposition stems from his time working with Yogev from 2003 to 2006, when Tichon was chairman of the Israel Port Authority and Yogev headed the treasury budget division.

Pricy reform

"Yogev poured NIS 3 billion to NIS 5 billion of state money into reform. The port workers got the money but Yogev's reform plans never went anywhere," Tichon said. "A man like that should be barred from public office."

Yogev declined to respond.

The selection committee received a draft State Comptroller's report that was sharply critical of Yogev's term as a director and later chairman of Israel Railways in 2010 and 2011, in connection with the purchase of rolling stock from the Canadian company Bombardier.

The State Comptroller has yet to publish the report, and TheMarker has learned that the sections devoted to Yogev will not be included in the final version.

The Government Companies Authority has been without a director for 18 months. The agency controls around 100 enterprises that in 2012 employed 58,800 workers and accounted for 2.8% of Israel’s gross domestic product. Its portfolio includes some of Israel's biggest business, including Israel Electric Corporation, the port operating company and Israel Aerospace Industries.

Yogev is in favor of reducing the public sector and privatizing companies; it is a near certainty that he will try to tackle the most problematic government companies, including the port operating companies, IEC and Israel Railways.

Shani has an extensive background in both business and government. But the one time he headed a government company, as chairman of the government housing company Amidar, he came under criticism from then-State Comptroller Miriam Ben-Porat in her 1992 report.

She accused him of using company resources for his personal benefit and that of close associates, including spending $13,800 on 116 nights at various hotels and using petty cash for his wife's personal expenses.

In 1996, Shani was convicted of breach of trust for allowing Ariel Sharon to take an entire floor of Amidar's office building for his personal use. Shani was sentenced to perform community service.