Politicians Angle to Find Cronies a Way Back Into the Boardroom

An 'A Team' of qualified directors to sit on the boards of government companies was supposed to end patronage, but politicians are fighting back.

Haim Avitan in court in 2013, accused of corruption.
Moti Milrod

Last July the Haifa District Prosecutor’s Office announced that for lack of sufficient evidence it had decided to close the investigative file against Haim Avitan, former mayor of Hadera, who was suspected of receiving bribes from contractors.

But three months later Transportation Minister Haim Katz hastened to submit Avitan as a candidate for director at Ashdod Port, with the idea of eventually appointing him chairman of the government corporation.

Avitan, a member of the Likud Central Committee, may not be an expert in the shipping industry, but he is an important activist and close to its leaders. During his eight years as Hadera’s mayor, Avitan developed a network of political connections, including Finance Minister, Moshe Kahlon, who backed Avitan’s nomination.

Despite the high powered backing the Public Sector Appointments Committee, headed by retired judge Bilha Gilor, rejected it.

“The candidate has no special qualifications that would significantly contribute to the operations of the company, especially at a time it is scheduled to be privatized, when there is a need for expertise in the capital market.,” the panel explained.

The committee had warned it would not approve any candidates for the Ashdod board unless they had at least five years of experience in logistics or transportation. But this warning was ignored.

The committee’s refusal to approve Avitan’s appointment was a harsh blow to Katz’s lofty status in the Likud Central Committee – and to that of his close associate, central committee member Katy Sheetrit. It was the third time in a row the two have failed to deliver the goods at the Ashdod Port, after the unprecedented ousting of Gideon Sitterman as chairman and the rejection of the candidacy of Sasi Shilo, former chairman of the Israel Postal Company and director of the Local Government Economic Services .

Moreover, the Avtian affair may endanger the minister’s influence on the appointment of the next CEO of the port. For the past two years the board has lacked a quorum to form a search committee for the position. Avitan would automatically have been included on the panel.

The CEO and chairman of Ashdod Port carry tremendous political power and have a major says in the privatization process.Thus, Katz had good reason to appeal Avitan’s rejection.

Kahlon intervenes

Over the weekend the daily Yedioth Ahronoth revealed that Kahlon had himself phoned Gilor, asking her to speed up the appointments of candidates two government port companies – although he didn’t name Avitan.

Kahlon denied politics was at stake. “I’m not worried about the fact that I picked up a phone — it’s legitimate. I’m the finance minister and I want to take care of the economy. I phoned her and told her that it’s important to appoint directors in the Ashdod Port because this port has been without a board of directors for two years and it isn’t functioning.”

Despite the finance minister’s genuine fears, the Ashdod Port board has a quorum and the company actually functions quite well.

In fact, immediately upon Avitan’s disqualification, enough directors were suddenly found and a search committee formed to find the next CEO. Incidentally, it is headed by a Transportation Ministry official along with two others appionted via the Government Corporations Authority’s program to select directors through a nonpoliticval betting process, known as “A List directors.”

The more urgent problem is Haifa Port. There, the company really is suffering from poor labor relations and unmanned boardroom seats. Katz recommended two of his own candidates as directors. Kahlon signed off on the nominations and they were submitted. But last Sunday the Gilor Committee decided to disqualify the two requested appointments. In the case of attorney Sarit Golan-Steinberg, there was fear of a conflict of interest problem because she sits on the Haifa City Council.

Tghe extent of the tensions between politicians anbd Ori Yogev, the Government Corpoations Authorioty chief, became evidence last week when Kahlon appeared as a surprise guest at the annual GCA conference and let off some steam.

Kahlon, who has a rocky relationship with Yogev, attacked the most significant achivement of Yogev’s tenure: The Directors A Team program, which was designed to sever the connection between politics and appointments to top jobs at state owned enterprises. Business considerations are now supposed to be the top crieria, with nominations submitted by the general public.

Kahlon took issue Yogev’s program, which has created a bank of candidates based on ostensibly objective criteria, which lesaves polticial considerations out. Yogev is not Kahlon’s man; he was appinted by Yair Lapid, who was finance minister in the last govenrment.

The GCA boasts that 60% of the directors serving today in government corporations were appointed from the A Tea. But the political establishment is fighting back. Over the past six years the Likud Central Committee has become the government’s chief manpower agency.

Members of the central committee have immense polrtical power, for which they have to be compensated financially. The easiuest way is with government jobs.

When TV’s Channel 10 revealed a “job diary” attributed to Culture and Sports Minister Miri Regev, which allegedly contains her ministry’s plans for appointing associates to public positions the frustration increases. Even more so when this is blocked by an official like Yogev, without political support.

Likud rebellion

Already in 2014 TheMarker revealed the rebellion in the ranks of Likud against the A Team. When required to do pick candiates from ther A Team, ministers like Silvan Shalom, Gilad Erdan and Moshe Ya’alon dragged their feet.

The same is true today. Politicians are demanding to enjoy the public benefits that cpome with power and demanding that it be done soon – since nobody knows how long the current government will last.

“I have a lot of respect for the A Team, but I don’t have respect when things are done in a distorted manner – and that will be taken care of,” said Kahlon at the convention. He complained about the unfilled positions on boards, which he blamed it on the refusal of ministers to accept the A Team or propose candidates of similar stature.

Kahlon was expressing the tremendous pressure on him from his former (Likud) and present (Kulanu) associates to restrain the conduct of the GCA, which reports to him, and even oust its chairman.

As part of the attack, two weeks ago Social Affairs Minister Haim Katz – who is close both to Kahlon and to Transportation Minister Yisrael Katz –complained to the State Comptroller’s Office and the attorney general that Yogev had appointed one of his former business associates as a member of the Mekorot national water company board. The director demanded of the Mekorot undertake a thorough streamlining plan, whicch creating friction with the workers’ committee.

Worries about crontism aside, Kahlon’ critique is largely justified. The appointments process at government corporations is distorted.

The A Team was subject to considerable criticism in TheMarker due to discriminatory criteria for filtering candidates; the unuaully large number of Lapid and Yogev allies among the leading candidates; and the power that Yogev concentrated in his hands at the expense of the ministerial leadership, when he asked to remove ministers’ authority to form the boards of directors and blocked appointments he didn’t like.

Ego battles

In the absence of determined political or legal direction, the appointment of the directors has become a gray area and a source of ego battles and horse trading. Among other things, deals have been made whereby candidates from the A Team are approved in exchange for turning a blind eye regarding other appointments – if only to scrape up legitimization for the fragile existence of the A Team to begin with.

From here the path was short to claiming the lack of legitimacy of the process and calling for its cancellation. In Israel, after all, it’s customary to bury crucial reforms only because implementation was faulty, as though it isn’t clear, for example, that political appointments on the Israel Electric Corporation’s board in the company’s present condition, are playing with fire.

The main reason for the failure of the A Team program to work lies in the fact that although two years have passed since it was set up as a pilot project, it is still not anchored in legislation.

In line with Deputy Attorney General Avi Licht’s directive, ministers’ cooperation is official only voluntary, while Yogev promised to act to amend the Government Corporations Law accordingly.

An amendment to the law would solve the shortcomings and formalize the powers of the GCA’ vis a vis the ministersm making the entire process transparent and binding.

But since the draft bill is still not anywhere on the horizon, because political appointments are the life blood of the Likud. As a result the GCA is preoccupied on a daily basis with legal battles with candidates, quarrels with ministers and the paralysis of the corporate administration in the government corporations, as everyone looks on from the sidelines at its demise.

At the end of the week Kahlon’s associates insisted that he had been misunderstood, and that he does not intend to close the A Team, but only to fix the process. They say he even sypports puttng the A Team program into law.

If the Kulanu party doesn’t merge with Likud,, there may be something to those declarations. But meanwhile, the surface is bubbling, and does not augur good news.

“Due to the need to maintain public trust and the desire not to be seen as introducing political considerations in the context of the appointments, we are willing to harm the public interest repeatedly,” Justice Minister Ayelet Shaked of Habayit Hayehudi was quoted as saying.

The head of her party, Education Minister Naftali Bennett, is known as someone who refuses to make appointments from the A Team. “The system has become so accustomed to objecting to appointments and all in the name of the principle of government restraint. We have replaced the value of governability with the value of restraint,” added the woman who is supposed to be Kahlon’s partner in the hoped-for process of approving the A Team.

Although Shaked was referring to the saga of the appointment of the attorney general, if that is also the spirit of her ministry when it comes to cleansing the government corporations of political appointments, perhaps the public would be better off accepting an imperfect bank of candidates, rather than accepting a political activist at the head of a major government corporation on the eve of privatization.