The outgoing leadership at the Israel Railways union used its money to hire private investigators to probe employees' behavior and to pay off fines personally incurred by union leaders, found a report by the Histadrut labor federation.
The national union, which is at odds with the railway board led by Gila Edrey, was investigating what the latter did with the NIS 2.5 million it received from members over the past year and a half. It released the report over the weekend.
Edrey told TheMarker that she and her team had done nothing wrong, and that they had received the relevant Histadrut official's permission for the contested expenses.
The Histadrut found that Edrey and her team were relatively organized in their financial management. It also found two problematic expenses: The union apparently hired private investigators to trail two company employees whom the union leaders suspected were cooperating with the management in eavesdropping on them. It also found the union leaders had used union money to cover NIS 45,000 in fines they had incurred personally when a judge found them in contempt of court half a year ago.
The conflict between the Histadrut and the railways union broke out in June, after Histadrut chairman Ofer Eini decided to oust Edrey, disband the union leadership and appoint a new team. In response, Edrey and her allies argued that the Histadrut did not represent the railways workers and tried to organize under competing union Koach La Ovdim. That attempt fell through.
Meanwhile, the Histadrut asked accountant Elisha Shaar to conduct an urgent review into the finances of the railway union, particularly the northern branch, where Edrey's support is especially strong.
The railway union receives its budget from the NIS 45 a month membership fees paid by the railway's 2,000 employees. In 2011, the employees gave the union NIS 1.63 million, of which NIS 1.24 million went to the national union and NIS 415,000 went to the northern branch. Employees gave the union another NIS 668,000 in the first half of 2012.
Israeli Railways itself makes no contributions to its union's budget. However, it does occasionally help the union fund activities for employees.
The accountants met with Edrey and with Eldad Levy, the northern branch's accountant; reviewed the quarterly reports; and went through union checkbooks, meeting protocols and agreements with service providers. The union offered full cooperation, thus providing a rare glimpse into the inner operations of one of the country's most powerful unions.
There were no issues with how the union recorded revenues, they noted. Problems arose with the expense side of the equation. The audit looked into expenditures from January 2011 through June 2012, over which period the union spent NIS 2.5 million. NIS 1.7 million was spent by the national union, mostly on legal advice (34.3% ) and PR advice (30% ). The northern branch spent NIS 793,000, of which 63% was for "welfare," including holiday gifts and activities for employees. The union also spent money on cell phones, food and taxis.
Most of the expenses were completely reasonable, found the auditors.
However, the union did have an inexplicable NIS 18,000 debt to the bus cooperative Egged and to the legal firm that advised the union when management moved its headquarters to Lod.
The real questions arose regarding the money the union spent on private investigators. The union hired private eyes in two instances. In the first case, it paid NIS 65,000 to investigate claims that a train executive had sexually harassed an employee. In the second case, it paid an investigator NIS 44,600 in March and April of this year following "a suspicion that a manager in the southern district, employed under a personal contract, is interacting with employees in ways that flout agreements and damage railways employees," Edrey explained in her response to the audit.
But that's not the real reason, the auditors countered. The union actually hired the snoop due to suspicions that this manager was helping management eavesdrop on employees, they stated.
They could not find any protocols detailing the union's decision to hire the investigators, they noted. Thus, there was no official affirmation of the union's motives in these cases.
However, "Launching investigations into Israel Railways employees is not one of the union's public duties, and specifically in the case of criminal allegations, such as sexual harassment," the proper party to turn to is the police, they said.
The second problematic expense involves the use of union money to pay fines the union leaders personally incurred for contempt of court. This includes NIS 10,000 fines that Edrey, northern branch union chief Shai Tal and southern branch head Moshe Uliel were each charged, and NIS 15,000 charged to the union as a whole. The fines were incurred amid wildcat strikes the union launched in February.
The treasurer told the auditors that the Histadrut's transportation sector official Avi Edrey had approved the union's decision to cover these fines. But Avi Edrey told the auditors and TheMarker that he had told the union chiefs they'd have to pay the fines themselves, and added that he still expected them to do so.