Shlomo Filber, a political ally of Prime Minister Benjamin Netanyahu now under house arrest as part of a securities investigation, was temporarily replaced as Communications Ministry director general on Monday.
Ayoub Kara, who replaced Netanyahu as communications minister in May, presented the move as procedural, but it could signal the end of Filbers tenure as the Israel Securities Authority investigation into Bezeq and other companies controlled by Shaul Elovitch widens.
In view of developments surrounding the ISA investigation into the Bezeq affair and in order to maintain administrative continuity Communications Minister Ayoub Kara decided to exercise his authority and to appoint Maimon Shalima, the deputy director general, until Mr. Filber can return or for a period of three months, whichever is earlier, the ministry said in a statement.
Filbers troubles come amid other headaches for the prime minister, whose associates are snared in a separate probe into suspicions concerning the governments purchase of three German submarines. On Monday, Miki Ganor, the businessman at the center of the affair who served as middleman between Israel and ThyssenKrupp, was reportedly ready to turn states evidence.
Not only is Filber under house arrest, so is Elovitch and Stella Handler, respectively the controlling shareholder and CEO of Bezeq, as are other figures connected with the investigation. The unfolding probes have pounded the share price of Bezeq and other Elovitch companies, casting doubt about whether his Eurocom holding company can repay some 1.2 billion shekels ($340 million) in debt.
On Monday, Bezeq was down another 1.3% to 5.51 shekels while its parent companies B Communications and Internet Gold lost 2.8% to 56.10 and 2.5% to 28.50, respectively.
For the most part stock market analysts have urged clients to sit out the investigation, citing Bezeqs strong fundamental business. But on Monday Roni Biran, head of research at Excellence Brokerage, said he was concerned and lowered his target price for the stock to 6 shekels from 6.80 before news of the probe surfaced.
The current situation is far from ideal for company management and its ability to navigate it in an especially challenging period, he said. In addition, the probe is threatening to sideline the issue of canceling structural separation, which is hurting shares.
Biran was referring to a central part of ISA suspicions against Filber, who reached a controversial agreement with the company to end the financial separation of its business units, a move that would have bestowed on it huge tax benefits.
Suspicions about Filbers actions while director general were echoed in a state comptrollers report issued last week, which cited a host of alleged administrative irregularities in relation to his handling of Bezeq.
In response to the report prior to its publication, Filber had defended his actions, saying they were no different than those of other government officials and that he was being unfairly singled out.
The comptrollers office decided, for reasons of its own, to focus only on a one-year period, during the term of one minister, of one director general and on decisions regarding a single company, examining the conflicts of interest of that one minister and director general only, he said, referring to himself and Netanyahu.
Filber asserted that Finance Minister Moshe Kahlon also had conflicts of interest because a sister of his works for another telecoms company, Hot, for which the treasury was then preparing legislation that would benefit it and a third company, IBC.
He dismissed problems raised in the comptrollers report, saying he favored Bezeq by noting benefits were awarded to its rivals as well. Filber further claimed that whatever delays there were in introducing reforms to Bezeq businesses like landline telephony, they were no different than delays under five previous ministers and four previous directors general.
Whether or not Filber eventually returns to the ministry, Shalima is unlikely to be his permanent successor. A career army man and more recently ministry official in charge of spectrum allocation and engineering, he has filled in as interim director general twice in recent years.
Shalima is a classic army man who will work by the book, will raise criticisms but implement whatever decision is made, said one ministry source.
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