State Bordered on Criminal Negligence in Letting Agrexco Collapse, Says Finance Committee Chairman

The state should have behaved transparently about Agrexco, the members of the Knesset Finance Committee said yesterday in a meeting on the demise of the agricultural produce export company.

"The state's behavior in the Agrexco matter borders on negligence and criminality," said MK Moshe Gafni (United Torah Judaism ), the chairman of the Knesset Finance Committee yesterday. The committee held a discussion on the bankrupt agricultural exporter yesterday, which was ordered liquidated by the Tel Aviv District Court on Sunday.

gafni - Tomer Appelbaum - September 14 2011
Tomer Appelbaum

"The Finance Ministry must reveal the motives behind the decision not to provide funds that would have allowed the company to continue operating," said Gafni. "Such a critical decision for the future of Israeli agriculture and farmers can not be made in the dark," he added.

The state and the Israel Plants Production and Marketing Board were Agrexco's largest shareholders, holding 30% and 59% of the shares respectively, while Tnuva owned an 11% stake in the company. The marketing board is also controlled by the state. Agrexco was not a pure government company, but was a quasi-government one.

Gafni said the treasury's decision to let the firm collapse was an attempt to privatize it in an illegal fashion, without an orderly procedure and without the Finance Committee's approval - as required. He also complained that not a single Finance Ministry official involved in the Agrexco affair attended the committee session. Instead, "low-level officials who were unable to supply details on the decision-making process related to the company," were sent, said Gafni.

MK Haim Katz (Likud ), the chairman of the Knesset Labor, Welfare and Health Committee, said this was a case of unprecedented abandonment of the employees. "Things were done dishonestly," said Katz. He said the state was responsible for the company's predicament, as it was the owner. He said the state stole money from pension fund members by encouraging the pension funds to buy Agrexco bonds, and provided a bad example of not meeting its commitments.

MK Shai Hermesh (Kadima ), who heads the agricultural lobby, said someone decided to liquidate the firm in an attempt to privatize it.

Shlomo Nass, the attorney appointed by the court as Agrexco's trustee, told the committee: "The responsibility for Agrexco is in the state's hands, as it appointed the management and board of directors. The state may only own 30% of the company directly, but indirectly it owns [Agrexco] almost completely."

Nass said that in two and a half months of trying to find a way to allow the company to continue operations, the Finance Ministry did not once respond to any attempt to find a solution.