Zelekha to Appoint Foreign Auditing Firm for Israel Railways

Accountant General Yaron Zelekha was the leading candidate for the post of director-general of Israel Railways a few months back. Shortly after Israel Railways' chairman of the board, Moshe Leon, decided not to extend the contract of the former director-general, Yossi Snir, he offered Zelekha the post. Zelekha initially accepted; but then he reneged, after he was offered a more tempting position, from his point of view - that of accountant general at the Finance Ministry.

Nevertheless, Zelekha, so it seems, did not forget about Israel Railways. He recently decided to increase supervision of the funds going to the public corporation, thus putting himself in the position of one of the key decision-makers about its fate, even if he does not actually run the corporation himself.

To implement his plan, Zelekha plans to appoint a foreign auditing company that will be able to supervise the activities of one of the largest work suppliers in the country without fear. The decision comes in the wake of the pretentious development plan decided on, in the past year, and the dangers inherent in it. The plan calls for an investment in the railways of some NIS 20 billion. Zelekha would like to avoid a situation, such as happened in the Public Works Department, in which public funds are wasted and all kinds of people try to grow rich at the public's expense.

Zelekha has also decided that payments for the project will be made every 45 days, and only after it has been determined how the previous budget was used and how well the project is moving forward. The payments will be stopped if the deadline is not being met. In the PWD, projects were started before a budget was approved and then price estimates changed rapidly and millions were lost; but the state had already commited itself and had to go on paying.

The foreign auditing company will be called on to examine each and every one of the projects in the development plan and to decide what sum would be necessary for carrying them out. If the auditors find that the estimate determined by Israel railways for a particular project is higher than the actual cost of the project, the difference will be taken from Israel Railways returned to the state budget. On the other hand, if the Israel Railways estimate is lower than the actual cost, the corporation will be responsible for raising the funds from its own sources. Israel Railways is due to raise NIS 6.5 billion of the development budget from extra-budgetary sources.

The cost estimate for a transportation project is one of the main factors to be taken into account when determining a project's economic viability. A change of more than 10-20 percent is likely to affect the economic viability of a project, transportation sources say. When talking about a project involving millions, the sums involved in changes are very great indeed.

Government sources have criticized the existing plans and have said that many of the proposed lines, including those between Acre and Karmiel, and the line through the Jezreel Valley, will not prove profitable. They also say that the railways have overbudgeted for the Ra'anana-Tel Aviv line, which is relatively cheap.

Israel Railways' director-general Yossi Mor says he has not heard of the treasury's plan to examine the components of the project and to withdraw sums if the estimate made by the corporation is too high. He said that the agreement for the development plan did not include such stipulations. Mor said Israel Railways' operations were completely transparent, and that he had no problems with outside auditing.