Bezeq Beset by Strife Inside and Out

Fallout from the Trojan horse spyware scandal could undermine a financing deal for communications giant Bezeq. Legal experts said yesterday that a consortium of banks financing the Apax-Saban-Arkin acquisition of Bezeq has the right to withdraw from its commitment should an unexpected business development occur between the time of the signing and the closing of the purchase deal. Thus, the banks could likely withdraw from the deal if it turns out the brewing scandal substantially harms Bezeq.

According to an agreement signed between the state and the Saban consortium, the state must allow the buyers to withdraw from the deal should the banks pull out. Despite this, the buyers must prove that they did everything in their power to convince the banks not to bow out.

The consortium of five major banks, led by Bank Leumi, is said to be extending $600 million in credit out of the $972 million the Apax-Saban-Arkin Group is going to pay the state.

The legal sources made their statement after the Apax-Saban-Arkin group threatened not to carry out the deal because of the scandal, in which police suspect Bezeq subsidiaries Pelephone, Yes and Bezeq International of illegally obtaining documents from competitors and have investigated executives at the subsidiaries.

The Bezeq buyers fear the investigation might draw Bezeq into lawsuits, dragging down the company's value. The Government Companies Authority noted yesterday that the suspicions arose only after the May 9 tender.

The deal is expected to be completed at the end of the month, after receiving final approval from the Communications Ministry. However, the deal is likely to be delayed if the buyers make good on their threat not to close before being promised compensation for any harm to Bezeq's value caused by the investigation.

Meanwhile, an internal struggle between two groups of workers at Bezeq is raging over workers' committee elections next week. Some 3,000 employees who are categorized as "Generation 2000" or "Generation B" workers are demanding that they be allowed to stand for election.

A 2001 collective bargaining agreement defined these lower-paid workers as "employees engaged in defined activities that in the past were staffed by workers of employment agencies." Their lower status stipulates they may vote for representatives but not run in elections.

Committee member Moshe Mushkatel expressed support for Generation B workers' right to be elected. Considering they make up 30 percent of the work force, "it is unreasonable to prevent such a large force of workers from being represented on the committee."

"Generation A" workers as well as Histadrut labor federation representatives object to allocating spots to their junior co-workers. Histadrut member Rahamim Laniado, who holds the Bezeq workers portfolio, said, "Allowing Generation 2000 workers onto the committee doesn't make sense, because these representatives will not be able to wage a struggle against company management, and their time on the board will be useless. They are a weak group lacking tenure in the company."