Comptroller Probing Sale of IMI Plant

The state comptroller is investigating the decision-making involved in the sale of the Israel Military Industry's Magen defense plant to Sammy Katsav for NIS 2.5 million.

A short time after the sale, TheMarker revealed that the sale price was especially low and prompted questions within the defense industry, because the expected profits of the factory were $3 million a year.

Around a year before the Magen sale to Katsav, the Government Companies Authority signed an agreement to sell the plant for $20-25 million to General Defense, but the deal did not go through, because the group did not complete it, and paid a $1 million fine to IMI.

Sources close to the sale at the time said that difference between the two offers was extraordinary. Now, it seems that the comptroller is investigating why the company was sold for such a low amount.

TheMarker revealed that reports stated the company's expected net profits would reach $3 million for each of the three years after the sale, so the plant was sold for less than the profit the owner raked in in the first year of operations.

According to TheMarker's findings, Katsav committed himself to paying 30 percent of the company's pension commitments, amounting to $3 million, while the Finance Ministry and IMI were to pay the rest. The treasury also took it upon itself to pay debts of NIS 350 million to pensioners.

At the time, the treasury said that the deal was made after a tender, and that questions on the matter should be asked of IMI. The treasury also said that it was not a whole company that was sold, but one division that was losing money.

The Magen plant produces Uzi, Galil and Glilon rifles, and pistols. Katsav also received an option to purchase another IMI plant in Kiryat Shmona.