Mifal Hapayis Former Execs Ordered to Return $13 Million in Excessive Pensions

The National Labor Court yesterday ordered three former Mifal Hapayis national lottery executives - Gideon Gadot (ex-chairman), Elitzur Goren (ex-CEO) and Rachel Guata (ex-VP) - to return some NIS 13 million (which includes adjustments for inflation) which they illegally received from the company.

The judges, led by the Court President Steven Adler, rejected the threesome's appeal of a Tel Aviv District Court decision, ruling that Mifal Hapayis' original suit had been detailed and well reasoned, leaving no room for intervention.

Gadot served as the lottery's chair from 1981 to 1996. Between 1984 and 1992 he also moonlighted as a Likud member of Knesset. The lottery awarded him NIS 1.34 million severance pay when he retired, while he also received a pension equivalent to 70 percent of his salary. The pension started at around NIS 58,000 per month and was index-linked.

The Labor Court adopted the position of the District Court which slashed Gadot's pension from NIS 66,000 to NIS 20,000 and ordered him to repay Mifal Hapayis NIS 5.7 million to cover pension payments dating back to 1996 as well as his severance pay.

Goren, who retired as in 1994, was ordered to return his severance pay and part of his pension as well, for a total of NIS 3.5 million.

Guata, who stepped down in 1996 at the age of 39, will return severance and pension benefits worth NIS 3.7 million.

The judges noted in their ruling that the salary of a Mifal Hapayis CEO was substantially higher than the CEO in a state-owned company.

The State Comptroller's Office had told the national lottery company that the retirement conditions of the three were beyond the acceptable norm for equivalent positions in state companies of comparable size.

Then-attorney general Michael Ben-Yair told Gadot's successor, Avraham Katz Oz, to look into the matter. Ben-Yair said that Hapayis enjoys a unique status as it is "incorporated as a private company but definitely serving public goals."

Katz Oz appointed a public committee headed by Amnon Zichroni, who concluded that as a company bound to public standards, the trio's pension packages "exceeded the norm for a public company to the highest degree, without any justification."

Gadot had defended his position in court on the grounds that the Hapayis salary committee had set the terms of the payout. "They gave, and I accepted with love," he said. He said that he need not be "a chief rabbi who gives a stamp of approval to this or that decision of the committee."

In their appeal, the three argued that the sums were approved in a legal manner by the board, wage committee and the company's legal advisors. They said that the District Court had erred in retroactively applying rules covering public companies to the severance agreements they reached with the company, as it is a private corporation whose budget does not come from the public purse.

However, the Labor Court ruled that "Mifal Hapayis was not established as a private gambling enterprise," but rather, "the essence of its existence is to derive profit from lotteries for the use of the public." In this context, the level of the severance packages was unacceptable, the court said.