Taking Stock / Daddy Dearest

The great telecommunications battle has begun.

No, that isn't a reference to Communications Minister Ehud Olmert's titanic struggle with the cellular trio, which is fighting tooth and nail against his decree to slash interconnection fees. That battle is already well underway.

A new one is erupting, and it's just as vicious, inside the Israel's biggest phone company, between two of its topmost personalities. The fight reached a new low when the more veteran of the two warriors called for the resignation of the upstart newcomer, sparing no insult regarding his performance.

At Bezeq, behind everything lurks the company's privatization, which has been laboriously grinding on for the last 13 years. Its sale to private hands has become something of a grim joke, not only because it's been taking so long, and not only because there's basically zero chance that Finance Minister Benjamin Netanyahu can sell it this year either.

No, Bezeq's privatization is a sour joke mainly because it's becoming harder and harder to understand why we even bother to dwell on it at all.

Why anybody would privatize a company

There are two reasons to privatize a government company. One is the desire to break its monopoly and open its market to competition, improve service and lower prices for consumers.

To achieve that, the government doesn't need to sell Bezeq. Maybe quite the opposite. Cellular, long-distance and Internet have been opened to competition and soon the domestic arena will be too, and the government has controlled Bezeq throughout.

Who knows, if Bezeq had been a privately held monopoly, perhaps it would have been harder to introduce competition.

The second reason to privatize a company is efficiency. Once owned by businessmen, in theory Bezeq should become more efficient. It would have to achieve a respectable return on capital it invests, a thing no government company has ever achieved.

But this is where the real swamp festers. Bezeq's workers didn't sit around twiddling their thumbs waiting for the company to be sold. For years they have exploited the weakness of the management, and of the Communications Ministry and of the Government Companies Authority, to anchor their rights and perks in cement. Let the company be sold, let it be damned. Their future is secure.

In a series of agreements signed in the last seven years, the workers arranged for 24-karat golden parachutes at a total cost of NIS 3 billion. Bezeq can streamline all it pleases, the government has already paid the bill.

Hello, son!

Bezeq likes to portray itself as an honest corporation that publishes financial statements, is listed for trade on the Tel Aviv Stock Exchange, and that usually boasts charismatic managers armed with a cadre of public relations advisers.

Yet this week the leader of the workers' committee, Shlomo Kfir, unleashed a blistering attack on Bezeq's CEO, Amnon Dick, in writing and via the press. Labeling him a failure, Kfir called for the CEO to resign.

It is pure hypocrisy on Kfir's part. He knows perfectly well who really runs Bezeq - the workers. Its real chief executive is the chairman of the workers' committee, namely, Kfir himself.

When you're the chief executive of a company that belongs to nobody, no wonder you have the clout to give your son a job at the company.

The real reason for Kfir's merciless assault on Dick is apparently his suspicion that the management leaked the report to Yedioth Ahronoth last week, about Itai Kfir's appointment at Bezeq and the likelihood that he'll get tenure, too.

Your average reader would probably be irked that workers do as they please at government companies. But what Yossi Reader doesn't know is exactly what "tenure" at Bezeq really means.

Here is an imaginary scenario for you: Kfir Senior wedges Kfir Junior into the company. But all new workers have to be employed under "Generation 2000" rules, which give them no special perks and also, they are liable to be fired at any time.

Daddy Kfir is nobody's fool. He left a few trap doors and secret compartments in the agreements he signed with management. One that the Bezeq workers particularly like is the quota. The workers committee can name a certain number of Generation 2000 employees to get tenure after two years instead of eight years.

Young Kfir belongs to the Generation 2000 employees, but he can elbow into the collective employment agreement far faster, if named.

That was the easy part. The trickier part is to turn Kfir the Younger from a "collective employment agreement" worker into a "transferred" worker. Meaning? Meaning, this is something dating from the days before Bezeq was a company at all. It used to be a Communications Ministry division, and when it was incorporated, its "transferred" workers at the time got to transfer their surplus, profligate pension rights.

Wait for it: one day, say shortly before Bezeq's privatization or some other major restructuring of the telecoms market, after a few night-long meetings, the workers committee will convene with the management and reach another historic agreement allowing the company to be privatized, or the market to be opened to competition, or a strike to end, or whatever (fill in the blank yourself).

Then the company will release an incomprehensible press announcement studded with baffling buzzwords - Generation 2000, collective, temporary, interim and "transferred" workers.

Forget the jargon and babble. Read between the lines: yet again the workers committee managed to reclassify a few dozen or hundred favored workers from nobodies into "transferred" workers.

That is not imaginary. It has happened.

Six months ago the workers exploited the entry of Amnon Dick as the company's new CEO to set out on another round of extortion. They managed to wrest absolutely wonderful retirement terms for a few hundred more workers.

In Bezeq's financial statement for the fourth quarter of 2003, it noted a modest NIS 420 million nonrecurring charge, that the press largely ignored. What's another half-billion charge for a company like Bezeq! But the truth was that the gargantuan sum is another NIS 420 million that Bezeq is simply handing over to its lucky workers.

Being reclassified a "transferred" worker is a very, very lucrative thing. It is worth about a million shekels to a worker over 50 years of age.

A million shekels? Yes. That is roughly the cost of the extra pension payment to the "transferred" workers, thanks to the agreements the labor committee has signed with management.

Today you're saying, well, it's a pity that the boy needs papa to set him up a dull job at that boring phone company. But tomorrow, if the company's privatization gets delayed long enough and the contacts do their thing, daddy may have arranged for junior to join the exclusive club of Bezeq millionaires.