Taking Stock / The Amorai Method

Shlomo my friend,

First of all, congratulations on your appointment, which truly was a surprise. Since you left your deputy-CEO position at First International Bank, and mainly since you parted ways with FIBI's chief Shlomo Piotrkowsky, you'd vanished from the headlines. You opened a little consultancy and the name Shlomo Rothman seemed to have vanished from the public arena.

If our memory is accurate, you used to actually like the limelight. If so, the new job is perfect for you. As chairman of the Israel Electric Corporation, you're in for a lot of publicity, as it's one of the most powerful points of power in Israel.

How powerful is it? Just look at the company's cash flow, and unlike so many of the company's chairmen over the years, you can actually grasp what balance sheets say.

NIS 6.5 billion, that's how much the IEC has invested in each of the last four years. That is a tremendous sum of money. No other Israeli corporation invests amounts like that. And the company's chairman has considerable influence over the amount, how it flows, and to whom.

A 1,001 tales

And after you read the IEC's financial statements, get yourself an appointment to meet with an amiable ex-IEC executive, one Adi Amorai. He had served as chairman of the IEC management board back in the 1990s. (Yes, you can meet with your predecessor Eli Landau too, but only as a fleeting courtesy.)

Amorai will tell you the tale of the IEC's first days, and what he learned during his stint at the company. He will tell you tales of corruption, of the way billions of shekels are spent and squandered, about how long-entrenched high-ranking employees treat the company as their private fiefdom, in his opinion. He will tell you tales of manipulated information delivered to the board of directors, and mainly, he will relate how he was blocked, intimidated, weakened and, finally, crushed into compliance.

After you meet with Amorai, your next meeting should be with the Finance Ministry staffers. For years they have been trying to prize open the electricity industry to competition.

Then sit down with David Assous, the chairman of the Public Utility Authority (Electricity). He's the man who supervises the IEC's tariffs. Now, don't forget, the PUA are the good guys in this story; the ones with the agenda are the IEC people.

Many faces

But before you trek over to the treasury, do your homework. Read the indictments served against the chairman of the IEC labor committee, the deceased Yoram Oberkovich. Read the charges filed against the procurement division chief, Asher Cohen. It matters, Shlomo, because the next time the workers talk about tradition at the company (and complain about how you're trampling it), you should recognize its many faces (and its foreign bank accounts) for what they are.

From that point on, you are no longer innocent of information. From that point on, you know what is going on. And this is the point for you to decide which path you will follow.

Option one

So here's the first option. You thank all the pundits who hailed you as the all-too rare expert appointment, but smile inwardly - your real agenda is to gain power and scatter your largess upon the waters for your friends and cronies to feed upon, just with rather more skill than is commonly shown.

In gratitude to the people who appointed you, you start creating links with the IEC's major suppliers. First to become your new best friends are the billionaire brothers, the Ofers, who have traditionally done big business with the IEC, whether it's supplying cables, or coal, or power stations.

Next you announce faithful adherence to another entrenched IEC tradition - nepotism. You lend your support to the teams of lawyers fighting to preserve the practice of hiring the kinfolk and keeping the gargantuan utility a happy warm bubble of festering family relations.

You strike alliances with the unions, secret ones of course, supporting their battles against the Finance Ministry's efforts to introduce competition.

And above all, you adopt the position that the IEC isn't a lowly company, it's a separate realm that collects tax from the State of Israel and lives by its own rules.

And there's the other option, Shlomo. You could create history.

You could view yourself as the ultimate representative of the company's real shareholders, the people of Israel.

You could institute dramatic reform of the procurement division. You could revisit all the company's major decisions and practices. You could replace key people. You could bring in new, squeaky clean faces. You could negotiate with the labor committee, but not kowtow to it.

And most important, you could deliberately weaken the IEC, and strengthen the entire electricity sector by allowing competition to arise.

Make no mistake, Shlomo. There are enormously tricky people over there at the IEC. For years upon years they have found convoluted ways to postpone, fudge and torpedo any attempt to let in competition. Sometimes they found succor at the National Infrastructure Ministry, sometimes in the Knesset committees and sometimes even at the Prime Minister's Office.

Yes, Shlomo, we know it's easy to sit on the side and hand down advice, and we also know what the easier option is. Thing is, you hail from the business sector. We remember you from banking circles. So we have higher expectations of you, and we won't settle for the shoddy stuff delivered by the IEC's former chairman.

Nor will we settle for the Amorai method, of standing by as the corruption rages on, only to start moaning seven years later that you'd tried to tackle it, but failed.