A cabinet committee on privatization headed by Finance Minister Ehud Olmert approved the sale of Ashot Ashkelon Industries Ltd. to a consortium headed by former MK Avraham Burg, provided the group dumps its current funding partners, the Finance Ministry said Sunday.
State Comptroller Micha Lindenstrauss had recommended last week that the government postpone the sale of the state-owned subsidiary of Israel Military Industries, until Burg would adequately explain the nature of his relationship with the funding partners, Ian Davis and Aviv Algor. The two are currently facing criminal charges, including grand larceny and publishing false information liable to mislead investors, and as such are prohibited from purchasing public property.
The Government Companies Authority and Attorney-General Menahem Mazuz accepted Lindenstrauss' recommendation, prompting Burg and his partner in the purchase, T.R. Civil Engineering Ltd., to inform the GCA that they intend to find a new source of funds for the deal. Following their announcement, the cabinet committee decided to approve the sale's completion.
The Finance Ministry said that Burg had yet to disclose the identity of any new financier.
Davis and Algor were set to provide 36 percent of Ashot's purchase price, half of Burg's planned 72% share.
Ashot workers said they would strike Monday in protest of the cabinet decision, which they called a "cynical attempt to bypass the state comptroller's report and empty it of content."
"Even [former Finance Minister Binyamin] Netanyahu made sure to protect workers' rights when he privatized," they said, noting Olmert's claim to be more socially minded.
The factory will be closed for all activities besides workers' protest meetings, they said, demanding that the Finance Ministry negotiate with them on the conditions of the sale. The workers asked to be included in any privatization arrangement benefiting IMI employees.
Olmert emphasized the importance of respecting the workers' rights in his closing remarks at the committee hearing, and called on the buyers and workers to reach an agreement.
'Vital interests' set for refinery sale
In the same Sunday morning cabinet committee, ministers approved a decree outlining Israel's "vital interests" that must be protected in the privatization and sale of the Ashdod oil refinery.
The refinery must remain in Israeli hands; confidential information must not be divulged; competition within the fuel industry must be privileged; hostile parties must be prevented from wielding an influence over the refinery; and the continued existence of oil refining activity in Israel - and the domestic supply of refined oil products - must be ensured, according to the document.
"For the first time in a privatization process, the tool of a vital interests decree (tzav interesim hiyoniyim) is being used in order to anchor and protect the economic interests of the state in the company being privatized," noted Government Companies Authority director Eyal Gabbai.
The guidelines were formulated by the GCA following consultations with the Prime Minister's Office, National Infrastructure Ministry, Defense Ministry, General Security Service, Israel Police, Anti-Trust Authority, Fuel Authority, Justice Ministry, and others.
In the government's plan to privatize Oil Refineries Ltd. (Bazan), it was decided that the Ashdod and Haifa refineries would be divided and privatized separately. Meanwhile, the Ashdod facility would be sold as a whole through a tender and the Haifa refinery's stock would be issued for trade on the Tel Aviv Stock Exchange.
At the end of the month, the High Court of Justice is scheduled to begin hearing a petition by the Movement for Quality Government that was lodged in opposition to monetary arrangements between the state and the refineries' operator, the Israel Corporation, that were made in the context of the privatization.
The division of Oil Refineries and sale of the Ashdod installation will only be able to take place when (and if) the court approves the deal.