electricity line old370.
(photo credit: Marc Israel Sellem)
Israel Electric Corporation CEO Eli Glickman pledged to launch a transparent investigation into the disappearance of NIS 1.5 billion from the utility's accounts, speaking to Globes ahead of a board of directors' meeting on the issue Sunday.
"We'll investigate and leave no stone unturned. We'll report matters properly and will act transparently and credibly," Glickman told Globes, speaking about the NIS 1.5 billion cash flow shortfall, the discovery of which in September caused a schism between the Finance Ministry and the utility, and which jeopardizes its financial stability.
Glickman admitted that serious flaws were found in IEC's conduct, and he disclosed that he would ask the board of directors' approval to increase the amount of capital that the utility plans to raise in November, and to bring forward offerings planned for early 2013.
Later Sunday the IEC's management will hold an expanded meeting to discuss the shortfall and its repercussions on the utility. The board of director's audit committee will also convene to discuss the findings of the external examiner's report by Goren Capital Group Ltd. IEC's management says that it has no plans to draw personal conclusions against executives at this time.
"It's disgusting to demand the resignation of executives at this stage, before the facts are clear," an IEC executive told Globes. "The CEO, CFO, and other executives are working day and night under enormous pressure caused by events beyond their control. It's anarchic and irresponsible to pass judgment before the facts are heard."
The scandal broke out in September, when IEC notified the TASE that the update of its cash flow projections found a NIS 1.5 billion shortfall, partly due to higher fuel costs. Last week, Glickman and IEC CFO Harel Zeev Blinde asked Finance Ministry officials for state aid in raising the amount. They asked the government to increase its guarantees to IEC beyond the NIS 5.5 billion already raised with government guarantees since the beginning of the year.
The utility wants to increase the latest offering, which the Knesset Finance Committee has not yet approved, from NIS 500 million to NIS 2 billion, and says that this is the only way that it can buy all the fuel it needs for the production of electricity.
The request has infuriated the Finance Ministry, especially the Accountant-General's Department, which previously opposed increasing the government guarantees to IEC beyond NIS 4 billion. The Accountant General's Department fears that increasing the government guarantees to IEC will negatively affect the State of Israel's credit rating. IEC's debt totals almost NIS 70 billion, the second largest in the country, after the government debt.