Comptroller slams nepotism, corruption in Nat’l Transport Co., Dan bus co.

The reports note a range of “severe” defects, including defective management, improper appointments of persons with personal connections to managers.

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January 28, 2015 19:17
2 minute read.
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An Egged bus driving through Jerusalem. (photo credit: MARC ISRAEL SELLEM)

 
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State Comptroller Joseph Shapira on Wednesday published dual reports slamming alleged nepotism and corruption in Netivei Israel – National Transport Infrastructure Company and the Dan Bus Company.

Netivei Israel was formerly known as the Israel National Roads Company.

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The reports note a range of “severe” defects, including defective management, improper appointments of persons with personal connections to managers, improper financing of foreign flights and other conflicts of interest.

Regarding Netivei Israel, the report said that former CEO Shai Baras had improperly appointed an employee he had been personally close with to be an outside adviser and evaluator on a committee that approved extraordinary requests by developers.

The appointment was made at the same time that the employee was giving financial advice and opinions to some of those same developers, and he was paid NIS 3.5 million for less than 1.5 years of work – far above what the comptroller viewed as reasonable. Further, the appointment was made without a standard public competition for the position and despite the person not being on Netivei Israel’s standard listings for performing the work.

Shapira noted that nepotism at Netivei Israel is particularly serious since the public entity receives around $7 billion per year from the state.

Although Dan is technically a private company, it receives large public subsidies, around $500 million per year, which Shapira said imposes a higher level of standards, accountability and transparency on the company than for a completely private entity.



The Transportation Ministry failed in its oversight of Dan, the comptroller said.

He criticized the conduct of Dan chairman Micha Najar and CEO Shmuel Rafaeli as raising issues of conflicts of interest between Dan’s needs and their personal interests.

Najar and Rafaeli approved foreign flights for themselves and others on Dan’s dime substantially beyond what was reasonable, the report said.

They did not report and distinguish which aspects of their spending of company funds were for personal expenses and which aspects were business-related, it added.

Shapira ordered the Transportation Ministry to better police Dan’s conduct and use of public funds.

Netivei Israel responded with clear concern for the report’s allegations, saying that it had already made changes and would continue to work hard to avoid a recurrence of some of the activities being questioned.

Dan accepted some criticism, but also stating that the comptroller was trying to hold it to the full standard of a public company when Dan, at its root, is a private company.

Dan said that its actions are up to the standards of other private companies.

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