Treasury reneges on agreement with IBA

IBA brokered settlement with the Treasury, selling off real estate in order to guarantee a credit line and maintain solvency.

IBA logo 311 (photo credit: Courtesy of IBA)
IBA logo 311
(photo credit: Courtesy of IBA)
As the cash-strapped Israel Broadcasting Authority prepares to implement long-awaited reforms – following years of negotiations, strikes and sanctions – the Finance Ministry broke off its agreement prior to Passover.
The IBA brokered a settlement with the Treasury, selling off its real estate assets in order to guarantee a credit line and maintain solvency.
In return, the Finance Ministry promised to transfer a grant of NIS 90 million, a loan of NIS 240 million and approximately NIS 400 million as its share of the real estate sales.
The IBA had previously negotiated a compromise with both the Journalists Association and the Histadrut labor federation on layoff compensation.
As a state-owned enterprise, the IBA would not be directly involved in the real estate transactions. The Treasury would receive its rights and ultimately transfer a large portion of the proceeds from the sales to the IBA barring the loan.
Last month, representatives from the Prime Minister’s Office, the Finance Ministry and the IBA signed a memorandum of understanding.
Days before Passover, the IBA received a document from the property division of the department of the accountant-general of the Finance Ministry that contained new conditions contradicting the signed MOU.
IBA officials Eran Horn and Tomer Karni objected strongly to the amended version.
Karni, the IBA’s deputy legal adviser, warned that if the IBA abided by the new terms, the enterprise would leave itself open to political pressure.
The new terms would also jeopardize the IBA’s offices.
While the IBA wants to retain one-third of its headquarters in the old Sha’arei Zedek building on Jaffa Road, the Finance Ministry plans to sell the property without guaranteeing plans for the IBA.
Even if the Treasury were to relent and allow the IBA to remain in its current building, the IBA must find another location from which to broadcast.
Since the Finance Ministry changed the negotiation’s terms, the IBA has ratcheted up the pressure. IBA director-general Yoni Ben-Menachem wrote a terse letter to accountant-general Michal Abadi stating that the new terms were unacceptable and the IBA demands that the previous agreement be upheld. The IBA has threatened to manage its real estate transactions outside of the Finance Ministry.
Due to the negated compromise, the benefit packages of several hundred IBA employees are in jeopardy.
The enterprise cannot afford to lay off staff without funding from the Treasury.