Israel Electric Corporation (IEC) (TASE: ELEC.B22) today petitioned the Central District Court to order the trustee to empty the trust account which money was deposited to pay pensioners. NIS 1.5 billion remains in the account, after IEC withdrew NIS 600 million with the employees' consent a year ago.
The IEC workers committee strongly opposes the emptying of the trust account, and already declared a labor dispute at the utility's previous attempt to empty the account. The current petition to the court is in accordance with a decision by IEC's board of directors on March 21.
The trust account is held at Mizrahi Tefahot Bank (TASE:MZTF). Over the years, IEC's management deposited in the account money to finance various salary benefits to which the utility's employees and pensioners are entitled. The money is intended, among other things, in the event that IEC collapses and its employees lose their benefits. The money is primarily intended to finance the employees' free electricity benefit, the grossing up of the free electricity for tax purposes, holiday gifts, bonuses for employees with 35 years seniority, special compensation, and insurance.
In March 2012, IEC withdrew the free electricity component, amounting to NIS 600 million. It used the money to buy fuel for the generation of electricity as part of the participation in the rescue plan, in which IEC received government guarantees for the raising of NIS 9 billion.
The State Comptroller report on the matter said that the deposit of the money in the trust account was illegal, and that the account should be emptied. The regulatory team which oversees IEC's work made a similar decision.
Published by Globes [online], Israel business news - www.globes-online.com - on May 20, 2013
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