Minister of Finance Silvan Shalom has ordered Ministry of Finance Accountant General Nir Gilad to enforce the debt arrangement with the kibbutzim (collective settlements) by completing arrangements for transferring 25% of the Tnuva concern to state ownership.
Shalom is basing his actions on the follow-up agreement with the kibbutzim signed in 1996, as amended in 1999. The agreement states, "The kibbutzim will transfer 25% of the every kibbutz's rights in the company and/or legal entities that may be established in place of the Tnuva cooperative society." 600 agricultural communities, half of them kibbutzim, control Tnuva.
Most of the kibbutzim signed the notes, mostly because all money transfers and debt forgiveness was conditioned on their signature. Some kibbutzim, mostly in the central region, which did not need to have debts forgiven or rescheduled, did not sign the notes.
In recent years, various parties in the kibbutz movements have tried to find a way to avoid fulfilling their commitments. Two objections have recently been raised. The first is based on the fact that there are two cooperative societies named Tnuva: Tnuva Food Industries, which controls the milk industry, and Tnuva Central Cooperative for the Marketing of Agricultural Products in Israel. The Ministry of Finance says the Tnuva group includes both cooperative societies.
For their part, the kibbutzim, senior Tnuva officials, and various kibbutz and Tnuva legal advisors claim the arrangement signed by the kibbutzim involves only Tnuva Central Cooperative for the Marketing of Agricultural Products in Israel. They assert that the note does not refer to Tnuva Food Industries, which has most of Tnuva's capital.
The second objection is that transferring the shares is conditional on transforming the two cooperative societies into a company. This appears unrealistic, although Tnuva CEO Arik Raichman began dealing with the issue several years ago.
To date, initial efforts have been made to define the rights of each kibbutz and moshav (cooperative settlement) in the cooperative societies in order to establish ownership of the asset. This has been completed, but there have been various delays since then, believed to be linked to an attempt to gain government consent for deleting the Tnuva clause in the debt arrangement, before Tnuva becomes a company.
These matters were brought to Shalom's attention yesterday, and he ordered Gilad to fully enforce the notes.
Published by Globes [online] - www.globes.co.il - on July 15, 2002