IMI privatization tender suspended

IMI Systems

The Attorney General wants a criminal investigation of Government Companies Authority head Ori Yogev, who is managing the tender.

The suspension of the Israel Military Industries Ltd. (IMI) privatization tender will continue until the uncertainty regarding Government Companies Authority head Ori Yogev is removed. Sources inform "Globes" that in recent days, Ministry of Finance director general Shai Babad asked Attorney General Avichai Mandelblit what he should do in this sensitive matter.

Two weeks ago, the State Comptroller asked Mandelblit to consider a criminal investigation against Yogev in a number of affairs. If Mandelblit agrees, Yogev's suspension from his position is likely, and this measure will have consequences for continuation of the tender being managed by Yogev. For this reason, the Ministry of Finance hopes that the Attorney General will decide soon to remove the uncertainty, but the tender is now suspended, pending Mandelblit's decision, even though officially, the negotiations with Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), the only bidder left in the tender, are about to begin.

The State Comptroller's probe of Yogev focuses on a number of matters: the findings of an audit of Mekorot National Water Company and its subsidiary, Mekorot Development Enterprise; the appointment procedures for auditing accountants in government companies (through a committee in which Yogev himself was not a member); and agreements with accounting firms for conducting valuations in the IMI privatization process.

Negotiations were scheduled to begin in the coming days between the state and Elbit Systems. The negotiating team includes Ministry of Finance budget director Amir Levy, Yogev,and Ministry of Finance legal advisor Asi Messing. Simultaneously with the probe of Yogev, the State Comptroller is also investigating the IMI privatization process, from which four bidders withdrew.

Two weeks ago, "Globes" reported that parties in the Ministry of Finance had asked the Government Companies Authority to consider the consequences of selling IMI to Elbit Systems. These parties said that Elbit Systems would thereby significantly increase its market power by acquiring IMI, thereby becoming a monopoly in the arms market - a development liable to pose difficulties for the Ministry of Defense in future tenders. A large proportion of the Ministry of Defense's procurement from defense companies is exempt from a tender.

Elbit Systems is consolidating its position as one of the three main players in the arms market, in addition to Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) and Rafael Advanced Defense Systems Ltd.. Ministry of Finance Accountant General Michal Abadi-Boiangiu sent the tenders committee a detailed letter expressing her objection in the matter.

Published by Globes [online], Israel business news - - on March 23, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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