Comptroller's report: PM made political appointments

According to special state comptroller report, several Likud Central Committee members given jobs by Israel Small and Medium Enterprise Authority during Olmert's tenure as industry, trade and labor minister; comptroller submits findings to attorney general, civil service commissioner

Ynet reporters|Published: 08.28.06 , 10:35

A special report published Monday by the state comptroller harshly criticizes Prime Minister Ehud Olmert, who served as minister of industry, trade and labor minister for three years on behalf of the Likud, and the director-general of this office, Raanan Dinur.

According to the report, Olmert and Dinur made political appointments at the Israel Small and Medium Enterprise Authority (ISMEA), providing jobs to several Likud Central Committee members who did not deserve the appointments.

The findings were submitted to Attorney General Menachem Mazuz.

State Comptroller Micha Lindenstrauss wrote in his report: "The inspection findings raise the fear that the authority served as a convenient route for political appointments of people affiliated with the party of former Trade, Industry and Labor Minister Ehud Olmert. The authority operated while ignoring the norms of the public law, issuing projects in which employees recruited in an improper and unequal process were employed, with their only apparent quality being their association with the minister's party."

The affair began during the tenure of former Industry, Trade and Labor Minister Dalia Itzik, then a labor Knesset member. A special analysis report prepared for the ministry's director-general said that the ISMEA had turned into a "backyard for political appointments" and that "the authority is identified as polluted with political considerations and political jobs."

Dalia Itzik claimed in her answer to the comptroller that her deputy Eli Ben-Menachem was in charge of the authority. Ben-Menachem, on his part, said that he had no personal connection to the issue and that in any case the report's allegations were baseless.

Likud project managers

In March 2003, Olmert took over the ministry, yet despite the previous report, he decided (along with Director-General Dinur) to change the authority's charter in a manner that boosted the minister's influence over its budget and on appointing its chairman.

In his response to the comptroller, Dinur said the changes were meant to allow the authority to work "properly and effectively."

Shortly thereafter, the Ministry added a new senior deputy director post. Olmert's candidate was attorney Lilach Nehemia, the former partner of current Finance Minister Abraham Hirchson. That appointment was made without doing the orderly paperwork.

The comptroller discovered that earlier Nehemia was a candidate to become a member of a government company directorate – however, she was found unfit for the job for fear of personal and political attachment, as well as the "lack of special skills."

Following Nehemia's appointment, the authority initiated business ties with many new project managers. The comptroller's office looked into three of them and found concerning results.

1. Moshe Shimon, a member of the Likud Central Committee, received NIS 27,000 per month (roughly USD 6,000) to manage a project aimed at handicapped groups. As it turned out, in January 2004 Olmert attempted to secure another top post for Shimon – that effort failed because he lacked university education.

2. Yitzhak Michaeli, also a Likud Central Committee member, received the same sum of money for running two projects: "Encouraging employment among the north's Bedouin population" and "Integration of small businesses from the non-Jewish sector as service providers through outsourcing." In this case, the examination revealed anomalies, including the fact Michaeli continued to draw a salary even after the contract expired.

3. Likud Central Committee member Yaakov Padida was tasked with a project aiming to "transfer small businesses from downtown Tiberius to a new industrial zone in the city." Padida was appointed without anyone else being interviewed for the post. Dinur's explanation: Even though Padida is not an "academician or economist…the project he was employed in did not require university education."

During his first month on the job, Padida did not report anything, and in the following months submitting generalize reports that said nothing about the extent or result of his work. For that, he received about NIS 14,000 (roughly USD 3,000) per month.

Response: Recommendations implemented

The Israel Small and Medium Enterprises Authority issued the following response: "The authority implemented the comptroller's recommendations and introduced new procedures regarding manpower and tenders, as is common in the public service…regarding the three project managers the report refers to, the Authority stresses that it ended the work of two of them more than a year ago. The Authority will continue to work in order to advance the objectives and targets set in the work plans, while implementing comments made in reviews and meeting the principles that stand at the basis of public service."