Internal disputes within the ministry of finance threaten to delay the Israel Military Industries Ltd. (IMI) privatization program. In discussions that took place last week in the finance ministry, there were disagreements between senior officials about the worthwhileness of privatizing the government-owned defense manufacturer.
Sources inform "Globes" that while some senior officials support privatization, others oppose the plan claiming that it would cost the finance ministry a great deal of money and now is not the time for such expenditure.
The finance ministry said in response, "We do not comment on internal discussions."
However, one source told "Globes" that there is nothing in the disputes to change the position of the finance ministry that IMI should be privatized.
In recent days, departmental heads at the finance ministry presented the plan to privatize the company to Minister of Finance Yair Lapid. This follows last year's agreement between employees, the Histadrut, finance ministry, defense ministry and Government Companies Authority to move forward on the privatization plan.
IMI has 3,000 employees of whom 940 are not necessary for the company's operations. Their early retirement as part of privatization would cost the state NIS 1.1 billion, while a further NIS 800 million will be set aside for 1,040 employees in case the new owners make further layoffs. In addition to these costs, with the privatization of the company, the state will erase NIS 2 billion of IMI's debts from various loans made by the finance ministry and defense ministry in recent years to allow the defense manufacturer to continue operating.
A source close to the topic strongly refuted claims by senior finance ministry officials that privatization of IMI would cost the state a great deal. The source said, "Privatization is the most reasonable solution in a situation in which the government pours tens of millions of shekels into the company every month and every attempt to derail the plans already agreed is putting a spoke in the wheels."
According to the privatization plan that was agreed in the past few months, in exchange for erasing the debts and providing money for a safety net and retirement program for some of the employees, IMI will move to the Negev by 2020, vacating the expensive land where it is located near Ramat Hasharon so that 20,000 new homes can be built. Supporters of the privatization plan said that marketing this land, in one of Israel's most expensive regions, would allow the state to recoup many times over the cost of the privatization.
Published by Globes [online], Israel business news - www.globes-online.com - on May 27, 2013
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