SodaStream and gov't at loggerheads over grants

Government says SodaStream contravened investment laws. SodaStream accuses government of bureaucratic inertia.

SodaStream International Ltd. (Nasdaq: SODA) and top Ministry of the Economy official are accusing each other of breaking promises regarding a grant.

"SodaStream has not received one shekel for its investment in the Idan industrial zone in the Negev because it is in gross breach of its commitments. Comments that we're torpedoing 2,000 jobs are simply lies," a top Ministry of the Economy official told "Globes" today.

SodaStream CEO Daniel Birnbaum counters, "Since the new government was established, we've had no cooperation to expand our manufacturing operations in Israel. There is a 30% unemployment rate in [the Bedouin town] Rahat, and we want to employ 2,000 people in the adjacent industrial zone. The government responds with helplessness, and tells us, in effect, 'don’t build a factory here'. We bought an 85-dunam (21.25-acre) site for a huge complex on the basis of a NIS 90 million grant, but the government has not kept its promise."

The Ministry of the Economy says otherwise. "In 1999-2012, the Investments Promotion Center approved no less than nine investment plans for SodaStream, and provided the company tens of millions of shekels in grants altogether," said a top ministry official. "In the case of the investment at Idan in the Negev, the company completely changed its business plan: it bought equipment beyond the agreed amounts; the construction of buildings in the southern industrial zone is stuck; and the equipment purchased by the company has been dispersed to several sites across the country, and even among subcontractors. This contravenes the Law for the Encouragement of Capital Investment. These matters were examined by our engineer and accountant."

The top ministry official says that, over the past year, SodaStream filed an additional request for a grant for a further investment of NIS 160 million to expand activities at Idan and hire 400 more employees. The source explained that this request cannot be approved because the company has not met its past commitments.

For his part Birnbaum complains that for the past six months he has not been able to meet with Minister of Economics Naftali Bennett. He told "Globes, "I see that he writes in Facebook that Scarlett Johannson is also beautiful on the inside but meanwhile he has not set up a meeting with me. Everything is slow and bureaucratic and it is very difficult to set up businesses here. I have to compete with companies like Coca Cola and I can't be running after government ministries just so that they'll allow me to produce in Israel and create thousands of jobs. I'm coping with enough issues these past few days. I'm fed up."

Published by Globes [online], Israel business news - - on February 2, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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