Two bill proposals to amend a law that oversees appointments in government-owned companies, which were set to be presented in the Ministerial Committee for Legislation on Sunday, are “harmful to the public, and would turn government companies into a vacuum of positions to be filled by the close associates of ministers,” Deputy Attorney-General Gil Limon wrote in an advisory opinion on Sunday.
The bill proposal would do away with the existing infrastructure for the appointment of directors of government companies, granting more power to the ministers whose offices are related to the company at hand. Limon wrote, "Advancing this bill would directly affect the financial successes of these companies, the Israeli economy at large, as well as the essential services provided to citizens through these companies.”
In 1975, the Knesset passed the Government Companies Law to regulate companies whose ownership and control lie (wholly or predominantly) with the state. The idea was to make sure that “government companies” are organized under one body, in order to reflect both public-ownership concerns and commercial and business considerations, as well as to ensure their independence.
In a “government company,” the State holds the right to appoint the majority of directors. The law also specified rules for their appointment, including eligibility and terms of office.
Government Companies Authority
To oversee these companies, the Government Companies Authority was established under the law and is an auxiliary unit of the Finance Ministry. Its responsibilities include general oversight, advisory to the government, and the monitoring of compliance.
The Authority is responsible for over 100 companies, such as the Israel Electric Corporation, Israel Aerospace Industries, Rafale, Mekorot, Israel Railways, and others.
In 2013, the Government Companies Authority, alongside the Finance Ministry, then headed by opposition head Yair Lapid (Yesh Atid), put together a professional database titled the Directors’ Pool - an official list of qualified candidates eligible for appointment to the boards of directors of such companies.
The purpose was to ensure that appointments were professional, transparent, and apolitical. This followed a State Comptroller report that revealed instances of inappropriate political appointments, a lack of transparency, and dysfunctionality in how the companies were run. By 2022, it had 1,200 candidates, all divided by professional profiles.
However, the Pool was criticized for not being codified in law, and also for failing to provide equal representation to specific population groups.
In 2024, a public committee recommended updating the recruitment and training process of directors. It also recommended getting rid of the existing Pool, and instead establishing separate appointment committees for each company, which would grant the relevant ministers more flexibility in and control over the hiring process.
This year, the committee was headed by MK Dudi Amsalem (Likud), who is the Regional Cooperation Minister, serves as a minister in the Justice Ministry, and is also a Ministerial Liaison to the Knesset. He proposed to do away with the Directors' Pool altogether to clear out the backlog in appointments. Still, this move alarmed professionals for its dangerous slant to political and personal appointments, which would ultimately harm the companies.
The government tried, in 2020, to cancel the Directors' Pool, but then-deputy attorney-general Dina Zilber prevented the move.
The bills - one of which was submitted by Amsalem - were scheduled to be raised on Sunday in the Ministerial Committee for Legislation. Limon noted that they were not drafted professionally and lacked an opinion from the legal advisory.
The danger in such a change, Limon warned, would “affect the chief stakeholders of these companies - the citizens.”