High Court quashes Postal Company chair’s ouster

In a decision handed down today, the High Court of Justice upheld the petition to nullify the decision by Minister of Communications Shlomo Karhi and Minister of Regional Cooperation David Amsalem, who is also responsible for the Government Companies Authority, to dismiss Israel Postal Company chairperson Mishael Vaknin.

The panel of three judges, Yitzhak Amit, David Mintz, and Khaled Kabub, found unanimously that the ministers’ decision was liable to cause “a chilling effect that will deter directors currently serving at government companies from continuing to fulfill their roles for the benefit of the company they manage applying independent, professional judgement.”

Justice Amit wrote in the decision that “a bird’s-eye of the dismissal of the petitioner from his post leads to the conclusion that we are dealing with an highly exceptional dismissal, unreasonable in the extreme.”

Substantial flaws were found in Karhi and Amsalem’s decision and conduct. The judges said that the law stipulated certain circumstances in which a government company director could be dismissed, and that this could not be done simply at the discretion of ministers. They said that there had to be solid, clear grounds for determining that a director had diverged from the conduct expected of him, and that this condition had not been fulfilled in the present case. They found the case against Vaknin to be “extremely shaky”, and that the decision to dismiss him had not been preceded by consultation with the Government Companies Authority, which opposed the move.

Sensitive timing

Justice Amit said that Vaknin had been in the post for just a year and one month before he was informed of the decision to dismiss him in March 2023. “The deterioration in the standard of service to the public and in the financial position of the Postal Company did not begin with the petitioner’s appointment. On the contrary, the petitioner took up his post especially in order to restore Israel Postal Company to a path of recovery in advance of its privatization.” It was found that after Vaknin became chairperson, the going concern qualification was removed from Israel Postal Company’s financial statements, and that within a short time he managed to reach an agreement on a recovery program with the company’s employees, something his predecessors had failed to do.

Amit also found that Vaknin’s dismissal came at an extremely sensitive time, when it was on the final straight in the privatization process. “The dismissal of the petitioner was liable to damage, and perhaps even has damaged, the privation process, or was liable to cause, and perhaps even has caused, the price received in the privatization to be less than the highest possible price.”

Karhi stated in response to the ruling: “But later on, when there’s a catastrophe in the postal service, when local authority heads petition the High Court of Justice over the shameful state of postal services to the public, the High Court of Justice will ask for the response of the minister of communications and will blame Netanyahu. The ruling by the High Court of Justice, which arrogates powers of elected officials and leaves the responsibility with them, is a fundamental breach that goes to the root of the democratic regime in the State of Israel. With God’s help we’ll fix that.”

Published by Globes, Israel business news – en.globes.co.il – on March 7, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.