Chareidi Underrepresentation in State-Owned Companies, State Comptroller Report Shows

By Aryeh Stern

The Government Companies Authority serves as a central liaison between the companies, the government, and other regulatory bodies. It advises the government and ministers regarding the companies, overseeing the public and equal operation of the director appointment process and representing ministers in the public and equal operation of the process for appointing directors to the companies.

In a review, it was found that the mechanism for selecting directors serves as a public, competitive, and equitable mechanism. However, despite the efforts of the authority, due to a lack of appointments by the relevant ministers, director positions in supervised companies remain vacant. Some companies operate without a quorum, a directorship chairman, and proper representation, adversely affecting their management.

Out of 620 director positions in government-owned companies, 270 (about 44%) are vacant. In 2022, 52 out of 109 companies and associations supervised by the Government Companies Authority (approximately 50%) operated without a directorship chairman, with 28 government-owned companies among them.

The percentage of women serving in the CEO role in government-owned companies is only 5%, and the percentage of women serving as directors of the board is only 14%, even though the goal is 50%, in line with the percentage of women in the population. Only about 1.5% of employees in government-owned companies and about 6% (28) of the serving directors are from the Arab population, compared to their percentage in the population, which is 21%. Only about 1.5% of serving directors are from the chareidi population (6), compared to their percentage in the population, which is 13%.

The selection of directors for the year 2022 was nominally balanced (50% women). However, the proportion of candidates from diverse populations was small compared to their percentage in the population: The percentage of candidates from the Arab population was only 5% (67 candidates) compared to 21% in the population; from the chareidi population – only 2% (31 candidates) compared to 13% of the population; from the Ethiopian immigrant community – only 1% (15 candidates) compared to 1.7% of the population; directors with disabilities – only 2% (34 candidates) compared to 17% of the population; and new immigrants – only two candidates (about 1% of the selection).

The State Comptroller recommends that the Ministry of Finance and the minister responsible for the authority examine the allocation of the necessary resources for the authority and the powers it needs to fulfill its tasks. It is recommended that the authority conduct a comprehensive survey of all government-owned companies to obtain an updated picture of the level of cyber and corruption risks and the extent of compliance of the supervised companies with their goals. Afterward, the authority should define the cyber risks and corruption risks to which the government-owned companies are exposed. The Government Companies Authority is also recommended to work to recruit an internal auditor specializing in information systems and cyber, and the management of the authority and the ministers responsible for the companies are required to act to strengthen the authority and take the necessary steps to correct the deficiencies that have arisen in the review.