Treasury Dispute Halts Major Housing Project, Hospital Upgrades
A financial dispute involving hundreds of millions of shekels between two departments in Israel's Ministry of Finance is delaying a major development project in central Israel. The project, which includes the construction of 3,000 housing units on land belonging to Sheba Medical Center (Tel HaShomer), has been stalled for months.
What began as a professional disagreement over funding for the relocation of hospital buildings has escalated into a personal conflict. It has emerged that the head of the Budget Division, Moran Froznaper, who is leading a review of the original agreement, previously advised Sheba Medical Center and was involved in negotiations for the very agreement he is now examining. This revelation has raised concerns about a potential conflict of interest.
The dispute is not only holding up the housing construction but also essential infrastructure, including roads and public transportation routes. Most critically, it has halted work on a new, protected premature baby unit and dialysis center, which are vital components of the hospital's expansion plans.
The original agreement, signed in March 2018 between Sheba Medical Center and the Israel Land Authority, involved the transfer of 240 dunams of hospital land for the housing development. A key condition was that the project would only proceed after the hospital's relocation costs, estimated at approximately 1.2 billion shekels, were financed through the sale of the land to developers. Sheba Medical Center, relying on these expected payments, initiated a significant expansion plan.
Despite initial progress, the project faced delays due to environmental petitions, the COVID-19 pandemic, and the ongoing war. Construction cost increases also led the Accountant General's department to agree to cover additional expenses for land evacuation. However, Froznaper, appointed about nine months ago, initiated a review of the agreement, citing concerns about broader implications for other government projects and potential exposure to lawsuits from developers. Some also suggest the delay stems from a long-standing power struggle between the Budget Division and the Accountant General's department.
During a recent meeting with Finance Minister Bezalel Smotrich, the Accountant General, Michal Abadi-Boiangiu, reportedly raised concerns about Froznaper's past advisory role at Sheba, warning of a conflict of interest. The Ministry of Finance, however, issued a statement asserting that Froznaper disclosed his past consultancy role from a decade ago and that no conflict of interest exists, allowing him to continue his involvement.
