Israel Battles Corruption at the Top

In between chasing terrorists, Israeli police have their hands full investigating interlocking allegations of sleaze and scandal in high places. Tales of financial corruption are tossed to and fro freely by Israel’s top political players – with or without foundation. Many fizzle out before they come to court or on appeal, but in the meantime these affairs are natural and regular headline grabbers.
For some time, the left-leaning Labor opposition has had it all its way with the make-a-deal Greek Island affair which daily buffets Likud prime minister Ariel Sharon and his Laurel and Hardy sons, Knesset Member Omri Sharon and business executive Gilead Sharon. All three are also faced with charges of illegal fund-raising for Sharon’s 1999 primary coupled with overseas money-laundering.
Two similar charges against Labor prime ministerial candidates were recently dropped. This has not let the opposition party off the hook. This week it was Labor’s turn for a dose of the sour medicine.
The story broke on Tuesday, November 4, with the arrest of four people suspected of complicity in bribing National Insurance Institute officials to “forgive” the lion’s share of a debt owed by the country’s biggest banking institution, Bank Hapoalim, on behalf of its employees. Another two arrests made Thursday, November 6, were of suspected “arrangers” of the illegal deal.
All the suspects were supported by high-powered legal talent.
Now for the small print: Bank Hapoalim – the “Workers’ Bank” that has grown into the largest and most powerful capitalist force in the country – owed the National Insurance Institute 86 million shekels (nearly $20 million) on behalf of staff back in 1994. After five years of haggling, in 1999 – by which time the bank’s once-patron Labor Party was in power – presto-chango, three quarters of the debt melted away leaving a paltry 20 million shekels (the equivalent of $.4.5 million) for payment.
Two former members of the Hapoalim Bank group’s staff are suspected by the police of using their connections in the NII to arrange to have the debt cut, for which service they are alleged to have received a Bank Hapoalim check for 7.7 million shekels. Not all of it went into their pockets; some was deducted to bribe the NII officials for their clemency or peeled off at other points en route.
Somehow, no one at the time noticed the vast sums going astray and ending up magically in sticky fists, neither the bank’s directors, Labor cabinet ministers, heads of the NII, or even the Controller of Banks – or so they say now. But the affair is only at its outset and promises to evolve into a cause celebre with more revelations. The Likud government now in power will certainly relish every moment. The exposure of Labor-associated misdeeds is music to the ears of Sharon and his fellow Likudniks who are sick and tired of hearing Labor’s Amram Mitzna, Ofir Pines and Yuli Tamir sounding off about the growing corruption under Likud rule.
Suddenly, certain recent unexplained occurrences fall into place. The new owner of Bank Hapoalim Shari Arison left Israel in a hurry to relocate in Miami, Florida as her friends complained about the impossible business climate. Yohanan Strassman suddenly resigned as the NII’s director-general, in protest against “the suffering government budget cutbacks have inflicted on the poor, orphans and handicapped.” The suffering is genuine, but the police may want to know how much Strassman knew about the institute he headed “mislaying” some $15 million that could have alleviated a lot of this suffering.
What outrages the ordinary Israeli most about the affair is the double standard.
While the fat cats are “forgiven” for defaults and obtain massive rebates through their connections or by outright graft, on the authority of “directives from above”, the Israeli individual without pull is hounded mercilessly and forced to pay rocketing charges for any small step outside credit ceilings or failing to meet time limits – on the one hand by the banks, on the other, by national insurance officials.
When both these oppressors are seen to be breaking the rules and rewarding themselves at the expense of the public purse, ordinary Israelis infer that white collar crime pays and feel free to indulge in tax-dodging and lax financial discipline. Israel’s law enforcement authorities, however overburdened they may be, have no option but to pursue the affair down – or up – to its many ramifications, because the appearance of one law for the rich and one for the poor holds even greater hazards to the fabric of Israeli society than life under the shadow of Palestinian terror.