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Prime Minister Benjamin Netanyahu, right, speaks with Defense Minister Benny Gantz, both wearing protective mask due to the ongoing COVID-19 pandemic, during a cabinet meeting in Jerusalem, June 7, 2020. (Menahem Kahana/Pool Photo via AP)
Menahem Kahana/Pool Photo via AP, shows Prime Minister Benjamin Netanyahu, right, speaking with Defense Minister Benny Gantz, both wearing protective mask due to the ongoing COVID-19 pandemic, during a cabinet meeting in Jerusalem, Sunday, June 7, 2020.
Inside storySystem is vital, but unwieldy and ignored; reform is overdue

Breaking law nobody enforces, Netanyahu, Gantz yet to file financial disclosures

Corruption allegations have upended Israeli politics, yet a key mechanism to ensure transparency in dealings of top politicians is being ignored, partly because it is so cumbersome

Haviv Rettig Gur is The Times of Israel's senior analyst.

Main image by Menahem Kahana/Pool Photo via AP, shows Prime Minister Benjamin Netanyahu, right, speaking with Defense Minister Benny Gantz, both wearing protective mask due to the ongoing COVID-19 pandemic, during a cabinet meeting in Jerusalem, Sunday, June 7, 2020.

At least a third of Israel’s cabinet ministers, including Prime Minister Benjamin Netanyahu and Alternate Prime Minister Benny Gantz, have failed to produce a declaration of their personal assets, more than three months after the legal deadline for doing so.

The result: government watchdog bodies that keep track of the conflicts of interest that surround the highest decision-making bodies in the country are unable to do their work.

Submitting the financial disclosures is mandatory. But there are no specific sanctions for failing to do so and the State Comptroller’s Office, which receives the ministers’ disclosures, has taken a lax approach to enforcing the rules. Part of the reason for that: The paperwork is cumbersome even by the standards of Israeli bureaucracy, the information required is extremely broad, and the documentation must be completed in the minister’s own hand — a radically time-consuming process.

In the US, it is usually expected that politicians will release their tax returns for public scrutiny, with President Donald Trump exceptional in declining to do so. In Israel, the requirements and expectations are different.

Ministers and Knesset members are subject to the same tax laws and requirements as all citizens, and their tax returns are private. Both ministers and MKs are also required to hand in a “declaration of assets.” These are supposed to be vetted but are not made public.

Cabinet ministers, who hold direct decision-making powers as the executive branch of the government, must submit theirs to the State Comptroller’s Office, where attorneys and accountants carefully sift through the declarations and produce a “conflict of interest” report detailing the issues and decisions in which the minister cannot partake. The comptroller is required to keep the declarations secret over privacy concerns, but the conflict of interest report produced by his office is public.

By law, the ministers’ declarations must be submitted within 60 days of the swearing-in of a new government — or by July 17 of this year for ministers in the 35th Government, which was sworn in May 17. It must be updated each year after the first declaration, and then again within 60 days of leaving office.

Knesset members must submit their financial declarations to the Knesset Ethics Committee, where for privacy reasons they are held under strict secrecy rules that can only be suspended by a court order. The MKs are required to hand in their disclosures when first taking office, and update them annually with significant changes.

Public Security Minister Amir Ohana holds a press conference in Jerusalem, on July 15, 2020. (FLASH90)

An examination conducted by the business journal TheMarker in early August found that 15 ministers and deputy ministers had failed to submit their declarations by the July deadline. It named names.

Last month, when the crowd-funded investigative news outlet Shakuf took up the issue, it found that three cabinet members had submitted theirs in the interim: Finance Minister Israel Katz, Welfare Minister Itzik Shmuli, and Deputy Finance Minister Yitzhak Cohen.

The remaining ministers flouting anti-corruption and transparency rules came from across the coalition.

Gila Gamliel speaks at a conference in Kedem, in the West Bank, on September 5, 2019 (Hillel Maeir/Flash90)

The names on the list include six members of Likud, five ministers and one deputy minister: Netanyahu, Public Security Minister Amir Ohana, Health Minister Yuli Edelstein, Deputy Health Minister Yoav Kisch, Environmental Protection Minister Gila Gamliel and Transportation Minister Miri Regev.

There were four ministers from Blue and White on the list: Gantz, Minister in the Defense Ministry Michael Biton, Strategic Affairs Minister Orit Farkash-Hacohen, and Tourism Minister Asaf Zamir, who announced his resignation from the government on October 2 but is still required to submit the declaration within 60 days of leaving office.

Orit Farkash-Hacohen. (Yanai Yechiel)

And there was one each from Gesher and Shas: Community Advancement Minister Orly Levy-Abekasis and Religious Affairs Minister Yaakov Avitan, respectively.

The comptroller’s office has sent repeated reminders to the offices of the relevant officials, beginning with the first reminder on June 3, asking them to fulfill their legal obligation.

Former Yeruham mayor and now Minister in the Defense Ministry Michael Biton. (Yanai Yechiel)

An important caveat: Some ministers, such as Transportation Minister Regev, have submitted a conflict-of-interest declaration — in her case involving her husband’s senior post at Israel Aerospace Industries, a government corporation part of whose activities are regulated by the Civil Aviation Authority overseen by Regev’s ministry. Orit Farkash-Hacohen has also turned in some conflict-of-interest information.

Despite repeated efforts over recent weeks, The Times of Israel was unable to obtain official information from the comptroller’s office about the status of submissions from any of the 12 ministers who are not known to have filed all the legally required financial information.

Why it matters

On March 31, 2014, former prime minister Ehud Olmert’s grueling two-year, 140-session Holyland corruption trial came to a close with Olmert’s conviction for bribery.

Corruption is incredibly difficult to uncover, and even harder to prove

Two months after that sad milestone, the former premier was handed a weighty sentence: at least six years in prison and a 1 million shekel fine.

There was a logic to the severe sentence (which would later be slashed by the Supreme Court) that reveals a great deal about how Israelis think about corruption.

Former prime minister Ehud Olmert at the Tel Aviv District Court, March 31, 2014 (AFP/Pool/Dan Balilty)

Corruption is incredibly difficult to uncover, and even harder to prove. The Holyland trial was a case in point. On the day of Olmert’s conviction, former state attorney Moshe Lador, who had managed part of the prosecution of the case, gave an interview in which he explained on what thin threads the case was initially built. A single person, businessman Shmuel Dachner, had come forward and confessed to having bribed Olmert. He’d reached out to police investigators in 2010, told them he had bribed Olmert when the latter served as mayor of Jerusalem, offered evidence that enabled prosecutors to construct the larger story of Olmert’s misbehavior in office, and then died in 2013 just hours after giving his final testimony.

Why Dachner chose to open up to police was never clear. But without him, Lador said, the case would not have had legs. “The Holyland case looked like a viable issue [i.e., worth investigating], but we had no evidence…. There were those who raised the alarm, but the system didn’t know how to move forward. Suddenly the witness, Dachner… gave us the opportunity to solve this case.”

In justifying the stiff sentence he handed down to Olmert, then-Tel Aviv District Court judge David Rozen wrote in his decision that this invisible crime “by its very nature does not lie still but spreads, gnaws at, and brings ruin to public and governing institutions and frameworks. This corrosion, which penetrates and roots itself deep in the public service, radiates rot and atrophy throughout.”

There has been a series of high-level corruption investigations in recent years that have all driven home the same lesson to top prosecutors and senior judges: corruption is hard to see. It takes place in the shadows. And that lesson has had an effect, say critics. It has created a law enforcement culture that sees corruption everywhere.

Sentences must be harsh and prosecution uncompromising, Israel’s corruption-busting cops, prosecutors and judges have long insisted. Corrupt politicians are unlikely to be caught, and so the consequences of being caught must be made so severe that even that small chance is deemed too high a risk.

A law enforcement system thus primed goes a long way to explaining some of the trouble it encountered in the Netanyahu investigations, and alleged missteps that have fueled accusations from the premier and his supporters that his prosecution is driven by politics.

Prime Minister Benjamin Netanyahu at the start of his trial on corruption charges, May 24, 2020. Visible behind him are two of the three judges in the case, Rivka Friedman-Feldman and Oded Shaham (Screen capture/Government Press office)

The prime minister alleges a conspiracy by former state attorney Shai Nitzan, Attorney General Avichai Mandelblit, former police commissioner Roni Alsheich and many others to oust him from office for political reasons. That allegation may make sense to a defendant convinced of his innocence, and even to his more avid supporters, but outsiders have had trouble connecting the dots between so many ostensible conspiracists hailing from so many different political backgrounds, while opponents consider the conspiracy allegation to be both absurd and designed to undermine public faith in the police and the prosecution.

But one doesn’t need to be an avid Netanyahu supporter or a conspiracist to see the complications with the Netanyahu trial. In the most serious of the three cases in which Netanyahu stands accused, Case 4000, he is alleged to have received positive media coverage in return for policy decisions favorable to an owner of the media outlet. Without entering into the question of the overall ethical calculus of Netanyahu’s behavior, the claim by prosecutors that favorable coverage is a benefit that can be subjected to a criminal complaint is an innovation in Israeli law. No politician has ever before been prosecuted for such a “payment.” There may be a compelling case for setting such a standard. But legal opinions have questioned the introduction of such a dramatically new standard in so sensitive a case, which has the power to upset the political balance and even spark a constitutional crisis.

It’s hard to tell whether corruption is widespread in the Israeli government. The fact that a prime minister, a president, 11 cabinet ministers, 17 MKs, two chief rabbis, half a dozen mayors and a long list of aides and confidants have been convicted for illegal acts they committed while in office could mean that Israel is beset by an unscrupulous political class — or that it scrupulously holds its leaders to account.

In his 64-page ruling sentencing Olmert, Judge Rozen laid out eloquently the catastrophic costs that endemic corruption can impose on a society. The headlines out of countries like Lebanon in recent years are a cautionary tale in that regard. But there is an enormous cost, too, to the perception of widespread corruption. One need not posit the existence of a cabal of politically compromised prosecutors to argue that Netanyahu’s prosecution may have been driven by an activist impulse. One only has to look to the last time an Israeli prime minister faced a corruption trial and to the lessons that law enforcement officials learned from that experience to grasp the palpable frustration that permeates the law enforcement establishment when it comes to rooting out corruption, especially at its highest levels.

A prosecution so sensitive to corruption, say Netanyahu’s defenders, that it struggles to distinguish between legitimate political transactions and criminal ones — or at least struggles to explain to the politicians and the public where the line is drawn — can be as politically destabilizing as the corruption itself.

Prosecutor Liat Ben-Ari (2nd-L) and Shaul Elovtich (2nd-R) at the Jerusalem District Court for a hearing in the criminal cases against Prime Minister Benjamin Netanyahu, July 19, 2020. (Marc Israel Sellem/Pool/Flash90)

Transparency

Yet even as Israel struggles through an unprecedented two-year political crisis exacerbated by the Netanyahu investigations, little has been done to prevent the next corruption crisis from once again derailing Israeli public life — and it hardly matters if one believes the current national crisis was caused by Netanyahu’s unethical behavior or by an over-zealous prosecution.

A nation battered by the loss of faith in its institutions — for some, in its longtime prime minister and the ruling party that protects him; for others, in the law enforcement systems they believe have politicized and thus betrayed their public duty — has a supreme interest in deploying preventative measures that might stave off corruption and increase public trust in its leaders.

A nation battered by the loss of faith in its institutions — for some in its longtime PM and the ruling party that protects him, for others in the law-enforcement hierarchies they believe have politicized and thus betrayed their public duty — has a supreme interest in deploying preventative measures that might stave off corruption and increase public trust in its leaders

As Israel has grown wealthier, politicians, especially at the cabinet level, now face almost limitless opportunities for corruption. Various government agencies are currently planning vast new military acquisitions, new airports and seaports, a new tender for a private company to manage Route 6, the country’s longest highway, and new regulatory responses to the challenges posed by Chevron’s de facto takeover of Israel’s natural gas industry. Vast pressures will be brought to bear by the private sector on all such decisions — and the fear of undue influence, for example through the promise of lucrative later employment, will inevitably dog those decisions.

A 2009 World Bank report on asset disclosures of politicians described transparency as key to bolstering public trust in the integrity of a nation’s leaders and institutions. Transparency is the universally acknowledged salve for addressing both ends of the corruption equation: inhibiting actual corruption among its leadership class, and reducing the perception of a corrupt political elite that drives what many see as a destabilizing crusader impulse.

But the lack of enforcement of financial disclosure rules suggests Israel’s divided and bruised public institutions lack a reliable watchdog mechanism that can offer them that relief.

Fixing a cumbersome process

Public Security Minister Ohana is on the no-show list for the second year in a row. He submitted his 2019 declaration, due in August 2019, only in July of this year, almost a year late. He’s not the only one on the list guilty of serial tardiness. Some ministers simply failed to submit altogether in past years.

State Comptroller Matanyahu Englman during the Fifth World Holocaust Forum at the Yad Vashem Holocaust memorial museum in Jerusalem, Israel, January 23, 2020. (Yonatan Sindel/Flash90)

While it’s easy to criticize, it’s also easy to empathize. The declaration process itself is an arcane holdover from a previous era. Ministers are required to submit the entire declaration — a detailed listing of bank accounts, investments, real estate holdings, pension arrangements, and so on — in their own handwriting. The rule is meant to ensure they cannot later claim that an accountant or attorney fudged the numbers.

They must also include employers, major debts and investments and other interests of family members, and in some cases even of close friends.

It’s a cumbersome, time-consuming, privacy-violating process that must be repeated yearly, imposing huge time demands on some of the country’s busiest leaders.

No wonder the State Comptroller’s Office takes pity on ministers who are late with their filings, or who fail to file at all.

Yet it’s not clear why the system remains so ungainly. Until two years ago, MKs were allowed to fundraise for their primary races from individual supporters, until the law was changed and all primary race funding was replaced with public financing. In those primary races, all contributions had to be reported to the State Comptroller’s Office. MKs who raised any significant amount — a figure pegged at NIS 50,000 ($14,800) — were required to have a certified accountant and an attorney prepare and submit the list. The MK was only required to sign a document certifying they had read and were liable for the content of the report. That simple requirement made the whole disclosure process smoother, more professional and less likely to contain errors or inconsistencies.

A nearly empty plenum, due to restrictions against the coronavirus, is seen at the swearing-in of the 23rd Knesset, March 16, 2020. (Gideon Sharon/Knesset Spokesperson)

There is no reason to believe that Netanyahu, Gantz, or any other offending minister is hiding anything. After all, the disclosures won’t become public, and failing to report to the Knesset or comptroller doesn’t absolve one of reporting assets and earnings to, for example, the Tax Authority, which takes a less lax approach to enforcement.

Simply by streamlining the reporting process, the state comptroller could strike a dramatic blow for transparency. Easier reporting requirements will make it easier to hold politicians to account. The comptroller’s office once famously levied fines reaching into the hundreds of thousands of shekels for misreporting of MKs’ primary campaign fundraising, and those punishments were deemed legitimate because offending politicians had few justifications for not following the rules.

Israel is reeling from the Netanyahu trial, which has warped its political life by undermining trust in both prime minister and the law enforcement agencies that investigated him. The effect is likely to last long after the trial is over. Corruption, whether real or perceived, is corrosive. It is rooted in the opacity of government bodies. It’s hard to know with certainty why an official makes a decision, or to track the flow of benefits in real time or after the fact that might have influenced that decision.

It is no great insight to suggest that taking transparency requirements more seriously will help prevent both the corruption itself and the political shocks of aggressive enforcement. Israeli legislation and good-governance regulations recognized that fact long ago. It may be time to start acting on it.

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