Is anybody else feeling corruption and incompetence fatigue yet? First, a reminder. As if reading that long and sad list of failures isn’t enough, we now have a potential scandal in the Finance Ministry where Israel’s Tax branch of the government, the Tax Authority, has apparently been headed by individuals who allegedly provided tax breaks and favors to well connected businessmen and companies.
This scandal touches on a close confidant of Olmert’s, Shula Zaken, now under house arrest, who has been his right hand person for nearly 30 years, as well as her brother – a businessman – and others in their circle. Apparently, she was instrumental in having the director of the Tax Authority, Jackie Matza, appointed to his position. He, in turn, appointed a large number of people to positions within the Authority. Some prominent Likud members are being implicated in this matter as well – to remind you all, Olmert has spent his entire career until last year as a Likud (or earlier versions) member.
Tax Authority director Jackie Matza and his predecessor, Eitan Rub, were arrested on Tuesday on suspicion of widespread bribery and fraud at the authority.
Police suspect that the two appointed to key positions people who would be acceptable to the two businessmen, Yoram Karashi and Kobi Ben-Gur. The allegations are that the appointees then helped Karashi, Ben-Gur and their associates to obtain tax breaks. Police also suspect that Matza and Rub accepted or mediated bribes in exchange for pressuring their subordinates to grant tax breaks to various businessmen. However, it is not clear what kind of bribes were involved, as senior police officials declined to say whether they consisted of cash or other benefits.
Shula Zaken, Prime Minister Ehud Olmert’s office manager, was also questioned Tuesday in the affair on suspicion that she was behind Matza’s appointment to the job. Olmert was finance minister at the time, and Zaken, who is Karashi’s sister, served as office manager for Olmert at the time. Police also suspect that after Matza’s appointment, Zaken utilized his good offices to help her brother, a Judaica merchant and Jerusalem city councilman for the Likud Party.
The upshot of the allegations is that, if true, Israel’s Tax Authority has been compromised by the behavior of its leadership and presumably some of their associates for personal gain. I’ve been following the story for a couple of days in the hope that the police will prove to be incompetent and mistaken, but it appears they have a serious case here. Thus Israel, a Western democracy with a GDP that places it among the top 25 countries in the world, a strong economy, a strong banking and finance sector, a healthy technology and business climate is being led by some as if it’s some third world banana republic.
Oh, by the way, this story was leaked to the press. The press put it out there without warning, thus forcing the Israeli police to make arrests the next morning despite a ten month long secret investigation. In those hours, the suspects may have had time to destroy documents and data crucial to the investigation. Fortunately for the police, once again it seems they were wiretapping government officials. I wonder whether these taps cross lines with the other wiretaps they’ve got in there.
Did I mention that Israel’s Finance Minister, Abraham Hirchson, is currently also being investigated for potentially having turned a blind eye to a crime, embezzlement, at the former organization he headed?