conglomerates
Investment managers at Israeli institutional investors have chosen to put 40% of their investments into the bonds and stock of the country's five largest conglomerates. Photo by Tal Cohen
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Violent images have been circulating through the social networks and protest camps over the past few days - and it's not clear who's behind them. One depicts Prime Minister Benjamin Netanyahu in a Nazi uniform, and very much recalls the image of Yitzhak Rabin that was circulating before his assassination. Another depicts one of Israel's big businessmen in the crosshairs.

These are reminders of forgotten days, and not just from the period that preceded the Rabin assassination. They recall June 1933, when Dr. Haim Arlosoroff, then head of the Jewish Agency's political department, was trying to negotiate an arrangement with the Nazi regime that would have allow Germany's Jews to be brought to Israel in exchange for a portion of their property.

In the wake of his negotiations with the Nazis, my grandfather was derided by the right-wing press, and primarily the mouthpiece of the radical Brit Habirionim (the Strongmen Alliance ), led by Abba Ahimeir.

"Arlosoroff's Hitler celebration," wrote poet Uri Zvi Grinberg. "Stabbing the nation in the back and trying to lend the Hitler regime a hand of support," stated one opinion piece in the paper. "The agreement that Arlosoroff and his friend, Ben-Gurion, want to strike is just an imitation of Stalin's deal with Hitler;" "A red Mapai diplomat crawling to Hitler and his friends on all fours;" and "This baseness by Mapai, which was sold to a knight of hatred for Israel for ill-gotten gold" stated another opinion piece dedicated entirely to Arlosoroff.

That piece ran on June 15, 1933. That evening, he was murdered.

Who murdered Arlosoroff? We'll never know. Two members of the Brit Habirionim were accused of the crime, but they were cleared following a drawn-out trial in the Mandatory courts.

Thus, it was never proved that the murder was politically motivated. But you can't deny that the tone of the incitement that preceded the murder was so harsh that it made a political assassination a distinct possibility. From that perspective, the crime to democracy had already taken place, even if it never led to action.

This is the reason we've always argued that the leaders of the right wing, led by Ze'ev Jabotinsky, should have been punished for the incitement against Arlosoroff, and that they didn't do enough to stop it. Similar arguments were raised against Netanyahu regarding the incitement against Rabin. Now it's Netanyahu himself who is facing such dangerous incitement.

And this is why we need to aggressively halt the incitement against the "tycoons." It began with the online party in the wake of Sami Ofer's death, continued with the derision, and has now brought about images of their faces in crosshairs.

We need to remember: Israel's capitalists ("tycoons" is such a cynical term ) are normative businessmen. As far as we know, none of them are suspected of violating the law. Everything they did was within the accepted rules of the economic playing field. The great wealth and power they've accumulated stem from problems with the rules - but it's the rules that need to be the focus of our criticism, and it's the rules that need to be changed.

To a large extent, the complaints about the concentrated nature of Israel's economy should not be directed at the businessmen themselves. A few months ago, we published the insurance supervisor's statistics regarding the concentration of the institutional investors' investments. It turned out that the investment managers at the institutionals - provident funds, pension funds and life-insurance funds - had chosen to put 40% of their investments into the bonds and stock of Israel's five largest conglomerates. That's NIS 96 billion of the public's pension money in the pockets of only five groups.

This makes for a massively concentrated investment. It's also a very risky investment - at least some of these groups have debts so large that it's not clear who dared lend to them. Yet the institutional are lending them massive sums.

You can't say this highly concentrated, risky investment stems from professional judgment on the part of the institutionals. It's easier to say that cross-holdings - the fact that large institutionals like Phoenix and Clal Insurance are controlled by two of the five large groups - are distorting the investment managers' judgment. And maybe it's also the fact that the groups offer so many good jobs that the investment managers fear fighting with them or saying no to their attempts to raise money.

This is the high price we pay for the concentrated nature of Israel's economy - distorted investment judgment that lets the large groups receive more capital than is financially justified. Other companies are paying the price, since less money is left to invest in them. Pension savers are also paying the price, since their money is not being invested in the best way possible. And the Israeli economy is paying the price, since its potential for growth is being compromised.

But the parties responsible for all this are the institutionals, who are supposed to represent the public and are not fulfilling their jobs faithfully. The government committee investigating economic concentration needs to break down the relationships within the capital market - between the groups, the institutionals and the banks. The public needs to take action against the institutionals, which are neglecting their responsibilities. The regulators need to increase their oversight regarding the institutionals' investment judgment.

If this happens, Israel's big businessmen will pay a high financial price. That's the kind of price they should pay. That's the only kind of price they should pay.