Sometimes a given manufacturer sometimes can't get credit because the potential lender owns another company competing with the would-be borrower. That sorry state of affairs can't even be criticized because the potential lender also has holdings in the press.
Thus Moshe Gafni, chairman of the Knesset Finance Committee, describes the potential of interest lurking in Israeli conglomerates that own both finance and non-finance companies.
It is true that the Knesset Finance Committee approved a law that would diminish economic concentration in Israel, Gafni says. How effective it will prove is another matter, as the Knesset member admits himself. In some cases, he feels the economic concentration committee didn't dare enough, he says.
In fact the Knesset Finance Committee had begun urging the government to tackle Israel's problem of economic concentration for a long time, Gafni claims. The outcome, this "economic concentration law," is a compromise, in his view – between the Israel Securities Authority, the Prime Minister's Office, the Finance Ministry, and others.
Now the bill has to pass the Knesset plenum, after which it will return to the Finance Committee for serious discussion, Gafni explains.
TheMarker: Might somebody try to block the bill from returning to the Knesset Committee, hoping to delay the evil hour – if a new government comes into power, maybe it would feel differently about the endeavor.
"I can't say at this point," Gafni answers. "I assess that since parts of the bill fall within the purview of other Knesset committees, attempts will be made to split off small parts of the bill. But I won't let that happen, because this bill is a single entity."
The Companies Law and antitrust laws are part and parcel of economic concentration in Israel, as an issue, Gafni elaborates, and the Knesset Finance Committee should therefore be responsible for discussing the issue from the broadest perspective. "The economic concentration law is very big, very long and complicated, too," he says.
Based on precedent, Gafni doesn't believe the members of the Knesset Finance Committee will bend before the terrific pressures imposed on them, he says. They'd met pressures of the sort when discussing how to tax corporate income on exploiting the giant fields of natural gas found in Israeli territorial waters, and did not yield, he says.
Are indeed attempts being made to "soften" the law? And have you stated before that the recommendations of the economic concentration committee are too feeble?
"Beyond forbidding business groups to keep both finance and industrial holdings, any group with finance or industrial holdings should be banned from owning media companies, because that's part of the problem," Gafni answers. He declined to elaborate further at this stage, before the bill actually reaches the Finance Committee. Also, he won't say whether the committee is likely to strengthen the bill: "But what's for sure is it won't go out like it came in. It's a very big bill and changes will be made."
Could it be that the finance minister, who was responsible for advancing this legislative drive, has gotten cold feet?
"I have no idea," Gafni replies. "He has proven himself so far, even though he was threatened with defeat at the next party primaries."
For instance Finance Minister Yuval Steinitz stood strong regarding the state's share of natural-gas revenues, Gafni says. But the issue at stake now is more complicated. In any case, Gafni says, he will be meeting with Steinitz to hear his opinions.
How do you feel the economic concentration law will affect the public?
"It will change the whole system. We are heading for a situation in which a small group of people controls not only prices and business conduct, but the state of the economy," he says.
Today manufacturers can't get credit because the lenders are owned by their competitors, and you can't complain about it because they also control the media, Gafni says. "We face a real danger of becoming an unelected dictatorship, or a dictatorship that arises because the elected body doesn't see what's happening around it. The mere fact that notice is being taken and the issue is being discussed… is critical for the people of Israel."
The tycoons have been pressing to soften the recommendations and give them eight years to sell their finance-nonfinance cross-holdings rather than six. What do you tell them?
"We will meet with all the sides to this law, as we do for every law," says Gafni. "I don't hold these meetings in secret. I don't go ingratiating myself with anybody."If somebody asks to meet then they meet, he continues.
Everybody deserves a hearing and their demands need to be weighed based on their merits, not on their bank account or clout, says Gafni.
Nobody tries to coerce him any more, he claims: people ask to meet with him. Nor does he believe that imposing pressure on Knesset members achieves anything: "But I can't take responsibility for all 120 Knesset members. I can only speak for myself. There are some Knesset members who, we see, can't be relied upon when it comes to other matters."
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