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As had to be expected, the scandal rocking the Tax Authority has unnerved foreign investors. If the allegations are true, then rot in the Israeli governmental system

Foreign investors are reexamining their investments, concerned by a possible systemic shutdown in Israel in the wake of the Tax Authority corruption scandal,

"It doesn't make us look good," commented Hezi Zaieg, director of the Industry and Trade Ministry's Investment Promotion Center. "Investors fear the apparatus will shut down, that everything is under investigation."

Zaieg related that representatives of Shamrock Holdings, which is currently considering to enlarge its investment in MDS Eliran Computers in Jerusalem, have already asked for clarifications and wondered whether it would be possible to promote new investment approvals given current circumstances.

MDS means to invest $30 million to expand its workforce by 250.

Over the past year, most of the support for investors switched from the grant track to the tax exemption track, for which the Finance Ministry's tax division is responsible. This new arrangement raises concerns among foreign investors that the Tax Authority will be afraid to make decisions and thus will delay investment requests. 
 
Zaieg said their decisions are purely professionally motivated. "But," he asserted, "if someone were to come and try to link my decision to a friendship with one person or another, I'd start to fear making decisions."

The capital investments promotion law, by which the investment center operates, clearly states the conditions for approving government support of investments. Still, there are instances in which weight is given to the professional opinion of an external committee, which has the task of approving government support.

"My tendency is to help companies, to enable a business to work, not to kill it," Zaieg added.