weinstein - Daniel Bar-On - August 17 2011
Yehuda Weinstein Photo by Daniel Bar-On
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Attorney General Yehuda Weinstein aims to ban real estate developers from making donations to local municipalities on the grounds that such gifts may constitute bribes.

The ban will in effect bring to an end corporate entity gift giving to local councils in Israel.

Deputy Attorney General Mike Blass spearheaded the prohibition with the aim of blocking criminal elements from giving gifts to municipalities, and ensuring donations are not exploited by businessmen as a bribes to local government.

Blass says that he has received inquiries from businessmen who have been advised by legal counsels not to donate money.

"Relaying donations to local municipalities is liable to stir up a variety of problems. The donations cannot serve as a consistent, stable revenue for the municipalities; and there are problems stemming from the receipt of money by elements in a fashion that causes suspicion of criminal wrong-doing, and there are ethical problems, and potential conflicts of interest," says Blass.

A draft paper from the attorney general's office that has reached Haaretz recommends an absolute ban on the acceptance of donations by any municipality-related entity. Persons who conduct business negotiations with a local government would be prevented from giving gifts; and anyone who submits a request to a municipality would have to wait 18 months from the time of the submission before bestowing any sort of donation.

Real estate entities would face an absolute ban on conferring gifts.

Gift givers not cited explicitly in these regulations would face a local government acceptability committee to check out the proposed donation. These review committees would decide whether the gift source has a criminal record, and they would determine the interests of would-be gift givers. Should the committee approve a gift, the relevant local government would have to post on its website its acceptance of the donation, the identity of the giver, the amount of the donation and its purpose.

Local governments in Israel have not compiled data on the size of donations made to municipalities each year. Mayors estimate that the annual total of such donations is at least NIS 200 million. Since local municipality budgets cover ongoing expenses, these donations are applied to special development projects that would otherwise not be undertaken.

Many municipalities are linked to foundations that deal with fund-raising, such as the Jerusalem Foundation. In other cases, the municipality operates nonprofits to which donations are made, as in the case of the Tisch Family Zoological Gardens, which is owned jointly by the state, Jerusalem and the Jerusalem Foundation.

One of the main donors to local municipalities in Israel is the IDB Group, headed by businessman Nochi Dankner. Since the Second Lebanon War, it has adopted towns and communities in troubled border areas, particularly Kiryat Shmona; up to now, the group has donated NIS 418 million. According to the new regulations, the IDB Group would be banned from continuing to make such donations, because it has real estate dealings, and because it has a variety of business interests in the local municipalities.

In response, the IDB Group said: "The IDB Group supports any rule stipulated by the Justice Ministry that would enforce worthy regulations in public administration.... The Group will, of course, conduct itself according to regulations. Since the Second Lebanon War, the IDB Group has donated NIS 418 million to hundreds of projects in areas of education, health, social welfare, culture and sport in dozens of border area towns and communities in the Negev and the Galilee.... About half of this sum was invested in education, and it includes 18,000 scholarships to students in the Negev and the Galilee; and in all the areas, administrators and officials from the IDB Group personally monitor activities, and ensure that the donations' directly benefit communities. All this comes as part of an ethical worldview, shared by IDB Group director Nochi Dankner, holding that the society in which we live is no less important than the companies we run."

Officials at the Justice Ministry say that now that the new rules have been drafted, the next stage is to show them to the Union of Local Authorities for responses and then to go forward with the authorization of the ban.