The Golden Triangle of Corruption

The shorter the building approval process, the greater the transparency, the simpler and clearer the process and the less corruption there will be.

Nehemia Shtrasler
Nehemia Shtrasler
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Nehemia Shtrasler
Nehemia Shtrasler

Every major corruption case in Israel begins and ends with real estate. That's how it was in the 1970s with the Avraham Ofer and Asher Yadlin affairs, and that's how it is now with the Holyland-Olmert, Lod-Appel, Salt Industries-Dankner and Ramat Gan-Zvi Bar affairs.

The reason: Real estate is this country's honey pot. It is that great stash of money that politicians can get their hands on. They can pass some of it out to their associates, to political activists or simply to those who bribe them. It's the only major perk they can provide without leaving tracks in the state budget and without it coming to public attention.

It's a matter of chronic corruption with foundations in the Golden Triangle: the Israel Lands Administration, planning and building committees, and the developers who pay the bribes. The ILA is the forefather of the sin. The word "macher," or big-wig, is the key word there - because everyone knows it's impossible to make a move without a macher making some effort on your behalf to move your file to the head of the line. The immense power of the ILA stems from its exclusive control of land in the country. Every plant, every business, every road and every park requires land allocation from the Israel Lands Administration. The ILA decides how much land it will receive and where; it decides which land will be converted from agricultural use to construction and commerce, and what the tax will be on the conversion.

The strangest part of this is that the ILA does all of this without clear guidelines and without any public bids. Therefore, the power to determine a developer's fate is in the hands of the bureaucrats, and all the more so in the hands of the minister who serves as chairman of the ILA. From there, the path to bribery is a short one.

This is what happened two weeks ago, when David Appel was convicted of bribing Oded Tal, a former senior ILA official, to advance Appel's interests in the Lod area. Appel was also convicted of bribing two mayors. And this is also what just burst forth in the case involving Danny Dankner and Salt Industries. Dankner was arrested last week, along with former ILA director Ya'akov Efrati, on suspicion of issuing bribes to advance a deal in which an industrial site was to be rezoned for construction. The rezoning would eventually yield a $90 million profit for the Dankner family.

Former prime minister Ehud Olmert is also connected to the case, as he helped Dankner all along the way - both when approval for the deal was signed when Olmert was finance minister (and then changed his mind), and when he brought the deal before the ILA council for approval when he was minister of industry, trade and labor as well as ILA chairman.

It is therefore extremely surprising to hear the objections to the modest reform plan Prime Minister Benjamin Netanyahu is now trying to pass at the ILA involving the transfer of four percent of the country's land into private ownership. If that happens, it will be easier to enlarge an apartment without dealing with the Israel Lands Administration, and it will take less time to build a hotel without passing through the seven terraces of ILA purgatory.

As with everything in Israel, however, interested parties came out against this reform, too. Ministers, political activists, directors general, mayors, lawyers, environmentalists and machers of every kind expressed their opposition. They want the state to continue to hold all of the land. They don't understand that the stranglehold will only be broken and corruption stopped, growth greatly increased and apartment prices reduced, if the land is privatized and the ILA shut down. This was understood even in China, where they started extensively selling state land, so that now the Chinese government holds only 65 percent of it. In Israel that figure is 92 percent.

The second side of the triangle of corruption is represented by the planning and building committees, which work slowly - the ultimate bureaucracies. The citizen has to go through an endless amount of red tape to get his building plans approved, first at the local committee level and then with the district committee. Each committee has all the time in the world. There are the countless hearings, the objections, the approvals and the limitations. And it's impossible to understand how they arrive at what percentage of the lot can be built upon, how changes in use are approved or how taxation rates are set. Everything is done without specific criteria or transparency, so corruption reigns.

Here, too, Netanyahu proposed a reform plan around the concept of "one plan and one committee," meaning that every construction plan would undergo the hurdles of a single committee. In most cases, that would be the local committee. The committee would be supported by professionals and two independent public representatives. In addition, the committee hearings would be open to the public to enhance transparency and oversight. The prime minister even declared last week that he would give the committee the means to make corruption more difficult.

It is therefore a mistake to oppose this reform. The shorter the building approval process, the greater the transparency, the simpler and clearer the process - and the reform achieves this - the less corruption there will be. It's impossible to continue under the current system, which gave rise to the Holyland, Appel, Dankner and Bar cases.

The time has come to shake up the ILA and to shine a light on what is being done in the building committees. The Golden Triangle of corruption must be broken.