A Talented Man, With Terrific Contacts

Former IDF Chief of Staff Gabi Ashkenazi is not the first career officer to move on to a career in business.

This week an oil-and-gas-exploration company, Shemen, announced the appointment of a former army chief of staff as chairman of its board of directors. The contacts Gabi Ashkenazi built up both as chief of staff of Israel Defense Forces, and before that as the Defense Ministry's director general, should open many doors before the company, including that of the Prime Minister's Office, the Defense Ministry and the Finance Ministry - including, importantly, the door of the latter's budgets department, which Ashkenazi knows very well.

Ashkenazi didn't invent the wheel. He isn't the first career officer to move onto a career in business. After his ouster as prime minister in 2001, Ehud Barak, also a former chief of staff, embarked on an overseas business career and is believed to have accrued personal wealth of some NIS 30 million. Dan Halutz, another ex-top soldier, has taken over as chief executive of Kamor, importer of BMW cars. Then there are Teva Pharmaceutical Industries' CEO Shlomo Yanai, a general in the reserves, and another retired general, Eliezer Shkedy, at the head of El Al Israel Airlines.

Retired generals get tens of thousands of shekels a month as pension income. The capitalized value of that income is in the millions. Ashkenazi, for example, receives NIS 50,000 a month as his retirement pay, the capitalized value of which reaches NIS 11.8 million.

But that pension income is peanuts compared with the pay these career officers receive when they make the leap to business. By virtue of their prestige and contacts, they are rewarded with sky-high salaries, stock options, beefy bonuses and expenses and a car, of course. Ashkenazi, for instance, will be getting NIS 100,000 a month from Shemen (in gross terms ), before reimbursement of expenses and VAT, for a three-quarters (rather than full ) time position. He's also getting stock options and is eligible for bonuses.

For the sake of comparison, the prime minister grosses about NIS 44,000 a month.

Moreover, Ashkenazi will be free to engage in other pursuits that may also allow him to exploit his contacts. These contacts are worth gold. In short, whether through Shemen or through other endeavors, he can feather his nest nicely before making the leap to politics.

The reason companies hire former generals isn't necessarily their unique skill sets, or knowledge of the firms' areas of business. It's the access that these gentlemen can bring to the corridors of government and regulators. Most of Israel's ministers will take a call from a former chief of staff or general and will be happy to fulfill his requests. And that is how government is influenced by former high-ranking officers who exchange their uniforms for a business suit and tie.