Treasury to Reform Lottery After Finding Evidence of Corruption

Mifal Hapayis officials are often local politicians who filed requests for money, then granted it to their cities

In an unprecedented step, the Finance Ministry will intervene in the management of the Mifal Hapayis national lottery after it miserably failed a watchdog inspection.

The audit was triggered by a State Comptroller report that harshly criticized the lottery's management.

Treasury Director General Yarom Ariav has directed Accountant General Yaron Zelekha to conduct a special in-depth audit of the lottery's activities.
Following his in-depth inspection, Zelekha is expected to recommend ways to amend the organization and fix the problems that the comptroller found.

In Israel, gambling is illegal, but the national lottery is not only legal, widely popular, but also a source of funding for projects for the general public good. For instance, Mifal Hapayis profits are used to build classrooms and cultural centers.

However, a month ago the comptroller reported finding dozens of cases where the management orchestrated donations and sponsorships without due process, ignoring conflicted interests. These contributions were often made to institutions in which they held personal interests.

The management echelon of Hapayis, from chairman Shimon Katznelson down to the directors and local managers, are generally local government officials. They were found to have often allocated money to organizations related to the municipal or political entity to which they belong.

In many cases - they made requests for support and then took part in the committees that agreed to allocate the funds.

The state comptroller also pointed to many cases when organizations from Ashdod received Mifal Hapayis' monies as a result of the direct involvement of Katznelson, a former deputy mayor of Ashdod.

According to the comptroller, Katznelson was involved in approving NIS 1.5 million to support organizations he is involved in.

Yital Amadi, acting mayor of Jerusalem and a Hapayis board member, was involved in approving sponsorships to organizations from Jerusalem totaling NIS 1 million. Amadi was also involved in the approval of a donation of NIS 74,000 to non-profit associations in whose management his father is involved.

The comptroller also pointed to Hapayis managers who sent gifts to people connected to them personally, to suspicions of criminal offenses by Hapayis employees which were not reported to the police, and suspected efforts by Hapayis to hide information from the comptroller.

Although Mifal Hapayis' operations are subject to a license from the treasury to hold lotteries, the treasury is not expected to revoke Hapayis' concession or open it to competition, because the license is granted through legislation.

A spokeswoman for the Mifal Hapayis responded that "immediately upon receipt of the state comptroller's report it was raised for discussion by the board of directors and Hapayis' public advisory committee. The committee discussed the findings and recommended means to implement them.

The committee for implementing the changes is headed by the CEO, in accordance with the State Comptroller Law, and at the recommendation of the comptroller. The committee has already implemented the main part of the report's findings. Mifal Hapayis welcomes any examination and audit by bodies appointed by the law to do so."