Never Mind Halutz, Start With Sheves

Former chief of staff Dan Halutz didn't waste any time after quitting his job. We learned last week that he's demanding Bank Leumi compensate him for leaking the news that he sold securities a few hours before the Lebanon II war erupted.

His claim against Bank Leumi revived a legislative initiative by Silvan Shalom, to require top public-sector officials to transfer their investments to blind trusts upon taking the job.

Shalom's initiative came to be called the "Halutz law". It seems pretty obvious, too: top public-sector officials have access to valuable economic information, by virtue of their jobs. They shouldn't be allowed to abuse their positions to rake in personal fortunes on the stock market.

But if Shalom really is concerned about ethics in the public sector, there are some laws that need to be passed much more urgently than the "Halutz law".

If the former finance minister really wants to tackle public-sector corruption, maybe he should be pushing a "Sheves law", named for the former director-general of the prime minister's office, Shimon Sheves, who was convicted of helping friends - the Schuldenfrei brothers - inflate their earnings on real estate by tens of millions of shekels.

Wait a second, don't we already have "Sheves laws", forbidding bribery, fraud, breach of duty?

We do, but if you've been following the sentences handed down against public officials in the last decade, you'll see that the courts have gradually rendered the laws impotent. Corrupt public officials who abuse their positions to enrich themselves and/or cronies are let off with a slap on the wrist, at most.

The crime of fraud, the crime of breach of duty, are one of the few barriers still protecting us from politicians, clerks, and other public sector entities who use their seats as stepping stones to riches. It is entirely possible that in the Income Tax scandal, where among other things businessmen and officials are suspected of colluding to appoint convenient people to highly sensitive and influential positions - breach of duty may be the only charge that can be sustained. The corruption allegations may be too hard to prove.

Importing American norms

Certain elements have been attacking the crime of fraud and breach of trust. One of the most prominent assailants is none other than the incoming Justice minister, Daniel Friedman.

In a period when public-sector corruption is clearly rampant, and the symbiosis between big business and top officialdom transfers billions from the state to the few, a greater effort should be made to strengthen the definition of fraud and breach of trust. But it seems that all too many powerful entities do too well from weakening it.

Supporters of the "Halutz law" note, rightly, that the U.S. has a similar edict in place: from the moment a person is chosen to high public office, they can't manage their own portfolios.

But if we want to import American norms to Israel, there's another, more important law that we need first.

In the U.S., the government's contribution to GDP is small, and insider information is a fantastic way to rake in a mint at other people's expense. In Israel, the capital market is less developed and the share of the government in GDP is double.

So in Israel, we need a Sheves Law alongside the Halutz Law, a law that would require all public officials with economic clout to publish a detailed financial statement disclosing all their assets, and to continue publishing the statement years after they leave office.

The Sheves Law

Sheves for instance helped his business-sector buddies make tens of millions of shekels in ill-gotten gains. Wonder of wonders, a few months after he stepped down as director-general of the prime minister's office, he began to build a fortune, and fast at that. Among other things he advised the people he'd boosted when serving in government.

But he's just one of thousands. Every novice real estate developer, every lowly party player and every little fixer in the city bureaucracies knows that the top people at the cities and planning authorities wax fat during their time in public office, because they influence land allocation and zoning, and approval of building plans.

State Comptroller Micha Lindenstrauss recently revealed how the former deputy mayor of Petah Tikva, a lawyer named Sinai Gilboa, who also chaired the local planning committee on an acting basis, and grew rich while in office.

His story began with the Dan bus cooperative, which wanted to exercise its rights regarding land in the city. When Dan's plan was rejected, it decided not to pick a fight. Honey catches more flies than vinegar, they say. Dan simply hired the services of said Gilboa, who as said was also the city's deputy mayor and chairman of its planning committee.

Lindenstrauss found that Dan had pledged to pay Gilboa at least NIS 15 million for his services.

Israel's public sector is littered with Sheveses and Gilboas, who abuse their power to make money. The government controls 50% of GDP and much of the wealth is concentrated among the darlings of the public sector
After years of inaction at the level of the police, the prosecution and the courts in handling public sector crime, this year the police has leapt into action. It is investigating the grimy seam between big money and government, and started with the filth at the Tax Authority.

But the chance that the police will detect more than a tiny fraction of the tremendous corruption in the public sector is remote. A Sheves Law forcing all bureaucrats with power to move billions of shekels to publish personal financial statements would probably be far more effective in reigning in the rotten.