The Rewards of Evil

Avraham Hirchson. The Bank of Israel. Jacob Gelbard.

Everywhere you looked last week, a new scandal was painfully dragged, stinking and slimy, into the light. For all the differences in style and substance, they did have something in common: all were trying to help themselves to the public's money.

There's a bright side, say the optimists: the evils are surfacing. From now on, things can only get better. They'll say that it was the same before, only nobody got caught, so now it's actually better.

But that's naïve, not to mention wrong. If anything the reports on the thefts, the embezzlements and the scandals show serve to encourage crime and corruption.

Why? Because when the evil of the day is outed, the punishment for it is so laughably inadequate that it actually creates incentive to commit more crimes.

It's simple. As long as you don't know what you face if caught, there's an element of deterrence. If you know that you face at worst a slap on the wrist, the deterrence vanishes.

Not convinced? Here is a short analysis of the evils uncovered in the last week, but remember these are all suspicions. None have been proved.


To boil down the accusations, this public figure, his friends and associates, are accused of defrauding the public systems he led by tens of millions of shekels to finance his political career, and pad his pocket.

What will his punishment be? How will this egregious breach of duty be rewarded?

Haaretz writes that theoretically, if convicted, he "will apparently negotiations forced to resign" and he might, might even do hard time, but that's extremely unlikely, if only because the statute of limitations has already become applicable to some of his alleged crimes.

What conclusion would a novice politician reach? Without cutting corners, he won't be able to finance a political career and at worst, if caught, that he'd be kicked back to Square one.

In short, it paid off for Hirchson to help himself to the money, because otherwise he'd just be another guy in the street. Not an ethical strategy, to be sure, but it is a logical one.

We at TheMarker have called on Hirchson to resign. But that isn't enough. The public should be calling on the police, prosecution and courts to show the meaning of justice, and if he's convicted, to send him to jail, and for a long time.

The Bank of Israel workers

Even the workers now agree that they were overpaid, that they received unwarranted perks and bonuses, and that they should be returned. But all the ill-gotten gains? Return all of it? Heavens to Murgatroyd, no.

The union repping the central bank workers threatens to shut down the Bank of Israel because the nasty treasury insists that the workers return all the excess pay. The workers are prepared to return only the extra pay they received in the last two years.

Their chutzpah is unbelievable. Not only were they illegally given undeserved money, not only were they not punished: they aren't even willing to give it all back. As for punishment, maybe dismissal of all the senior workers involved in the embezzlement from the public - forget it. Nobody's even suggested it.

Conclusion: Take the money. At worst you'll only have to give back half.


Bezeq (TASE: BZEQ)  chief executive Jacob Gelbard reportedly pushed through huge bonuses and stock option grants for himself and other company executives. He himself "received" pay and options worth tens of millions of shekels for 2006.

But the Israel Securities Authority, whether prompted by the public protest or otherwise, investigated and found grave irregularities in the way the options and remuneration were approved.

And what has been done with grabby Gelbard? "His status has been shaken", oy vey, and that's only because the other directors are Bezeq are terrified that some of the mud flying around will stick to them.

True, Bezeq is not a government company any more. It is controlled by private people. But it is publicly traded. And the message  to other executives is clear: Take take take, take the money now, make your killing. If caught, at worst? Your "status will be shaken". Not pleasant, but well worth of the risk.