Why Politicians Go Into Business

Dan Naveh, a brand-new former MK and minister, joined Nochi Dankner's IDB group this week. He will be heading a new investment fund Clal Insurance is establishing.

Naveh has no business background. At this stage it is hard to know what his appointment means in terms of the nature of fund, and how he will be responsible for making it a success.

But we can ask what his appointment means. A lot of politicians move to the business world, and we can ask what that says about politics and the business sector.

The list of well-known politicians who moved from Knesset to the private sector in recent years includes former finance minister Avraham Shochat, who's on several boards in David Wiessman's Dor Alon energy group. Former police minister Roni Milo, who was also the mayor of Tel Aviv, now chairs the real estate company Azorim. Former Knesset speaker Avraham Burg is the chairman of Vita Pri Hagalil.

These are all serious and influential politicians who served in senior posts, and they may even be able to do so once again in the future.

Two former prime minsters who served in the last decade, Ehud Barak and Benjamin Netanyahu, retired to the business world, and then decided to return to politics. Barak and Netanyahu are politicians who failed as prime minsters, but nevertheless made a clear statement: Either I am prime minister, or I am going to make a lot of money.

Netanyahu, and now Barak, have proven it is possible to jump back and forth between the two worlds.

The connections between the business world and the political arena have become even closer in recent years.

This is an expression of the growing connections between wealth and power. Politicians have a huge influence on the business sector in areas such as regulation, legislation, access to information, and the ability to open doors.

Such information is worth money, in particular to a group such as IDB, whose principal operations are in Israel, and comes into contact with the authorities on a daily basis.

Burg, Naveh, Milo and Shochat are no different from Barak and Netanyahu. They also served in senior posts, even if less senior than prime minister. But they were certainly senior enough not to become accustomed to the boring daily routines of backbench MKs who serve on a committee or two.

Ambitious politicians such as these never adapted to the sharp turns in Israeli politics, which force them into periods of exile in the political wilderness.

The temptations of the business sector today are greater than ever, because of the huge jumps in the salaries of senior executives, and the ability to make it rich very quickly. And if you are a veteran politician, the dive into the business waters is cushioned very nicely by generous pension terms from the days in office.

It is exactly at the junction of various interests where these experienced politicians can exploit their connections for the benefit of the wealthy moguls, and this leads to two phenomena: the business sector enjoys the benefit of close connections in the corridors of power, and the politicians worthy of their jobs quit politics and abandon the arena to much less qualified politicians.

And the result of both of these phenomena is the sharp rise in corruption.