Army Shunning Sunlight, Says Treasury

Finance Ministry official criticizes Defense Ministry's excessive expenditures, lack of transparency.

The battle over the defense budget is on, and as usual Finance Ministry officials profess outrage at the opacity of the defense establishment.

The People of Israel may be one, but they live in two countries, quipped Shuki Oren, accountant-general at the Finance Ministry, describing his outrage at the stealth of the defense establishment in respect to its budget.

Shuki Oren
Daniel Bar-On

Oren is usually a placid type who doesn't seek the limelight. But the defense budget causes him to blow his stack.

"I was shocked," he told TheMarker yesterday. "They invited me to visit the Defense Ministry at the Kirya in Tel Aviv. During the meeting, they invited me to lunch." At the Finance Ministry they offer guests a glass of tap water, after the budget department eradicated refreshments last year, Oren says. "At the Defense Ministry, they invited me to a full three-course meal, with waiters and wine."

In May 2007 a committee headed by David Brodet laid out long-term guidelines for defense spending. The Brodet Committee recommended intense streamlining. Between 2008 to 2017, it ruled, the defense establishment needed to cut NIS 30 billion from projected spending.

Defense officials claim to be on track with the Brodet recommendations. Treasury officials say they aren't even close.

"In each of the last few years, the defense budget has exceeded the path set by Brodet," Oren says. Both the army and the Defense Ministry ignore public-sector norms, he contends.

The Economic Arrangements Bill for 2011-2012, now undergoing the legislative process along with the national budget (as it does every year ), adheres strictly to the Brodet recommendations, Oren says - recommendations that the cabinet accepted in July 2008. Yet when the treasury submitted the bill, the Defense Ministry severed negotiations and said it wouldn't come back to the table unless the treasury withdrew its "suggestions," Oren says.

"What did we suggest? We suggested an improvement in procurement processes, supervision over the defense budget, and over wages." The treasury did not suggest budget cuts, or belt-tightening measures for career soldiers. All it sought was to expose the figures to the light of day.

Living high on the hog, in the dark

It has become impossible to supervise the defense budget, Oren says. "It is utterly opaque. The system does everything to deflect true supervision. Although in recent years we have had an accountant-general at the Defense Ministry, the army is completely opaque to us. There is no civilian supervision over the IDF. They do their own audits by criteria set by themselves."

One of the treasury's offending "suggestions" pertains to supervision, which the treasury would like to have, as it supervises budgets at all other ministries, Oren points out. There is no question in his mind that there's flab to be cut in defense - the treasury just can't know where.

To drive home the point about opacity, Oren brings up the accommodation of Defense Minister Ehud Barak during the Paris Air Show in October 2009. The treasury only found out that the Defense Ministry had put Barak, his wife Nili Priell and his entourage at the upmarket InterContinental Le Grand Hotel because Transport Minister Yisrael Katz demanded to be housed there, too.

But the waste doesn't stop at the minister's office, Oren charges. "Some time ago I got an urgent call, nearly at midnight, from the Defense Ministry," he recalls. "What happened? A general needed to make a short flight, three and a half hours, to Europe, but he'd only fly business class." That was against the rules, and yet again it showed "how things are done there," Oren says.

Wage costs are a sore point for the Finance Ministry: 65% of the defense budget goes to wages, pension payments and rehabilitation costs, and only 35% goes to Israel's military strength.

"The Brodet Committee said wages in the army are unsupervised," says Oren - yet nothing has been done about it. "My predecessor, Yaron Zelekha, reached an agreement with the deputy chief of staff that wages would be audited." It was lip service on the army's part, Oren says.

The only element of wage costs that the treasury managed to begin supervising, in 2009 and only after pitched battles, was the use of cars. "In that audit we discovered, and I say this with the utmost delicacy, bad conduct," says Oren.

The army turned out to be factoring car use into wage costs based on criteria that it made up itself, completely irrespective of Israeli tax law. When the treasury sought to fix the problems, the army shut the door, he says. "The defense establishment refuses to comply with the law. They live in their own country."

The treasury fears that wages are being mishandled, Oren says. At the least the treasury demands that wage spending in the army be transparent. "We have no problem doing it in stages," he says. He suggests it start with the treasury receiving observer status in respect to the computer system the army uses for wages. By the end of the process, though, the treasury wants full control over wages in the defense establishment, as it does at all other parts of the government, says Oren.

Moving onto procurement, it's done completely in the dark, Oren says. There is no transparency at all. "I'm talking about civilian procurement, not arms systems. The Defense Ministry spends large sums on civilian procurement, but it doesn't adhere to the rules." While all other government procurement is 100% transparent, that isn't so for the Defense Ministry, he says.

All of this is merely proper administration, Oren sums up: "It has nothing to do with security whatsoever. It is simply proper procedure."