Taking Stock / 18 Families, and Lots of Clerks

Nir Gilad, the former accountant general at the Finance Ministry, is in advanced negotiations for a senior position - deputy CEO of Sammy and Idan Ofer's gigantic company, The Israel Corporation. Gilad is also the man who in 2002 led the state to buy the Ofers' 26-percent interest in Oil Refineries.

Former Finance Ministry director general Ohad Marani is expected to lead a team being put together by insurer Shlomo Eliahu to buy the controlling interest in Bank Leumi. Four years ago, Marani led the team that set the rules for acquiring controlling interest in banks. For the purposes of the Marani committee, the most relevant bank was Leumi.

Did the Ofers promise Nir Gilad a job while the negotiations were going on? Did Marani get a wink-wink from Bank Leumi? Of course not. But one doesn't need evidence of such promises to be very uncomfortable about the pattern.

A few years ago one of Israel's bigger businessmen, who has holdings in communications, told one of his managers to hire a man who had just left the Communications Ministry to a management position. The manager was taken aback: "What do we need him for?" he protested. "He hasn't done a thing for us, and he's useless, too. Did you promise him something?"

That wasn't the issue, the businessman explained. What mattered was that Communications Ministry bureaucrats knew that when they wanted to move on, this company would be happy to hire them.

A few years ago we overheard a conversation between two top bureaucrats at the Finance Ministry. Those were the days of the financial crisis, Israel's bond market was crashing, and the two were en route to a presentation the ministry was holding for rating agency analysts regarding Israel's economic situation.

Their conversation was long and emotionally charged. They argued loudly and fiercely about a burning issue: the pay levels of Bank Hapoalim's management.

Anecdote? Maybe. But if you rub shoulders a lot with top officials in Jerusalem, you get the feeling that they constantly have an eye on their next job.

Worse, in recent years top officials have been competing to see who gets the cushiest job the quickest. The exposes regarding the sky-high pay at the banks, insurance companies and big concerns have whetted their appetites, their imaginations and a few other things as well.

Reams have been written about the so-called "18 families" that control Israel's economy. In this paper we have often tried to differentiate between the propaganda and the economic reality. Mainly, we have tried to point out that 20 years ago, the economy was controlled not by 18 but by three families, two banks, one government and one union.

These families' business success and prosperity is not grounds for worry. That is a direct result of Israel's economic growth, the development of the capital market, and exposure to the great world out there.

What is worrisome is the growing ability of five or ten tycoons to influence government, and we don't necessarily mean the political echelon. We mean bureaucrats and regulators.

Government is brimming with good people who have a true sense of public mission. But we believe that there is a growing group of civil servants secretly racing for high-ranking jobs with gigantic salaries.

Why is big business so hot for these top clerks? They are very talented and accrue valuable experience in government, the tycoons would say.

Sounds good, but that is not the story. Most of these bureaucrats shifting from public service to private companies are going to sectors or companies they previously supervised. They are winding up in areas that were hugely impacted the year before by government decisions. Some businessmen view recruiting ex-officials as a way to advance their interests in government.

Rules ordering government clerks to cool off for months or a year before assuming private office cannot help. This is a small country where everybody knows everybody. Bread cast upon the water doesn't have to come home that fast, or even in two or three years: Its message will remain for a long time to come.

Clerks who refuse to grovel before big business find themselves reviled not only in the business sector but in the public sector as well. Steal horses with the gang or be labeled a hopeless, obsessive dork, bordering on the dotty.

Lately there has been more and more chatter about the 18 families. It is time to divert some of that attention to the bureaucrats, and on how to ensure that government professionals are independent and take pride in working for the public's greater good.

It is time for the family-haters to understand that the problem is not the big 18's prosperity. It is not the people who want to do well. It is with the people responsible for the public's assets, who have their minds not on the here and now, but on tomorrow.