Taking Stock / Never-ending Nepotism

Expose by the State Comptroller: The banks' provident funds are riddled with conflicts of interest to the detriment of depositors (gosh). The Chinese walls separating the banks from the funds are as porous as Swiss cheese, and so on and so forth.

First of all, kudos to State Comptroller Eliezer Goldberg for setting his sights on the provident funds. Sometimes timing is everything.

His report detonated at exactly the right moment, just when every banker in Israel was imposing inhuman pressure on the finance minister and treasury chiefs to block the drive to force the banks not only to forgo managing the provident funds, but also to sell them. The desperate bankers have been offering mini-compromises and convoluted ideas, anything that could allow Netanyahu to declare a "reform" without actually implementing one, anything that would allow banks Hapoalim and Leumi to maintain their stranglehold over investors, savers and borrowers.

The finance minister, his officials and the Knesset Finance Committee need support from every possible quarter to take on the dragon, to fight the most powerful forces in the marketplace - the banks, their owners and the entire sector that feeds on them.

The comptroller's focus on the conflicts of interest at the banks presents a great opportunity to look back and examine the efficacy of his institution. What results have the comptroller's biting annual reports actually achieved? What impact have other watchdogs really had?

Bites down, leaving no scar

Hmm. What the comptroller wrote was more or less what the Bejsky panel wrote 20 years ago after the banks collapsed and the taxpayer was forced to rescue them, and their shareholders, from bankruptcy.

So why haven't the recommendations of the Bejsky panel been implemented? Because that's the fate of watchdog reports in Israel - to get their 15 minutes of fame, then be ignored, at least when the rich and powerful - economically or politically or both - are the progenitors of the infamy. Lawyers love to quote the fabled American justice Louis Brandeis' famous adage: "Sunlight is the best disinfectant." Disclosure, exposure, dragging the dirt into the light is the way to cure corruption, fraud, malpractice.

Oh, Justice Brandeis, how wrong you are. In Israel, the only thing the sun cures is leather. It may glare day in and day out on the corruption, nepotism, filth, the scorn heaped on fiduciary duty, the racism, regressions, stupidity, and pure evil, and nothing is so much as tanned, let alone disinfected.

Who better than Israel's Electric Corporation to advance sheer idiocy and thuggishness to new heights of nastiness? About a year ago, when the State Comptroller penned a grim report on nepotism at the government companies, the IEC turned out to lead the pack. It turned out that the company was employing no less than 1,121 offspring of other employees; in one extreme case no less than nine kinfolk were working there.

The worst offenders were the ones closest to the feeding trough. No less than 65 percent of the IEC's national secretariat had family members employed at the same company; 44 percent of human resources department managers had their nearest and dearest at the company, and 37.5 percent of the top officials did too.

The amusing part is that the comptroller already cast the glare of his spotlight at nepotism at the IEC in 1974, yes, 30 years ago. And what impact did his shocking revelations have? None. What change ensued? None - oh, one thing did happen: a new generation of sons and daughters began working there.

After that State Comptroller expose, the cabinet and Knesset held debates, and the chairman and general manager of the IEC promised to fix everything. The Government Companies Authority (GCA) laid down new regulations requiring the IEC to issue tenders for each and every job opening up.

But a few days ago, the GCA received a learned legal opinion from the offices of the lawyers representing the IEC. The lawyers suggested all sorts of amendments et cetera, resulting in the clear-cut message that the IEC means to preserve its nepotistic habits, because "children should be encouraged to pursue their parents' occupation."

Now what? Wait for Brandeis' sun to shine down? When will we finally have a government brave enough to crack down and fire the chairman and general manager of the IEC, who are fighting to preserve the hideousness of the nepotism raging there?

Wait wait wait, maybe we got a little carried away there. After all, all Israel are brothers, right? The IEC chairman is a personal friend of the prime minister, and like any other major government institution, it is a gold mine of jobs for the boys too, not only the sons. All of Israel's politicians get their crack at the trough at one time or other, if not for themselves (or their kids), then for their cronies, friends and political allies. So really, why niggle and nit-pick - who needs Brandeis' sun when we have our IEC, which can cast its flickering electric light on the happy tradition of children pursuing their parents' occupation.