Attorney and Income Tax Expert Ehud Barzily, Is the Israel Tax Authority Corrupt?

Attorney Ehud Barzily is a well-known figure in the Israeli tax world; he served as deputy income tax commissioner from 1996 to 2000, and legal advisor to the income tax commission from 1999 to 2000.

Corruption, fraud and breach of trust scandals within the Israel Tax Authority just keep multiplying. And in recent years, the cases have become graver and more frequent - including the affairs involving former authority head Jacky Matza, top official Shuki Vita and attorney Yaakov Weinroth. While the media are still occupied with one scandal, a new one pops up.

On Tuesday, yet another serious corruption case involving senior tax officials exploded. Among the well-known public figures arrested are David Vanunu, head of the extremely sensitive field intelligence and investigations bureau at the Tax Authority; Reuven Schiff, one of Israel's veteran accountants and former chairman of the Institute of Certified Public Accountants; and Moshe Shchori, director general of Kadima, the leading opposition party.

Ehud Barzily - Nir Kafri
Nir Kafri

Vanunu is quite a familiar face at the Tax Authority, and not only in the center of the country; almost everyone at the authority's administrative offices in Jerusalem is acquainted with him. He was arrested and questioned in Jerusalem following the Holyland construction scandal, then released and returned to his job. His name has been mentioned in the media in other negative contexts as well. In recent months, Vanunu was also at the center of an undercover police investigation.

Attorney Ehud Barzily is also a well-known figure in the Israeli tax world. He served as deputy income tax commissioner from 1996 to 2000, and legal advisor to the income tax commission from 1999 to 2000. He was a candidate for the commissioner's job several times, including after the Jacky Matza scandal broke. In 2000, after he was again passed over for the commissioner post, he resigned from the Tax Authority and opened a private law firm specializing in tax matters. Barzily knows Vanunu from when they both worked at the authority.

Considering the pileup of criminal cases, would it be correct to say that the Israel Tax Authority is corrupt?

Absolutely not. The tax office is vilified and hounded nearly every day, despite the extremely important functions it fulfills. To say that it is corrupt would be completely untrue. To say that Tax Authority employees receive bribes is a grave accusation, and a false one.

Jacky Matza, the former head of the authority, confessed to breach of trust and abetting bribery. He was acquitted on all the counts of receiving bribes.

I know Shuki Vita and I am well-informed about his trial, in which I appeared as a witness. To the best of my knowledge - and this is the testimony I provided - Vita has not broken any laws. Time will tell. In my opinion, he will not be convicted of accepting bribes.

The current case is completely different, too, because it involves the payment of sums of money. In the other two cases, there was no such payment. If it turns out that the allegations against those who were arrested [Tuesday] are correct, then the failure is grave, but it is a local shortcoming. I hope that there is nothing behind it, because I know the people involved. But if it does turn out that money was paid, this is of course a very serious matter and it needs to be treated as such. But this is a specific case, not a system-wide [problem]. I know the people who work at the Tax Authority very well. I come from there. They are the best workers in the Civil Service.

Where does the failure stem from?

Your question is based on the assumption that there is a failure here - and I don't agree that there is a system-wide failure within the Tax Authority. But as long as we are speaking about failure, I believe that the tax system does not get the credit it deserves from the decision makers and the public. It is always under attack, being criticized and blamed. No one gives this large organization any credit.

There is no balance between the criticism it deserves and the many positive things it does. Not everything is rotten in the Tax Authority. Every year it meets the goals the government sets before it to collect taxes. The lack of thanks, and the endless criticism, paralyzes the Tax Authority and causes good people to leave.

How can unlawful behavior within the authority be prevented?

First of all, this is a question of ethical leadership. Good, loyal and devoted people must be promoted.

At the end of April, Tax Authority head Yehuda Nasradishi will end his four-year term and retire. Who should replace him?

His successor must possess three qualities: he must be a leader; he must understand the system; and he must know the profession.

A search committee to find the next director should have been convened a long time ago. Now there are only a few months left before Nasradishi's retirement and any search committee that starts today won't be able to choose a replacement before the end of April. There are many good people in the country who could serve as head of the Tax Authority and want to be appointed to the job - from both inside and outside the authority. It's very important to choose the best one.

What is the current scandal doing to the authority's public image?

Only bad things. The system has lost the public's faith. And this is something it needs. Unfortunately, the public does not know the positive sides to the authority's work, and there are many.

What effect have the recent scandals had on the relationship between the authority and the police?

Relations have been badly damaged in the wake of these last scandals. Matza, as head of the tax authority, and Vanunu, head of the national field intelligence and investigations office, worked very closely with the police - helping them and being helped by them. Their common agenda was a war on crime.

They sat around the same table with policemen for many long days, discussing the best way to deal with crime and criminals. At the end of the day, they were investigated as criminals themselves by those same policemen.

This isn't a simple matter. It is likely to damage the trust of one system - the police - in the other. They must work together on many cases, with complete mutual trust. Let's hope that after all the chimneys are cleaned, the two systems will cooperate again as they did before."