A series of arrests in a suspected fraud and bribery scandal at the highest levels of Israel’s tax system shocked the public this week, with some analysts saying it could be more damaging to the country’s stability than terrorist attacks. The arrests Tuesday of 22 current and former tax officials — including Tax Authority Director Jackie Matza and his predecessor, Eitan Rub — followed a nearly yearlong probe into allegations that businessmen had for years influenced decisions in the Tax Authority.
Sever Plocker, a columnist writing for the Israeli daily Yediot Aharanot, wrote that if the senior tax officials are convicted of even a small number of offenses, “this would spell the collapse of the public service system.” Such corruption and bribery, he wrote, “jeopardize Israel’s stability even more than a Hezbollah attack or the arrest of the prime, or any other, minister.”
Gerald Steinberg, a political science professor at Bar-Ilan University, agreed that it would be “more threatening to Israel as a country than external enemies.” But he cautioned that no one has been indicted, yet alone convicted in this case.
“The police come up with dramatic raids and arrests and sometimes there is never a court case because there is no evidence, or the police violated the rules about the gathering of evidence,” he said. “I’m not saying they are wrong [in this case], but it is premature to judge. We’ll have to wait for the indictment.”
This week’s arrests only serve to reinforce a feeling among Israelis that “corruption is pretty widespread” in government, Steinberg observed. He contrasted that with the life of Teddy Kollek, the long-time Jerusalem mayor who died this week at the age of 95.
“He was part of a generation of Israelis who were really public servants and did a tremendous thing for their generation,” he said. “He and [former Prime Ministers Menachem] Begin and [Yitzchak] Shamir did not make money off of public service, in contrast to those who are clearly in it for the money and whose level of public service is limited.”
The scandal comes just weeks before a committee evaluating the government’s handling of last summer’s war against Hezbollah is set to release its preliminary findings. The committee, headed by a retired judge, Eliyahu Winograd, could call for the resignations of Prime Minister Ehud Olmert, Defense Minister Amir Peretz and the military’s chief of staff, Lt. Gen. Dan Halutz.At a press conference Tuesday, Halutz said he would comply with such a request; Peretz previously agreed. Halutz told reporters that although the Israeli military had made many errors during 34 days of fighting, he would not resign and preferred to “correct what can be corrected.”
But Professor Yaakov Bar-Siman-Tov of the Hebrew University’s International Relations Department said there was such “a huge failure in terms of management of the war that somebody has to take responsibility.” And “there is a good chance” the committee will recommend the replacement of all three men, he said.
“I believe it would be very strange if the government did not accept” such a recommendation, Bar-Siman-Tov said. “The problems are so big that it is difficult to ignore them and say that these people should remain in their positions. It could blame the chief of staff and clear the prime minister, but it is not rational to blame only the chief of staff.”
Such a major overhaul of the country’s top leadership would not require new elections. Bar-Siman-Tov explained that the ruling Kadima Party could simply appoint a successor to Olmert, someone, he said, like Foreign Minister Tzipi Livni, who in turn would find a replacement for Halutz. The Labor Party, of which Peretz is chairman, would appoint a replacement for him.
But Steinberg said he believes the Winograd Committee will be “much more cautious in its language” and not call for the wholesale removal of the country’s top leadership. But if new leadership is required, he said former military leaders would have the inside track.
That would rule out Livni, he said, who is “not considered to have enough experience.”
“The Iranian issue will frame the issue of who will be the next prime minister and defense minister and there are a lot of ex-military men out there,” he said, referring to Iran’s quest for nuclear weapons and its oft-repeated threat to destroy the State of Israel.
Steinberg noted that one former military general, former Prime Minister Ehud Barak is “all over the headlines” as he jockeys for leadership of the Labor Party.