Sky scrapers

The Holyland apartment complex is the most high-profile case of building corruption in Israel's history, but hardly the only one.

By LARRY DERFNER
Holyland apartments 311 (photo credit: courtesy)
Holyland apartments 311
(photo credit: courtesy)
On May 7 a small bomb went off in the car being driven by Shota Hovel, head of the Department of Business Licensing and Building Inspection for the Tel Aviv Municipality. (No one was hurt, though Hovel’s car and others parked nearby were damaged.) In the 18 months since the last municipal elections, some 80 mayors, council members and senior municipal bureaucrats have been physically attacked or threatened with violence. “The majority of these assaults and threats have to do with decisions by municipalities involving building or business licenses,” says a security source. “This kind of violence keeps getting worse from year to year.”
Most corruption in the building industry happens at the local level – between developers, contractors and their fixers, or macherim,  on the one hand, and municipal officials on the other, says Meir Gilboa, a 37-year veteran investigator for the police, the Antitrust Authority and the State Comptroller’s Office.
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“In many cases bribery is involved,” says Gilboa, “but as often as notit’s people in positions of power doing illegal favors for friends andassociates. And if it’s a big-time developer who wants the ruleschanged in his favor, very few public officials will tell him no.”
Tzruya Medad, head of legal and economic affairs at the Movement forQuality Government, the country’s most prominent anti-corruption NGO,says: “If I could hire one more person in my office, it would be alawyer to focus only on government decisions in planning, building andland use.”
A survey released this week by Netanya Academic College and Shiluv
research group found that 83 percent of Israelis believe corruptionamong planning authorities is either “extensive” or “fairly extensive.”Asked who or what was chiefly to blame, 47% cited bureaucracy andmacherim, while 39% blamed cronyism between government officials andbusinesspeople. It turns out the public’s intuition is right on themoney, say anti-corruption experts.
The scandal surrounding Jerusalem’s Holyland apartment complex isliterally the most high-profile case of building corruption in thecountry’s history. It involves millions of dollars in bribes, suspectsincluding a former prime minister (Ehud Olmert) and a former Jerusalemmayor (Uri Lupolianski), and a colossal eyesore in the capital, ahumongous stone-and-concrete “monstrosity,” in the words of a judge inthe case. But while the scale of supposed corruption in Holyland isextraordinary, the style – whereby developers and contractors allegedlysent macherim to bribe local officials to ease building restrictions onthe project – is common as dirt, say observers.
In recent years, at least five former mayors – Lod’s Benny Regev,Kiryat Shmona’s Haim Barvizai, Rehovot’s Shuki Forer, Safed’s OdedHameiri and Eilat’s Shimon Algarissi – have been convicted of takingbribes from developers and contractors in return for easing buildingrestrictions, or in return for granting them public works contractswithout a tender, which is illegal. In most cases, the bribes went topay off the mayors’ campaign expenses.
On the corrupt developers’ side, one of the most notorious, DavidAppel, was convicted on April 15 for giving about NIS 1.5 million inbribes to former Lod mayor Regev, former Givat Shmuel mayor ZamirBen-Ari and former Israel Lands Administration official Oded Tal inreturn for favorable building and zoning decisions.
But these are among the rare cases that ended in court convictions. Inview of the true extent of building corruption, they represent thebarest tip of the tip of the iceberg, say corruption fighters. “Thestate comptroller’s reports are filled with these kinds of stories,”says Michael Partem, deputy director of the Movement for QualityGovernment. And even those reports show only a small part of thepicture.
The overwhelming majority of corruption in building remains secret,says Gilboa. “Even the people who know what’s going on and want to stopit are usually afraid to complain to the police. Either that or theyfigure it’s no use because the police – I don’t want to say they donothing, but let’s say they’re very slow and inefficient in theirresponse,” he says.
There are two things building developers and contractors are lookingfor from local authorities, and three things the corrupt among them arewilling to pay bribes for, says Gilboa: (1) zoning changes on land tomake it more valuable, for instance by rezoning agricultural land asindustrial land or, even better, as commercial land; (2) building code“variances” that, for instance, allow developers to add more stories totheir building, or to build more apartments on the lot and provide lessparking space; (3) speed up the impossibly slow, Byzantine approvalsprocess by moving a developer’s application “from the bottom of thepile to the top.”
THE HOLYLAND project is the ultimate example of zoning changes andbuilding variances gone wild. “The project started off as a few hotelsand ended up a nightmare,” says MK Ze’ev Bielski (Kadima), who gained areputation for integrity in 16 years as Ra’anana’s mayor, and who nowheads the Knesset’s local authorities caucus.
The Appel case involved a similar cocktail of corruption, also on agrandiose scale, going back to the 1990s. Appel, a longtime Likud powerbroker, gave then Lod mayor Regev about NIS 1.4 million for a buildingvariance allowing him to add two apartment towers and a shopping mallto his giant Ganei Aviv residential project. Appel also owned 140dunams of agricultural land in nearby Moshav Ginaton, and prevailed onRegev to annex the land to Lod and rezone it for residentialdevelopment, a Tel Aviv court found. (As is often the case with mayors,Regev was chairman of his municipality’s planning and buildingcommittee.)
In Givat Shmuel, Appel owned a plot of land zoned for construction of370 single-family houses, and the court found that he gave then-mayorBen-Ari NIS 95,000 to rezone it for construction of 2,000 apartments.Finally, Appel got ILA central region head Ilan Tal to award him anurban renewal contract after promising Tal he would use his politicalconnections to get him promoted, and even hire his wife in one of hiscompanies.
To further his goals, Appel used the services of a macher named Benny Tabin.
 “Macherim are usually involved in these sorts of deals,” says Gilboa.“These are usually people who used to work in the governmentbureaucracy, and they use their old contacts in the government onbehalf of developers and contractors who hire them.” Sometimes themacherim pass along bribes to government officials, but sometimes theygain favors for their employers without having to resort to bribery,just by “relying on old friendships,” Gilboa adds.
 “The macherim know how the municipality works, they know how to getthings done without bribes – by taking a developer’s file to the rightperson at the right time, and they make money for knowing how to ‘fix’things,” says Bielski. “I can’t say it’s illegal, but it’s very wrong.You’ve got two people coming to the municipality to apply for a permitto enclose their balcony, and the one who hired a macher gets it donein three months, while the one who didn’t hire a macher has to wait twoyears.”
(Bielski maintains that the macherim had little work in Ra’anana whenhe was mayor because he convened the city planning committee frequentlyand stayed on top of the bureaucracy, but he allows that they probablydidn’t altogether disappear from town.)
In many large development companies, macherim have becomeinstitutionalized – they’re not freelancers, they’re on the payroll,says Gilboa. “These huge corporations make sure to employ a lot ofpeople who were in senior positions in the Finance Ministry, thepolice, in government-owned corporations,” he says. “And when they showup in government offices, they send an unspoken message to thebureaucrats: ‘You see how far you can go if you play along?’”
WHILE SIMPLE human greed and deceit are certainly the main reasons forwide-scale corruption in and around the country’s building industry,there is a particularly Israeli ingredient in it, too – a huge,inscrutable, ever-growing government bureaucracy.
“In a Western country, it generally takes five or six years to get allthe necessary permits for a major construction project like aresidential neighborhood or an industrial complex. In Israel, it takesabout eight,” says Gilboa. He adds that such an ordeal, of course,raises the motivation of developers to turn to macherim – and often tobribing government bureaucrats – to simplify and speed the process.
Ironically, the building bureaucracy has thickened in the last 15 yearsor so with additional layers of clerks meant to serve as a check on thecorruption of others, notes Gilboa. In fact, he says, the oppositeeffect has been achieved.
“The more bureaucracy you have, the longer it takes to get buildingpermits, the more leverage government clerks have over developers andcontractors,” he says. “It’s a paradox – the higher you raise thebureaucratic hurdles, the more corruption you get.”
Partem puts it cynically and bluntly: “The more ‘gatekeepers’ there are, the more of them you have to pay off.”
At stake here is not only honesty in government and business, but theprotection of the public interest in the approval of constructionprojects – and this latter principle is commonly violated in perfectlylegal fashion when very rich developers are involved, says Gilboa.
“You look at these two huge hotels that were built right on the Haifabeach and the one that was built on the North Tel Aviv beach, hotelsthat basically blocked off the beach to the public – that’s obviouslynot in the master plan, but it was approved. The law was changed, thebuilding variances were granted and, in the end, it was all legal,”says Gilboa. “If it was you or I who were asking the building andplanning committee for such a variance, they’d throw us out on our ear.But the developers who want the laws changed so they can build theseprojects are very, very rich, and when they ask, people in governmentwon’t say no.”
It’s simple, says Bielski: “Mayors want more residential development,more hotels, more shopping centers – and the added tax revenue theybring to the city. And they’re not happy to wait years and years forthe bureaucracy to finish, either.”
BUT THEN, of course, there’s another dark side of the picture – what isliable to happen to a mayor, a local council member or a seniorbureaucrat who dares to say no to a developer, contractor or other sortof businessman who doesn’t take no for an answer.
A couple of months ago a live grenade was thrown into the home ofNazareth Mayor Ramez Jeraissy, missing him but severely wounding hisbodyguard. Recently the municipal building in Tuba Zangaria was shot upwith an automatic weapon. A driver tried to run over Yitzhak Golvari,local council head in Kadima Tzoran. Itzik Rochburger, mayor of RamatHasharon, was attacked by men while getting into his car. Meir YitzhakHalevi, mayor of Eilat, was assaulted by men on the city’s beachfront.Herzliya Mayor Yael German and Netanya Mayor Miriam Fierberg-Ikar areamong the many, many mayors who’ve been threatened with murder, says asecurity source.
In each case, notes the source, the suspicion is that the mayor wasattacked or threatened by people who weren’t granted building variancesor business licenses, or who had their illegal buildings demolished bythe city.
“It’s gotten to the point where about half of the country’s mayors –roughly 130 of them – are either physically attacked or threatened withviolence over the five-year course of a term,” the source says. In2003, Yermi Olmert (brother of Ehud) resigned as mayor of Givat Shmuelafter receiving several threats connected to land use decisions.
It’s this sort of intimidation, combined with appalling policeindifference, that keeps municipalities from carrying out demolitionorders on any number of illegal buildings, says Gilboa. “In virtuallyevery city and town, there are demolition orders that aren’t carriedout because threats have been made against the mayor, against the citycouncil, against senior clerks, against municipal inspectors, and theywon’t send out a wrecking crew because it would require policeprotection, and the police can’t be bothered,” he says.
Bielski puts it more diplomatically, saying the police “aren’tenthusiastic” about guarding city demolition crews. But he adds that ifa mayor is determined enough, he can pressure the police into doingtheir job.
“Once we had a situation where some rough elements were running apirate gas station for trucks on public land. They stored fuelcontainers on the grounds and it was completely unsupervised, a hugedanger to the surrounding residents. We expected that if we went toshut it down there would be violence, but we pressured the police andone morning at 4 a.m. we sent a crew down there with about 200policemen guarding them, and shut down the operation,” Bielski recalls.
He says that during his 16 years as Ra’anana’s mayor, he was neverthreatened and never offered a bribe. “Once one of our city councilmen,who was an honest man, was offered a bribe, but he exposed it and thatwas the end of it. As far as I know, there was no corruption in thecity. But you can never know for sure,” he acknowledges.
Asked how Israel could better fight this source of corruption, Bielskirecommended cutting out the bureaucratic Via Dolorosa that developersand contractors go through so they won’t be so tempted to resort tomacherim and bribery. “Now they have to go to City Hall to get onepermit, then the police department for another, then the firedepartment for another, then the Health Ministry, then theEnvironmental Protection Ministry and so on. It never ends. What weneed is to combine the entire building approval process into a single,‘one-stop’ address so that it’s not such an awful ordeal simply tocomply with the law.”
Gilboa suggests a major increase in police intelligence resources forrooting out corruption, or “white-collar crime.” “In Holyland, somebodywho evidently wanted revenge came forward and told the police what wasgoing on. But that’s rare – to fight bribery and corruption, you haveto take the initiative, you have to seek out information, and thepolice do very little of this.”
Until a couple of months ago, the government was proposing tostreamline the planning process to give even more decision-makingauthority to municipal committees and less to the regional and nationalplanning boards. This was billed as a “reform.”
Then came the Holyland scandal, with allegations of corruption againstthe highest levels of Jerusalem city government, touching politiciansand civil servants both. The government is now reworking its reformproposal. Meanwhile, Israelis looking up at skyscrapers anywhere in thecountry may be wondering what really went into building them.