Olmert’s conviction

We can only hope that Olmert’s conviction will set in motion a process of soul-searching and a serious scrutiny of the problematic relationship that exists between business and politics, a relationship that is not unique to Israel.

March 31, 2014 20:59
3 minute read.
Ehud Olmert

Former prime minister Ehud Olmert. (photo credit: ELI MANDELBAUM)


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Olmert’s conviction The conviction of former prime minister Ehud Olmert on Monday was a very sad day for Israel.

The man who served in our most senior government position, who commanded the trust of the nation, and who had utilized the authority to make war and endanger lives, has turned out to be a criminal.

At the same time, today is also a day to be proud of our legal system. Olmert’s conviction along with other businessmen, clerks, and politicians, such as former Jerusalem mayor Uri Lupolianski, is a testament to the democratic concept that no one – not even a prime minister – is above the law.

Nevertheless, the Holyland trial and other cases that have come before our courts have revealed the problematic connections between business and politics and the rampant phenomenon of what economists call “rent-seeking” or the special sort of money- making made possible by big business’s connections with political figures and their subordinates.

Politicians and other well-placed people in government offices and other bureaucratic bodies, such as the Land Authority or the municipality, do favors for big business in the form of licenses, permits, and VIP treatment in exchange for bribes or benefits. The result is poor regulation, the transfer of public assets to firms at bargain prices or without bureaucratic oversight, and the total breakdown of meritocracy and fair competition. All of us pay the price in the form of inordinately high prices, flimsy and potentially dangerous building projects, and the stifling of entrepreneurial initiatives put forward by those less well connected, though no less talented.

A number of weak links are needed in order for a destructive form of “crony capitalism” to develop. It is not enough that there are dishonest politicians.

Gatekeepers on the professional level such as legal advisers, directors-general, and financial officers must either pretend not to see corruption or take part in the festivities.

This sort of “crony capitalism” is not unique to the Jewish state, though one could trace some aspects of the Israeli version back to our bumpy transition from a quasi-socialist regime dominated by the Mapai Party to a hastily implemented privatization of state and labor union-controlled industry.

Across the world – particularly in emerging economies – the relationship between politics and business has become fraught. India’s election in April and May will in part be a plebiscite on a decade of crony capitalism.

Turkey’s prime minister is engulfed by scandals involving construction firms. China’s President Xi Jinping vowed recently to act “without mercy” against corruption in an effort to placate public anger.

Even in rich and developed economies like the US the relationship between politics and big business is problematic. Financiers have benefited from the bailing out of banks in the wake of the 2008 economic meltdown; lobbyists have too much influence on lawmakers; and no politician can get elected without appealing to business interests for campaign funds.

In the Olmert case, the focus of the investigations was graft connected with the building of the imposing Holyland housing development, perched on a hill and easily recognizable on the southern Jerusalem skyline.

Who knows how many corners were cut, how many zoning laws were violated, and how many environmental or structural precautions were ignored in the process of increasing Holyland’s originally permitted 25,000 square meters to 311,000? Who knows how many other building projects throughout the world are tainted with the same sort of graft? What sort of message does this send out to honest, hardworking building contractors who want to believe that quality construction and competitive prices are the factors that determine who wins a tender, not one’s political connections nor one’s wiliness to bribe?

We can only hope that Olmert’s conviction will set in motion a process of soul-searching and a serious scrutiny of the problematic relationship that exists between business and politics, a relationship that is not unique to Israel.

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