Expert: Netanyahu Bezeq Affair dealings harmed 80% of citizens’ pensions

Coverage of the Bezeq-Walla Affair, which may lead to Prime Minister Benjamin Netanyahu’s downfall, has ignored the affair’s harming of 80% of Israeli citizens’ pensions, an economic expert has told The Jerusalem Post.Dr. Arie Nachmias, head of Business Administration at the Open University in Ra’anana, explained that coverage has missed that behind the affair was a deal that benefited Bezeq and Walla owner Shaul Elovitch, but was an “awful economic deal” for the Israeli public.He explained that most citizens do not necessarily invest in the stock market on their own. As a result, they think that they did not own Bezeq shares, which have lost billions in value since the affair.Elovitch profited between NIS 600 million and over NIS 1 billion from a controversial merger between Bezeq and YES, both of which he had large ownership shares in.What individual members of the public do not realize, said Nachmias, is that essentially all of the country’s small number of large pension funds had invested individual’s pensions in Bezeq which has been part of the Tel Aviv Stock Exchange’s bellwether stocks.In the Bezeq-Walla! Affair, also known as Case 4000, Attorney-General Avichai Mandelblit is expected to announce an intent to indict Netanyahu for bribing Elovitch with favorable government policies in exchange for positive media coverage on the Walla site.If Bezeq-Walla is part of the ongoing election campaign, he said the harm to the public should be the emphasis and not whether law enforcement is out to get the prime minister or not, which Netanyahu has tried to frame as the issue.Also, he said that making election coverage about Netanyahu versus law enforcement has pushed important substantive policy issues to the wayside.“The prime minister has moved the whole election debate from speaking about important issues to the citizenry, to fighting about ‘why are they trying to bring me to trial,’ and going after the police chief and the media,” and whether there will be a pre-election indictment announcement, he said.Nachmias said that he hoped that “at some point, politicians will also speak about issues like health, transportation, the poor,” threats from enemies and how to address the Palestinian issue – “all of which have dropped out of the election.”Asked why he thought average citizens did not realize the impact of the Bezeq affair on their own wallets, he said that, “there is an ignorance about public finances. Most people do not understand what it means to be shareholders or that they can have their pensions invested without [being active investors].”Another area where the Bezeq affair harmed the public, said Nachmias, was that many reforms to the telecommunications industry were put on hold.One clear example is that the public was expected to be offered much faster Internet access by now. But he said that has been delayed by Elovitch and Bezeq’s opposition to the reforms – opposition which was adopted by Netanyahu as communications minister.Nachmias said that the Bezeq affair should rally the Israeli public to understand the need to reform the current mechanism for guarding against conflicts of interest in the business sector so that it will better protect their interests.He said that the current system theoretically “makes conflicts of interest more transparent” which can protect the public from harm, but only if “people have integrity and when they are not indebted” to power-brokers.However, given that Bezeq CEO Stella Handler, Elovitch’s son Or, and others with oversight roles in Bezeq allegedly ignored their duties in favor of their feeling indebted to Elovitch, he said, the system broke down.Going farther, Nachmias said that if the current system – which permits a wide range of corporate transactions in spite of conflicts of interest as long as there is transparency – “leads to harming the public,” then possibly the system “is not appropriate for our culture” in Israel.Essentially, he said that Israel should consider substantially reducing the number of corporate transactions that it permits where there is a conflict of interest.His message was that transparency may significantly fall short in protecting the public. That means that a minimal requirement to protect the public may be opening to competition any transaction where there is a conflict so that the alternative to the conflicted transaction is clear.