THINK ABOUT IT: Dealing with corrupt money transfers

According to reports we are nowhere near the end of the most recent case of political scandal, involving budgetary transfers that would have been perfectly legal (even if a little smelly) if someone – or rather some very specific someones, including former tourism minister Stas Misezhnikov and deputy minister Fania Kirshenbaum from Yisrael Beytenu – hadn't allegedly decided to reap an illegal tithe (or two) along the way. Though we are not yet familiar with the full details of the affair, it seems as though most of the misdeeds took place in connection with two types of budgetary transfers: the so-called Coalitions Funds and Subsidy Funds. The two forms of transfers were the outgrowth of the disappearance of the Special Funds that were abolished in 1993. Under the Special Funds system, in the weeks preceding the passage of the annual state budget, the representatives of all sorts of institutions and MKs acting on their behalf used to crowd the entrance to the Knesset Finance Committee to try to secure earmarked budgetary allocations for their respective institutions. This rather degrading process was replaced by the Subsidy Funds, which involved the relevant ministries deciding on such allocations on the basis of clear criteria. After a while another category of fund allocations was devised – Coalition Funds, under which each of the coalition members was to be allocated a certain sum of money that it could spend on its own favored associations and institutions. In both cases there was to have been transparency and proper oversight, but that grew weaker over the years, opening the door to the corrupt practices that are now being revealed. Naturally, since we are before elections, all sorts of devices to get rid of the phenomenon are being proposed, both by politicians and by journalists. The two most common ones are to abolish the Coalition Funds altogether, and to get the Finance Ministry, but especially its Budget Department, to change its modus operandi in a way that will close the loopholes in the system. Let me begin by saying that the phenomenon of MPs or Congressmen being allocated funds from the state budget for pet projects of their voters is not unique to Israel. In the US there exists a system of “earmarks” at the federal level, under which Representatives and Senators are allocated funds in budget appropriation bills to spend on projects in their districts. The system is part of the horse trading that goes on between the president and Congress in the process of getting the budget approved. In France, too, there is a system called “réserve parlementaire” (parliamentary reserve), under which each member of the National Assembly and Senate is entitled to an annual average of €130,000 from the state budget through the parliament to spend on projects in their constituencies. The system has existed since 1979, but was only revealed several years ago, and created quite a stir, since the public had not known about it and the practice lacked transparency and oversight. Today all members of the National Assembly and Senators must publish information on the sums they receive, and the destination of the funds. (It should be noted that in both the US and France the funds are divided between Representatives and Senators from both sides of the House.) If indeed the next government actually abolishes the Coalition Funds – which is fairly unlikely since most of the parties (with the exception of the Arab parties) benefit from these funds – perhaps the notion of earmarks for MKs from all parties should be considered, as long as the system is transparent and subject to oversight. As to the prospect of the Budget Dept. of the Finance Ministry changing its modus operandi, this is also not very likely under the existing system. The main goal of the Budget Dept. visà- vis the Knesset Finance Committee (which is formally responsible for overseeing the transfers) is to smooth the passage of the Budget Law and subsequent amendments to it in the Knesset. Since the chairman of the Finance Committee is almost invariably a member of one of the coalition parties, with a vested interest in serving his party's interests, and those of his party's voters, the Budget Dept. is willing to bend over backwards to please him. This doesn't mean that the Finance Ministry (or even the chairman of the Finance Committee for that matter) is directly involved in corrupt activities, but rather that neither are inclined to snoop into the details of transfers. The only hope of changing the basis of the interaction between the Finance Ministry's Budget Dept. and the Knesset Finance Committee is if the chairman of the latter will come from the Opposition. Traditionally most of the Knesset committees are chaired by MKs from the coalition parliamentary groups, except for the State Control Committee, and the Economic Affairs Committee, which are Opposition committees. The two most prestigious Knesset committees, the Foreign Affairs and Defense Committee and the Finance Committee, are coalition strongholds, and the logic behind this is that in these two vital fields the Knesset should be cooperative to the maximum possible, even at the expense of effective oversight. However, in view of the conduct of the current chairman of the Finance Committee – Nissan Slomiansky from Bayit Yehudi – especially in his efforts to bypass the Opposition MKs in the deliberations on budgetary transfers in the committee (I dealt with the case of Labor MK Stav Shaffir in a previous article), perhaps a change in current custom should be considered, as long as it is agreed that the MK chosen to chair the committee must have relevant experience, and will undertake not to use obstructionist tactics to bury the budget (let us remember that if the annual budget is not passed by March 31 of the year to which the budget applies, new elections must be held). On second thought, it might be simpler to make a chairman from the coalition undertake to take his committee's oversight task seriously. But either way there is no doubt that something needs to be done. However, what I would most like to see happen is MKs and ministers receiving much more serious instruction at the beginning of each new Knesset regarding the existing rules of ethics (unfortunately, MK Micky Rosenthal did not manage to get the Knesset House Committee to approve his proposal for new rules, as I had hoped would happen at the end of October 2014), and on what is allowed and what is not allowed under the law with regard to financial transfers. I am not naive – you can provide instruction until you are blue in the face, but if you are instructing crooks it will simply help them devise more foolproof ways to circumvent the provisions of the law. However, I do not believe that most MKs and ministers are crooks, but rather that some of those who are prone to stumble are in a twilight zone where the saying “everyone does it” is applied to various dodgy activities. Perhaps authoritative and clear-cut warning about such activities will extract these MKs and ministers from the twilight zone, and from committing misdemeanors. Perhaps. The writer is a retired Knesset employee.

THINK ABOUT IT: Dealing with corrupt money transfers

Perhaps authoritative and clear-cut warning about such activities will extract these MKs and ministers from the twilight zone, and from committing misdemeanors. Perhaps.

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