Banana municipalities

The back-scratching, palm-greasing ethics of City Hall

Ziv Maor
שתפו כתבה במיילשתפו כתבה במייל
שתפו כתבה במיילשתפו כתבה במייל
Ziv Maor

The indictment filed two eeks ago against property developer Dudi Appel mentioned three former local authority heads. Appel, an influential Likud member, had assisted all three in their election campaigns, in return for shall we say rewards.

Lod mayor Benny Regev lost the mayoral elections in 1998 before he managed to complete his mission for Appel, to annex land from Moshav Ginaton to the Lod municipality. Appel had previously purchased land from the moshav for $24 million and during his (so far unsuccessful) struggle to have the land rezoned, he realized that its annexation to a municipal authority would be very helpful.

Just like the Israel Lands Administration, the local government has thousands of employees, council members and honest authority heads who usually work within the framework of the law. But at the ILA too, the combination of endless red tape, low wages and tremendous financial potential can engender corruption and banana-republic type management.

Mom, do me a favor -

Connections, family and friends are worth more than money. Friends in the right places can slash licensing procedures, increase building permit allowances, arrange jobs, and (illegally) set up discounts amounting to millions in municipal taxes, handling fees and particularly in betterment taxes, which are finalized through negotiation.

The general feeling in more than a few authorities over the years was that the government would eventually cover their overdraft. Thus they could go wild, drive fancy cars, employ two deputies whose duties were not always clear, and pay tens of thousands of shekels to various consultants, some of whom were cronies. The local authorities also related to tenders, which are required by law, as recommended but not compulsory.

The government actually did bail out the authorities, expect in a few cases in which the Interior Ministry appointed a special committee to replace the mayor and the municipal council due to bad financial management, even by municipal standards, as happened with Lod and Bnei Brak.

The state comptroller's examination of 11 local authorities in 2001 revealed that of the 305 new positions that required tenders, the municipalities bothered to go through the process in only 98 instances. This means that two-thirds of the positions were filled in an irregular manner. In Be'er Sheva, for example, there were 50 such instances. In Netanya, Petah Tikva, Tel Aviv and Modi'in, the tenders committees were composed of friends of the mayor, and could influence the selections.

Dozens of local authority heads have faced charges in recent years. The last one to be convicted, a few months ago, was outgoing Ramat Hasharon Mayor Gabi Paran. Paran was found guilty of taking bribes from two contractors, one of which was Plasim Development and Building, a company owned by Avi Zalman and Avi Biton. In a plea bargain Paran was finally convicted "only" of fraud and breach of trust, and for abetting fraud and breach of trust.

According to the original indictment, the two contractors financed Paran's legal defense in an appeal filed regarding his victory in the 1998 elections. Zalman ultimately turned state's evidence and was deleted from the amended suit.

Biased reporting

Six months ago Supreme Court Justice Dalia Dorner ruled that the Kfar Shmaryahu council head, Shmuel Ben-Tovim, had used public monies for publishing a local newspaper. The paper dealt mainly with reporting Ben-Tovim's accomplishments, and was geared toward the elections.

Connections between authority heads and contractors do not always reach the courts and sometimes end with only bad feelings. One prominent recent case is that of Kiryat Ono Mayor Dror Birenbaum, who decided to resign from his post in late 2002, about 11 months before the local elections and after nine years in office. Birenbaum claimed he was resigning because he had no more energy, but it turned out that he had a particularly attractive job waiting for him in the business sector, the management of the European activities of Housing & Construction Holdings, with an office in Budapest.

Housing & Construction is the mother company of Shikun Ovdim, which owns several plots of land in Kiryat Ono and is building hundreds of apartments there. Birenbaum did not understand the connection and claimed that he never made allowances for the company so his appointment was in no way a reward for good behavior.

His honor the mayor/attorney

Another recent case is that of Or Yehuda Mayor Yitzhak Bokhobza, who is also a lawyer.

While serving as mayor of Or Yehuda, Bokhobza represented contractor Aharon Maimon against the Shoham local council. Apart from the problematic nature of a mayor working at another job, Maimon is one of the most active contractors in Or Yehuda, with a large number of projects, including for the municipality.

After the matter reached a conflict of interests committee at the Interior Ministry, Bokhobza declared that he would stop representing Maimon.

Bokhobza claimed that the issue was being blown out of proportion and said that after he was explicitly told that he could not work as a lawyer while serving as mayor, he would cease his activities as a lawyer. Bokhobza did not deny that he had a friendly relationship with Maimon, saying that he has many friends in the city.

"If people said that he is my friend," added Bokhobza, "this would not prevent him from participating in tenders, but if I represented him, then there is a problem."

Regarding the tenders for work in Or Yehuda, Bokhobza said that even if he had wanted to help, he could not have. "The tenders are put in the box on the last day (for submitting bids)," said Bokhobza. "No one thinks the mayor opened the bids box beforehand."

Other ways municipalities can help contractors is by expanding building permits. Thus, for example, the Ramat Gan municipality tried to gain approval for 1,000% construction (10,000 square meters of construction for every 1,000 square meters of land) along the Ayalon Highway. This is twice the accepted maximum. Mayors also view increasing construction density as a great way to reduce a budget deficit, as additional construction increases municipal and improvement tax revenues. The problems of density and lack of infrastructure can be tackled by the next mayor.

Mayors are not the only ones guilty of corruption, much of which is perpetrated by lower level officials who sign various permits. The most recent case of this sort is, of course, the arrest of four senior employees of the Tel Aviv municipality, who are suspected of canceling millions of shekels in levies due the municipality, in exchange for monetary bribes.

Last year's the municipal comptroller's report confirmed that this is not an isolated case, and that bribes to wheeler-dealers at city hall are quite common in the processing of applications for permits, reducing the processing time from months or years to just a few weeks or less.

Another famous case involving the awarding of irregular building permits involved contractor Emil Abramov in Kfar Shmaryahu, back in 1992. That case ended in 2000, with a prison term for the contractor and the head of the inspection department at the Herzliya municipality, which is responsible for Kfar Shmaryahu too.

The conclusion that must be drawn from above cases, which are only a small sampling of what is happening in the local authorities, is that any economic recovery plan of the authorities must include comprehensive organizational reform that will finally put an end to the banana republic shenanigans in local government.

כתבות מומלצות

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