Israel Matzav

Oh what a tangled web we weave, when first we practice to deceive

I searched for the quote in the title online thinking it was Shakespearean. It's not. The quote actually comes from Sir Walter Scott's Marmion, published in 1808.

I searched for the quote, because it perfectly fits the pickle that Prime Minister Ehud K. Olmert is in this morning. If I have told you on many occasions that Ariel Sharon pulled off the disengagement surrender of Gaza and expulsion of its Jews to try to save himself and his sons from jail time, I have to tell you this morning that it looks like giving land to the 'Palestinians' may not be enough to save Ehud K. Olmert.

I hesitate to speak about this because the Israeli tax authorities are often accused of being vindictive, and as an Israeli who is required to file tax returns (most Israelis are not required to file), they have a way to get at me. But as the host of Israel Radio's popular morning talk show HaKol Diburim ("It's all talk") said this morning, "we all want to wake up and find out this isn't true."

On Monday night, the police started making arrests in a burgeoning scandal involving the income tax authorities, after the investigation was exposed on (cable) Channel 10's news. Among those arrested are the current head of the tax authority, Jackie Matza, his immediate predecessorEitan Rub, the longtime bureau chief of Ehud K. Olmert's office, Shula Zaken, Zaken's brother, Yoram Karshi, several business people, and most of the senior echelon at the income tax authority. Some of these people are actually being held, while others (including Zaken) have posted bond and been released to house arrest (which means that they are confined to their homes for some period of time while the prosecution decides what to do with them).

The charges?

The four lead suspects are Zaken, Karshi, Rub and Ben-Gur [Like Karshi, a wealthy 'businessman' CiJ]. Karshi, whose remand was extended by nine days, is suspected of taking advantage of his proximity to both Tax Authority officials and his sister to involve influence appointments to the authority. Police believe that Karshi - a member of the Jerusalem City Council - may have been one of the businessmen who allegedly influenced Matza's appointment. [In plain English, that means that he bribed someone to appoint Matza to be the head of the Tax Authority. Whom did he bribe? We'll get to that.... By the way, the Post doesn't mention how long Karshi has been a member of the City Council, but guess who was the immediate predecessor to the current mayor of Jerusalem. Hmm... CiJ].

Police said they believed Matza had arranged for the businessmen's taxes to be lowered, and that Rub, even after leaving his position at the Tax Authority, was involved in establishing contact between the businessmen and Matza. National Fraud Squad detectives said they suspected Matza of involvement in both accepting and offering bribes, fraud, violation of public trust and aiding in illegal appointments.

Nice, huh? Can you imagine the Commmissioner of the IRS being charged with "involvement in both accepting and offering bribes, fraud, violation of public trust and aiding in illegal appointments." Sounds like Nigeria, doesn't it? But wait, it gets better:

Ten months ago, police said, the National Fraud Squad (NFS) began to examine allegations that Tax Authority appointments - including that of Matza himself - had been influenced by powerful businessmen. Police suspect that after these people were appointed, the businessmen would approach them for preferential treatment in tax assessments.

As part of the investigation, then-NFS head Dep.-Cmdr. Miri Golan ordered a wiretap on Zaken's office phone [in Ehud K. Olmert's office. CiJ], after suspicions arose that Zaken was involved as a go-between, in contact with the businessmen and Tax Authority officials. The existence of the wiretap was only revealed when its results were used as evidence during the ongoing sexual harassment trial of former justice minister Haim Ramon [Ramon is on trial for kissing an admirer. As a result, he was forced to suspend himself as Justice Minister. At the moment it appears likely that Ramon will be acquitted because he didn't intend to sexually harass the woman and because the woman apparently told people she enjoyed it until she was pushed to file charges. CiJ]. Golan was reprimanded for the use of the wiretap, but the legality of the evidence has been confirmed in court. [In other words, the court has approved the use of a wiretap in the Prime Minister's office to gather evidence in a criminal bribery investigation. Even Richard Nixon didn't do it for money. CiJ]

In addition to the arrests, police searched 20 of the suspects' houses and searched the Tax Authority offices in both Tel Aviv and Jerusalem for documentary evidence. All of the suspects, including Zaken and Matza, were taken to the NFS's Petah Tikva offices for questioning.

Matza was appointed to head the Tax Authority in January 2006. The head of the Tax Authority is appointed by the Minister of Finance. And the Minister of Finance in January 2006 was....

On Tuesday night, police emphasized that Prime Minister Ehud Olmert was not a suspect in the scandal that led to the arrest of Olmert's longtime bureau chief and most of the senior leadership of the Israel Tax Authority.

Then whom the %$#@ did they bribe to appoint Matza? The comatose Ariel Sharon? Bibi Netanyahu who resigned months earlier?

YNet reports:

Sources close to Olmert posited Monday night that the prime minister is not likely to be investigated in the affair. According to them, there's no information tying Olmert, in his former role as finance minister, to the indictments against senior Tax Authority officials.

Likewise, they say, there is no evidence against Zaken, who is suspected, among other transgressions, of bribery, fraud, breach of trust, and granting tax benefits to cronies.

And these 'sources' know this because... the prosecutor's office is sharing information with them? And then there's this little tidbit:

Tuesday night it was revealed that, while finance minister, Olmert had been interested in appointing an external candidate to the post of Tax Authority Chief, but, pursuant to a negative recommendation from Attorney General Menachem Mazuz, he was forced to choose between two other candidates, one of whom was Jacky Matza.

Now that's interesting. Mazuz was (leftist) Yossi Beilin's (formerly known as Shimon Peres' poodle) candidate for the attorney general's position and represents the leftist tilt in the State's Attorney's office. Is he part of this too? Or is Olmert's office trying to run interference by dropping these kinds of tidbits in the press?

Haaretz has the lowdown on the 'planted' employees at the Income Tax Authority who allegedly 'helped' some 'businessmen' receive 'tax breaks.'

Writing on YNet's web site today, longtime columnist Sever Plocker gets to the heart of what's at stake here:

Where is there another democracy in which top Tax Authority officials are detained, the Justice Minister is put on trial, intricate financial affairs involving the prime minister and finance minister are being investigated and police files are being opened against so many top officials? Such a democracy does not exist except for Israel model 2006 - such a successful, yet crooked country. [Plocker was kind and did not mention that the 'religious' President is also about to be indicted for sexual harassment. CiJ]

If the senior tax officials are indeed found guilty of even a small number of the offenses they are suspected of, this would spell the collapse of the public service system.

Corruption and bribery at the highest levels of the tax system jeopardize Israel’s stability even more than a Hizbullah attack or the arrest of the prime, or any other, minister.

This would be a devastating blow the to the State’s backbone; when the tax system is rotten, so is the entire governing body. The disgust is overflowing.

...

In the few years before the aforementioned scandal, it was pleasant to walk through the doors of the Tax Authority: The employees smiled and were courteous toward the tax-payers. The terror was no longer; those who came with clean hands could expect positive treatment.

Tax arrangements were carried out in a clear and expedient manner, and assessing officers refrained from imposing the maximum tax allowed. The finance minister’s instructions to the assessors were clear: Take the citizens wishes into consideration; they also deserve a break every now and again, within reason.

This policy has proven itself beyond all expectations. The tax revenues, despite the decrease in tax rates, increased rapidly and resulted in surpluses in the State Budget. It turned out that when a government authority treats citizens with respect, the citizens pay their dues.

All this may come to an end today. Which assessing officer would risk accommodating a tax-payer? He or she would prefer not to decide, or go to court – anything so as not to arouse suspicions.

However, arrests of senior Tax Authority would have the most damaging effect on the citizens’ trust in the authorities and the public’s willingness to cooperate with them.

This trust, which is the foundation of every civil society, is already very fragile and is expected to become even weaker and reach the point of indifference and a search for alternatives to democracy.

Such situations breed populist, fascist and Bolshevik movements. No country is immune from them; not even Israel.

Do I hear "the C word"?

This scandal makes this country's previous scandals look like child's play by comparison.

For those of you who think this has nothing to do with the country's foreign policy, you're wrong. First, remember that the FBI got Al Capone for tax fraud. Israel is controlled by eighteen families, and you can bet that every last one of them has a stake in both the income tax authority and the country's foreign policy. Will this be Ehud K. Olmert's downfall? We can only hope....

Ironically, Teddy Kollek, who was mayor of Jerusalem for twenty-eight years, passed away yesterday at the age of 95 (the funeral is tomorrow). In Kollek's last election in 1993, he lost to Ehud K. Olmert, who had formed an alliance with the Haredim to win the election. Olmert has long since abandoned the Haredim, and has moved on to 'bigger and better' things. I guess the Haredim didn't have enough money to pay him.

posted by Carl in Jerusalem @ 11:43 AM