1. Netanyahu and Lindenstrauss
In the next week or two, the prime minister and the state comptroller will have to make two important decisions - two decisions on matters of principle, in the name of transparency, the public interest, and Israeli democracy.
At the beginning of next week, it will become clear whether Prime Minister Benjamin Netanyahu will bend, compromise, stutter, or capitulate to Governor of the Bank of Israel Stanley Fischer over control of salaries at the central bank. Despite Netanyahu's declarations that control will remain with the Ministry of Finance, it seems to me that he is looking for some twisted way of currying favor with Stanley, of finding some kind of compromise, and of giving him some kind of candy. But there is not, and there cannot be, any compromise or candy in this matter. Supervision of salaries at the Bank of Israel, one of the most corrupt and unruly public bodies in Israel, cannot be carried on in the dark, far from the public eye, and cannot be transferred to the effective control of the bank itself, because the cat cannot guard the cream.
I know that hovering over Netanyahu's head is the question of Fischer's second term, and the prime minister will try to appease the governor so that he will stay on. It will be a pity if Netanyahu makes his decision taking into account this disguised, vague threat. Even another term for Fischer cannot buy removal of supervision of Bank of Israel salaries, because no senior figure, whatever his prestige, power, and talent, can be above the law. I suggest that Fischer and Netanyahu should read the interview the "Financial Times" conducted a couple of weeks ago with Bob Woodward, the legendary journalist who exposed the Watergate affair. "We need disclosure, even if it hurts," Woodward said, "Democracy dies in darkness… There’s a whole apparatus set up in government institutions to keep people from finding out what’s really going on.”
It really will be a shame if Netanyahu lets the Bank of Israel government, headed by Stanley Fischer, conduct its business in the dark, and prevent people from finding out what's really going on in the rotten institution he leads.
It will also be a shame if State Comptroller Micha Lindenstrauss capitulates to Fischer and foregoes an investigation into the events that led to the removal of Dan Dankner as chairman of Bank Hapoalim. Fischer and Supervisor of Banks Rony Hizkiyahu, everyone now understands, refuse to say why they ousted Dankner, and see no public benefit in revealing the reasons (if there are sound reasons, which I suspect there aren't). As far as they are concerned, the public doesn't need to know everything. As far as they are concerned, a media campaign that they organized and in which they portrayed Dankner's supposedly problematic character, was enough in order to remove from the scene people they don’t like.
I'm sure that if Fischer rummages through the books in his library, he will find the well-known statement by US Supreme Court judge Louis Brandeis: "Sunlight is said to be the best of disinfectants; electric light the most efficient policeman."
Are Fischer and Hizkiyahu afraid of the sunlight and the electric light, and of exposure of the non-reasons for Dankner's ouster? That is something that Lindenstrauss must reveal to the public.
2. Gil Deutsch and Roni Biram
I suggest to Fischer that he should take advantage of the success story of the founders of Excellence Investment to learn something about competition in the Israeli economy. Perhaps in order to avoid revealing the reasons for removing Dankner from Bank Hapoalim, Fischer has portrayed the fight with Bank Hapoalim as the fight against the wealthy elite and the families that run Israel, and that supposedly endanger democracy.
Well, Biram and Deutsch started out 17 years ago with nothing, and turned Excellence into one of Israel's leading investment houses. They are leaving Excellence with half a billion shekels gross apiece, in the biggest financial exit ever seen here.
They did this despite the high degree of concentration in the finance industry, and despite the near stranglehold of the banks on this market until a few years ago. They overtook veteran brokers like Analyst and IBI, and left Clal Finance, a powerful entity and a unit of IDB, far behind. The exposure of the financials of Psagot yesterday in "Globes" only goes to show the extent of Excellence's triumph in the finance market. Psagot, an investment house that traces its ancestry to Bank Leumi, manages twice as much money as Excellence, but earns a great deal less.
How did they do it? How did Biram and Deutsch accumulate wealth? Were they born to rich families? Are they tycoons? Barons? No, they were not born with silver spoons in their mouths. No, they are not tycoons, oligarchs, barons, or any other of these ridiculous expressions. They succeeded in a highly competitive market because they showed creativity and innovation in finance (the derivatives and ETFs markets), the kind of creativity and innovation that create a distinct competitive advantage.
So the next time Fischer reads an article about the dark forces in the economy blocking competition, strangling innovation, and endangering Israeli democracy, let him pull out the story of Biram and Deutsch, and take a look at who is behind those articles: he will find that behind this nonsense are embittered business people who couldn't compete and are trying to blame an uneven playing field for their failures.
Published by Globes [online], Israel business news - www.globes.co.il - on June 18, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009