The clashes in the upper echelons of the Ministry of Finance plumbed new depths last week and are all the more worrying because they occurred just before a cut in the state budget and as the deficit has climbed to over NIS 50 billion. The accusations being flung around by Ministry of Finance director general Shai Babad and other leading officials in the Ministry of Finance budget department are unprecedented. In an interview with "Globes," Babad speaks at length about the background to the clashes, freely discusses the consequences for public trust, reveals a planned structural change in the Ministry of Finance, and also comments about his abrasive style.
Let's start with the elephant in the room - your harsh style.
Babad: "There's no doubt that my belligerent and aggressive style and my inflammatory nature cause sharp disputes - no doubt of it. But I think a distinction should be made between my style and my arguments, which can be correct."
It's not that you either speak rudely or your arguments are correct.
"No one's perfect. It's probably my flaw."
Will you work on improving this?
"I'll try. Even now, with all the media frenzy against me, I haven't shouted at any reporter. What I say to the budget department is also very much to the point."
What is a person who hears about behavior at the Ministry of Finance supposed to think? Can he trust you people?
"That's a good question. I think that at the end of the day, this behavior has a very negative impact on the service that we give people, so I want to stop it. The sphere in which we have to behave is within the Ministry of Finance. When there are organizational failures, things that are not done properly or by the rules, there are relevant parties."
Is there a connection between this behavior and the big deficit?
"I don't think that it plays a role. In every budget, we had a deficit and convergence measures. It's true that the situation today is not so good, but it's not something that can't be solved. All the indications are that the economy is strong. There's a deficit problem, and I'm not ignoring it."
We hear that at meetings, you are talking about who told whom to conceal how much.
"I presided at a meeting last week about the measures that we're bringing to the government. The meeting was with all sorts of relevant parties, and there was a tumultuous discussion. What did the people in the budget department do? They called Keren Marciano and told her that the director general gave an order to conceal the deficit from the government."
"A letter with very grave accusations"
The assistants who sent you the letter alleged that you don't let them work.
"If that's true, why wasn't this letter sent to the Civil Service Commission?"
Maybe because you are their director general.
"Had that been the reason, they would have come to talk to me, not written me a letter. Why did (Ministry of Finance budget department head, N.S. and A.B.) Shaul Meridor write to me at 11:30, after the media lynch, 'Forget what happened. Let's have a private conversation. There are things that are more important for Israel.' If that's what he thinks, why didn't he to this Thursday night? If there are problems that have to be solved, then come and talk to me about it. If they think that there's no point in talking to me, then they should go the Civil Service commissioner. As director general of the Ministry of Finance, I have to report improper behavior. There's a good reason that I didn't keep this letter, which contains very grave accusations, a private matter between me and them."
The allegations are either correct or incorrect.
"What's in the letter is incorrect. They themselves write, 'Until recently, you delayed a selection process for deputy director for 90% of the budget.' Why didn't they write the letter when I delayed the selection? Why didn't they write that I delayed the agreement? 'Until recently, you delayed the classification of deputy'; Why didn't they write that I delayed the classification? They deliberately waited with this."
We are in an unprecedented situation of elections after elections, and within this comes something about a meeting with Benny Gantz. Do you think that political ambitions might also be behind the timing?
"I don't know. I want to believe that it's not true. The fact that Shaul Meridor met with Benny Gantz during an election campaign and gave briefings throughout the previous campaign that there was a budget disaster - I obviously think that this didn't help the serving minister of finance and his party, which ran in the last election, and I think that it's unacceptable. It's improper for him to hold meetings with politicians for the precise reason that these people will make political use of what he tells them."
So why did you 'close the case' and end the disciplinary hearing?
"For two reasons. The first is that he undertook at the time to come and say exactly what happened - something he didn't do afterwards. The second is that he wrote in the letter and said it, and I'll never know whether this is true or not - that he didn't brief the minister in some way or other. That still doesn't mean that the event wasn't improper. Even if it wasn't improper as far as the Civil Service Commission was concerned, it's certainly unacceptable in terms of values and morals. So rules were issued that from now on, everything will be in writing and with the approval of the ministry's legal adviser."
Why isn't the minister of finance willing to back you in public?
"Everyone who asked the minister heard him say that he gave the director general full backing."
Only off the record.
"If you ask the minister, I think he'll tell you, and not just off the record."
What does backing the director general mean? The head of the budget department can be removed from his job.
"Were it possible to remove the head of the budget department during an election campaign, believe me - it would have happened a long time ago."
We understood that the head of the budget department and the minister settled their differences.
"Permit me to refrain from answering. I don't want to talk in the minister's name."
"Kahlon and I am like a chairperson and a CEO"
It looks like Kahlon is sending you into a street fight while staying in the rear.
"Not at all. This isn't supposed to be a minister's job. It's like a chairperson of a company and the CEO."
If Kahlon remains minister of finance, Shaul Meridor will be unable to retain his position.
"Were I minister of finance or prime minister and there were elections, definitely. As long at this is the DNA and these are methods of operation, Shaul Meridor is absolutely unfit to head the budget department."
Have you heard something from Netanyahu in this context?
"I don't want to speak in the prime minister's name, and I assume that if you ask him, he'll say what he thinks about Shaul Meridor."
Why did this happen now? What happened?
"I don't know. Maybe they heard that I was leaving and then saw that I was extending my term, so they said, 'Let's speed his exit. We'll make him feel unwanted.' Maybe they heard that I want to handle the entire matter of selecting people for positions, and they really didn't like that. It doesn't matter what the motive was. Media lynchings are unacceptable, contemptible, and unworthy, and have no place in the ministry of finance. These methods have been used in the department for 20 years already, and there's a way to solve problems. I'm the one who sent the letter of the deputies to Attorney General. I'm the one who brought it to the surface. I'm the one who's responsible. There's the Civil Service commissioner, there's the Attorney General, and they're the ones to ask. There's a good reason why they only wrote the letter with such vitriolic language at 11:30 at night."
Your outlook is, 'I want to change the checks and balances in the ministry of finance, isn't it?
"I want more than that. I want to enhance cooperation between the departments in the ministry of finance. The constellation in which the departments have been fighting between themselves for the past 20 years, or with the director general - and you'll soon see the report by the State Comptroller, which will be issued just three weeks from now, about the 2019 forecasts and the mutual mudslinging that will be exchanged between the departments - these things can't continue. There aren't eight or nine ministries of finance. There's one ministry of finance, and we have to make sure that these departments work with each other."
What does changing the DNA of the budget department mean?
"I think that the DNA in it means solving problems by media lynchings and leaks, and that's unacceptable. The budget department is a policy department of the Israeli government. It's supposed to advise the government and implement its policy. The minister of finance is the one who is supposed to set policy, not the budget department, but what actually happens is that if the government's policy matches the department's policy, they implement it, and if not, they thwart it. They tell themselves that they're protecting the public, so they're allowed to give briefings against the government, because it's in the name of the public."
Why did you decide to do something about it at the last minute? It looks like you decided to burn down the clubhouse.
"On the contrary. First of all, I haven't left, and second of all, the director general is the most experienced in exactly these places that were in the ministry of finance for the longest time - this is exactly what has to change. I'm not doing it for myself, but if I don't sort out the ministry, and this DNA continues the way it's going, this ministry won't escape its quarrels, and there will be seven more reports by the State Comptroller. This has to stop. Furthermore, the staff in the budget department has gone too far, and now it's already clear to everyone. Do you know of anywhere else where lower staff brief the press against their serving director general?"
You have no scruples against briefing the press against them. A director general who besmirches his staff is also unacceptable.
"Excuse me, excuse me, I'm not briefing against them. I'm only complaining about the media lynch. I never called reporters to give dirt about them, like they have done dozens of times."
Is there a structural change in store in the ministry of finance?
"A change in the procedure for selecting people for positions certainly needs to be on the agenda. First of all, this system in which the results of all of the selection procedures is known in advance is questionable. It's important to stress that I'm not saying that the people selected aren't good people and suitable people, but all of the people come from within the department. What's wrong with some of the people coming from outside with business experience and understanding of the economy, like I did, and some coming from other departments? It would have improved the work a lot had some of the deputies in the accountant general department previously been in the budget department, and some of the people in the budget department had previously been in the accountant general department."
Admit the truth: you yourself managed quite a few selection processes, and knew exactly who was going to win them.
"I don't say that I wasn't part of the system."
The process of appointing the director of the Israel Tax Authority, too.
"This is an appointment committee, not a formalized selection process, and you can bring anyone you want."
Until a week ago, you told everyone that you were about to leave, and suddenly you're staying to fix things.
"Two things have happened since then. One is this entire mess. I wrote no letters. I'm certainly not leaving in a situation in which they'll tell the media later, 'He left because of this. He realized that he was at fault.' The other is the question of my cooling off period, which is one year, and there's some checking around about a certain position in which my cooling off period might be reduced or changed in some way, so I'm waiting to find out. At the end of the day, if I have to sit a year at home and get a partial salary - I have a family to feed - this is also part of the considerations."
"The budget hole will lessen when an orderly budget is made"
Is there budget anarchy now?
"There's no budget anarchy. It's just lynchings by the budget department."
But there is a deficit.
"There is a NIS 12 billion deviation in 2019.
And NIS 22.6 billion in 2020.
"No, no, no. It depends on the deficit target set when the budget is made. If the deficit target is 2.9% instead of 2.5%, as has happened a dozen times in the past, then the NIS 22 billion hole is NIS 15 billion or NIS 16 billion - when an orderly budget is made.
Was Kahlon a disappointment as minister of finance?
"I'm not a politician, and I don't get involved in these things."
If Kahlon remains as minister of finance, do you see yourself staying as director general?
"I'll make every effort to leave the next director general a ministry of finance that works, with teamwork between much more diverse professionals."
Can you continue working with people in the budget department after everything that has happened?
"I see myself straightening out this ministry. It's not my ministry or their ministry."
What do you hear from the other department heads in the ministry?
"All of the other department heads say that there's one brave person willing to tell the truth, but he's going to pay the price, and we think that he'll lose in the end. If you go to battle against 80 people, you're going to lose. I may lose, but I came to serve the country order to do something right. So at the end of the day, I'm not what's important. What's important is that I at least tried. You know what? That aggressive style you asked me about? This is the only way that might enable me to succeed in fixing this problem. Rightly from their point of view, none of the previous director generals wanted to deal with it.
Published by Globes, Israel business news - en.globes.co.il - on June 23, 2019
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