Treasury prevails on budget transparency

The Defense Ministry and IDF must provide the Finance Ministry with full details on salaries, pensions, and procurements.

The Ministry of Finance will receive full salary figures from the Ministry of Defense, as well as IDF figures for draftees, career officers and NCOs, reservists, and civilian employees. The procedure regulations for improving the defense budget transparency and oversight, written by Prime Minister's Office director general Harel Locker, state that the information will include "details, structure, and content, which will permit control and oversight of salaries and performance."

The 2012 defense budget is NIS 60 billion, the largest budget in Israel's history.

The salary staff at the Ministry of Finance's Accountant General's Office, under Accountant General Michal Abadi-Boiangiu, will handle the overseeing of salaries. The 105 strict procedures leave almost no room for maneuver. Most are in line with the ministry's demands, and are worded in unprecedented detail, including a strict timetable - by early May, the new supervisory system is due to be fully operational.

The procedures were set after tough negotiations between Ministry of Finance officials, including Minister of Finance Yuval Steinitz, and their Ministry of Defense counterparts, including Minister of Defense Ehud Barak and IDF Chief-of-Staff Lt.-Gen. Benny Ganz. The Ministry of Finance officials said that the supervisory system will save billions of shekels, while Ministry of Defense officials said that it was an attempt by the Ministry of Finance to seize control of the defense budget.

"This is a very important achievement for the Ministry of Finance, which can tightly oversee the Israeli government's budget, especially the budget of the Ministry of Defense," Locker told "Globes". "The agreement was reached after long negotiations between the parties. The Ministry of Defense realized that, in the end, restoring confidence and cooperation with the Ministry of Finance was to its benefit, and for the good of the entire defense system.

"For this purpose, I am pleased about the openness by the army chiefs in favor of the measure, and I know that this was at Barak's order. However, without the stubbornness of Steinitz, Budget Director Gal Hershkowitz, and Accountant General Michal Abadi-Boiangiu, this dramatic measure could not have been carried out. The a critical thing as far as I am concerned, as the Prime Minister's Office director general, is that I hope that the restoring of confidence between these two systems, and the 15-page document that I wrote will not leave any room for future disagreements and friction. Bottom line, the Ministry of Finance will very soon, within three weeks from today, see online details on the salaries, pensions, and procurement budgets. I stress that the prime minister repeatedly reiterated that he would not accept a lack of transparency by any public body. That is what he told me to do and that is what I did."

Performance data

At the Ministry of Finance's request, its officials will be able to obtain the raw data files, and not just the processed figures from the Ministry of Defense. These files will have full data. The Ministry of Finance will also have the right to request the desired file structure and content, including all salary items appearing in pay slips, and extra payments to every recipient. If the Ministry of Finance wants additional data, such as past data, the IDF must hand them over. The IDF will also provide the Ministry of Finance Accountant General's actual personnel data for the periods requested. However, at the Ministry of Defense's request, the Accountant General's office will not receive personal details, but only data and cross sections to carry out trend analyses.

Locker also stated that the IDF will provide the Accountant General's with an expert contact person, with the rank of at least major, for preparations and current operations, and another contact person, a computer expert, for operating the files. Once per quarter, a senior officer of at least the rank of lieutenant colonel will go to the Accountant General's for a briefing to discuss problems and breakdowns encountered by Ministry of Finance officials, and how to fix them.

At the request of Abadi-Boiangiu, the Ministry of Defense comptroller (a Ministry of Finance official based at the Ministry of Defense) will have the same data terminal as the terminal at the IDF Personnel Directorate, including the salary application. The Ministry of Defense comptroller told a Knesset hearing that he did not receive the complete files.

The procedures also state that the Ministry of Defense comptroller will present an annual salary control work plan for the IDF at the start of each work year. If any flaws are found in salaries during the year, the matter will be investigated immediately. In addition, the Accountant General's Department and the IDF will fix the flaws. If money was paid in violation of the agreement signed between the IDF and the Ministry of Finance's Director of Wages, or in breach of Israel Tax Authority guidelines, the payment will be immediately stopped, and the IDF will collect the money pursuant to Accountant General guidelines.

Locker gave the Ministry of Finance the right to hire external consultants to oversee salaries. These consultants will not have access to personal data, and the IDF will have the right to review the findings of an investigation, before they are published. The procedures state that disputes between the parties will be brought before the Accountant General and the IDF Chief of Staff, and if they cannot reach agreement, the matter will be decided by the Prime Minister's Office director general.

The procedures are just as draconian on pensions. The Ministry of Defense must provide detailed monthly reports on any decision that changes pension policy, and any specific case in which the IDF decided on a change. The Ministry of Finance will not make any additional unilateral demands about salaries and pensions.

The procedures also regulate the relationship between the Budget Department and the Ministry of Defense, giving Ministry of Finance officials the possibility of seeing online all budget items, including future commitments. Agreements on oversight, transparency, and control of the procurements budget were signed at the same time between Abadi-Boiangiu and the IDF Chief of Staff's financial advisor and the Ministry of Defense budget director.

Published by Globes [online], Israel business news - www.globes-online.com - on March 25, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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