The Israel Police is striving to persuade suspects in the Israel Tax Authority case to turn state’s evidence and sing against the other suspects in exchange for closing the file against them, or lesser charges. The police are seeking to shed light on what was going on behind the scenes at the Tax Authority, how appointments were made, and how internal tender procedures were managed.
The Police National Fraud Unit is expected to make a second wave of arrests next week, this time mainly of the businessmen involved in the affair.
The Police questioned all the detainees in the affair yesterday and today, including Tax Authority director Jackie Matza. The police have also questioned other Tax Authority officials “associated with the work routine at the Tax Authority”, as well as employees in Matza’s office, some as suspects and other as witnesses.
Sources inform ''Globes'' that before the questioning began, the police estimated that at least 200 people would be questioned. A second wave of questioning will likely include businessmen who allegedly obtained illegal benefits from the Tax Authority. The police say that this is a “sensitive, complex investigation, full of ramifications, that will last for many days.”
The remand of former Tax Authority director Eitan Rub and Matza’s aide Galit Simhon expire tonight. The court released them to close house arrest.
The investigation is increasingly focusing on Kobi Ben-Gur, who appears to have dominated appointments at the Tax Authority in practice. The police say, “He has the greatest influence of all the witnesses and suspects in the case.” The duty judge ruled, “His involvement in the Tax Authority activity was huge… His influence on Tax Authority activity spread into many and varied areas.”
Olmert asks Bachar to take over Tax Authority Prime Minister Ehud Olmert telephoned outgoing Ministry of Finance director general Dr. Joseph Bachar and asked him to take over the Tax Authority. Bachar has not responded to the offer, and his final decision is not yet known. Yarom Ariav is due to replace Bachar as Ministry of Finance director general on Sunday.
Associates of Minister of Finance Abraham Hirchson expressed optimism this afternoon that Bachar will accept the job, at least for a few weeks. He has not yet made his decision, since he had decided to leave the Ministry of Finance after exhausting years in which he led reforms named for him, in order to devote time to his family.
Another possible candidate for the Tax Authority director is Ministry of Finance director of state revenues Meir Kaputa, who is due to leave the ministry on February 1. Shuki Vita will replace him.
Only a qualified candidate from the Ministry of Finance can be appointed acting director of the Tax Authority. The person must be either an attorney, accountant, or economist with a background in taxation. Kaputa, an attorney, has a strong tax background, including participating in ministry committees on taxes and income tax reform.
A decision is leaning towards Bachar, since employees of the consolidated Tax Authority, which comprises both the former VAT and customs and income tax departments, are divided and accuse each other of irregular work procedures. Some employees yesterday asked Hirchson to appoint someone from within the system as the new Tax Authority director, because an outside appointee would stain the reputation of all employees. Income tax employees asked that Yehuda Nasradishi, be appointed to the post, while VAT and customs employees want Ami Segal.
In response to media reports that the income tax and car leasing reforms would be suspended, and that the launch of a negative income tax would be deferred, a Ministry of Finance spokesman said, “That’s completely inaccurate.”
The negative income tax is due to come into effect only in 2008, and its operation may be handed over to the National Insurance Institute, eliminating the need for filing tax returns. As for the reform in the use value of company cars, the matter is being handled by Bachar, and is due to implemented only later in 2007. Finally, the third stage of the income tax reform has already been carried out, and the upcoming stages are mandated by law.
Matza: I treated Ben-Gur as just another fixer
Sources inform ''Globes'' that Tax Authority director Jackie Matza claimed during his questioning, “Kobi Ben-Gur was just another operator wandering around the Tax Authority, and I treated his requests as just another request from just another fixer.”
The police investigators played tapes to both Matza and Ben-Gur in which Ben-Gur is heard saying asking Matza to make various appointments at the Tax Authority. Sources inform ''Globes'' that Matza claims that he listened to the request, said that he would take it under consideration, but in practice ignored it. He told the police that appointments he made were based on professional factors and on recommendations from the professional echelon.
Matza claims that he warned other people about Ben-Gur, and that he may have erred by allowing Ben-Gur to make his requests and wander through the Tax Authority’s corridors, but that he had inherited this situation from his predecessor, Eitan Rub.
The police have evidence that Matza’s aide, Galit Simhon, was appointed on the basis of Ben-Gur’s request to Matza. Sources say that Ben-Gur admitted under questioning that he asked Matza to appoint Simhon, and that the appointment was based on recommendations he received about her. On Tuesday, Simhon’s remand has been extended by four days.
Published by Globes [online], Israel business news - www.globes.co.il - on January 4, 2007
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