Forbes Israel reported Sunday that twelve business groups control Israel's economy - making it among the most concentrated on the globe. The report echoes warnings by journalist Ari Shavit.
According to the report, the business groups are controlled by the following families: Sami Ofer, Nochi Dankner, Shari Arison, the Cerberus-Gabriel consortium, Charles Bronfman, Yitzchak Tshuva, the Saban group, Lev Leviev, Matthew Bronfman, Tzadik Bino, the Borovich family, and Eliezer Fishman. The 12 families own 60 percent of the aggregate market value of all Israeli public companies (excluding the even larger Teva Pharmaceutical Industries), Forbes reported.
The report goes on to say that the families have constructed their empires, which consist of Israel's largest companies, using organizational structures that have long ago been done away with in the Western world.
The report explains that the groups have an inordinate amount of control over Israel's economy, political leaders and media due to the structuring of their holdings as pyramids – meaning several layers of companies each own others beneath them but are all beholden to the leading families. Such a phenomenon was eliminated in the US in the early 20th century through restrictions on ownership and the double taxation of dividends a company paid its owner company.
The report stressed that the issue is not economic, but political – saying the only way to regulate the power of the families is a large government coalition that would seek such regulation.
Shavit, a commentator for the left-wing Haaretz daily, recently warned that the Kadima Party, led by Ehud Olmert, directly represents the interests of "the 18 families," as Shavit refers to those controlling most of Israel's assets. Shavit warned that a Kadima victory would represent a total takeover of control of all the central institutions of the state by the families. He wrote a mock-memo, as a "strategic advisor to the 18 families" on the eve of elections:
"Dear Wealthy Families,
"...For the last 15 years my colleagues and I have been laboring faithfully and devotedly to assure your conquest over the democratic systems of said country. Over the years, we reached outstanding achievements. We have managed to create a society devoid of opposition for you, one without any parties worthy of note, without labor unions worth the name, without sniping journalists. We thus achieved almost perfect control over the Israeli consciousness, and over the government and political establishment.
"We can state, with great satisfaction, that there is no political power in Israel today that can stop us; there is no public debate that could restrain us; and there no investigative journalism that can imperil us. Thanks to methodical, professional work over a decade, we have achieved absolute hegemony for you. A hegemony that wealth never had in any western country worthy of the name.
"...We had to set up a political body that would serve us faithfully and put One of Us at its head. We had to harness all the assets we bought in the last decade to assure its victory, to ensure that the government shared our views, bears our arms, does our bidding.
"...But the issue isn't just personal. As a vehicle, Kadima has the political structure we always dreamed of, being a party with no members and no institutions and no ideology. The new ruling party will be a vastly valuable tool to achieve our goals. Since it has no obligations downward, only upward, it will enable us to seize full control over the Israeli government. Police, prosecution, treasury - it will all be in our hands. Even the antitrust commissioner. The Supervisor of Banks. Even the Supreme Court will be manned with new, friendly faces. Like Berlusconi's Italy or Putin's Russia, Israel of Kadima will be a paradise for corporate control. The decrepit democratic regime of the 20th century will be replaced by a reign of the oligarchs with absolute economic power."