A presentation by the Ministry of Finance has revealed the first details about the oversight mechanisms that Finance Minister Bezalel Smotrich and the government want to establish to prevent the leakage of funds destined for Arab communities to organized crime. The oversight will apply to the budgets of all local authorities, including the Jewish-majority ones.
Israel Hayom reported that according to the presentation, the police, the ISA, and the Ministry of the Interior will form a hierarchy of authorities for overseeing the funds.
Localities will be classified by 'traffic lights': a red authority will be defined as one in which many criminal elements are involved and will receive close scrutiny; a yellow authority with less involvement of criminal elements will receive partial supervision; and a green authority that is free from the involvement of criminal elements will receive light supervision. The supervision will also be on the development funds for the authorities - such as funds for infrastructures and the five-year plan, and also on the current budget.
In the first phase, the ISA, the police, the Tax Authority, the Authority for the Prohibition of Money Laundering, the Ministry of the Interior, and the Ministry of Justice will compile an intelligence picture for the classification of the authorities according to the traffic light rankings. They will also compile an intelligence file on contractors and suppliers to be blacklisted. These parties will not be able to compete for tenders in general in the civil service and in the authorities.
In red authorities, there will be a government entity that will control the authority's tenders and budgets committee, and there will be a dedicated and independent bank account for the authorities' budgets. This will effectively mean the takeover of the authority's tenders by a government entity.
Yellow authorities will have a dedicated bank account with two authorized signatories (one of them on behalf of the Treasury), and in the case of essential services, such as garbage removal, transportation, and other services, the budget will only go through the mechanisms outside the local authority.
A green authority will have simple mechanisms that will also apply to the yellow and red authorities, which are the transfer of funds through a bank transfer only, not cheques or cash.
The main challenge is expected to be the consolidation of the intelligence picture. The police are to allow the government and the treasury to use the information without harming the investigations and revealing information. Another challenge is the ability of the Ministry of Justice to use this information to color authorities according to the traffic light rankings and disqualify suppliers from submitting tenders. The challenge is to translate the intelligence picture into legally admissible evidence since there is a fear of the violation of the contractors' rights.
The Ministry of Justice is still considering whether dedicated legislation is needed. The direction is that the move will be done in the form of administrative control, so that the contractors will not be punished, but their candidacy for tenders will be disqualified on the basis of police intelligence.