Legal and Ethical Aspects of Israel’s Integration into the Global Economy and the OECD

The 15th Caesarea Economic Policy Planning Forum, June 2007

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  • Cover Type: Softcover | Hebrew
  • Number Of Pages: 96 Pages
  • Center: Eli Hurvitz Conference on Economy and Society
  • Price: 45 NIS

Recommendations of a research team that explored legal and ethical aspects of Israel’s integration into the global economy that were prepared for the 2007 Caesarea Economic Forum. The recommendations pertain to the public, business, and third (philanthropic) sectors.

This book contains the recommendations of one of the research teams for the 2007 Caesarea Economic Forum. The recommendations pertain to the public, business, and third (philanthropic) sectors. The aim of the recommendations is to accelerate Israel's integration into the top tier of OECD states and the global economy, and to make its integration not only an economic issue, but also a goal for advancing the public and private sectors in Israel. Among the proposals: developing compensation mechanisms for senior executives in the business sector and setting clear guidelines in advance that will reduce the "principal-agent problem" and the negative feelings associated with it. A further objective is to bring about the establishment of ethics tribunals for cabinet ministers, elected representatives, and senior employees.

The Public Sector

  1. Regulating legislative lobbying. A list should be drawn up of lobbyists and the organizations they represent, and a periodic report on lobbying activity should be submitted, including goals and costs of such activity. A cooling-off period is recommended during which Knesset members or senior civil servants would be unable to serve as lobbyists upon completion of their term of office. Regulations should be formalized for lobbying in the Knesset and in the public sector. As a guiding principle, there should always be more than one representative of the public sector present at meetings with special interest groups.
  2. Instituting a paid cooling-off period for senior employees. Regulations for a cooling-off period should be formalized for senior public-sector employees, and they should be permitted to move to the private sector after a paid cooling-off period. At present, there is a mandatory cooling-off period without pay for civil servants, thus creating a distorted situation and an opening for ethical and legal misconduct.
  3. Establishing an ethics-based disciplinary tribunal. A system of disciplinary adjudication should be created for cabinet ministers and elected officials as well as public-sector employees, based on codes of ethics to be publicized in advance.
  4. Strengthening non-governmental public review bodies. Public review bodies operating independently of the government should be strengthened through the state budget or via a mandatory fee paid on behalf of such bodies, in three spheres: consumer affairs, the environment, and nature. These bodies will operate in accordance with state criteria to be determined by law.
  5. Completing legislation on stepped-up enforcement of laws and ethics.
  6. Maintaining long terms of office for public positions such as director-general of government ministries and head of government authorities. To maintain longer terms of office, methods of selection should be regulated, and service in the post should be terminated without the status of an appointment of trust. This will lead to stability in the public sector and prevent politics from infringing upon it.
  7. Establishing a statutory economic-social council alongside the Prime Minister and formulating a multi-year government plan for assisting weaker population groups.
  8. Completing structural reforms regarding monopolies and carrying out the privatization of government-owned commercial entities, after regulating competition and reducing economic concentration.   
  9. Restoring the prestige of public service and reducing judicialization. It is important to leave room for the exercise of discretionary judgment on the part of public servants. The use of ethical instruments will reinforce this trend.
  10. Adopting codes of ethics and service charters in the public sector. Codes of ethics should be completed for elected representatives, ministers, judges, ministries, and public authorities. This effort should be led by the directors-general of the government ministries.
  11. Establishing codes of ethics for agencies charged with auditing, investigation, or enforcement. The Office of the Attorney-General, the State Attorney’s Office, and the State Comptroller’s Office must act in accordance with codes of ethics and charters and implement guidelines for public transparency to the fullest extent possible.
  12. Increasing transparency and publicizing decisions relating to the public sector, for example, initiating the publication of administrative decisions in the area of planning and construction.
  13. Ratifying the United Nations Convention against Corruption (UNCAC). Israel’s ratification of the Convention would enhance the prestige of the Israeli economy and of the country’s business sector as well as facilitate Israel’s inclusion in the OECD member states.
  14. Incorporating ethics into the educational system at all levels.

The Business Sector

  1. Developing compensation mechanisms for senior executives in the business sector that are commensurate with results produced and with the value of the companies. Establishing clear guidelines in advance will reduce the “principal-agent problem” and the associated negative feelings.
  2. Adopting a code of ethics and creating an effective ethics program for companies. The code would assign relative weight to such values as responsibility, trust, honesty, professionalism, preservation of individual dignity and well-being; relations with customers, employees, suppliers and creditors; and transparency and ethics in material published by the company. Institutional investors can offer incentives to companies (or “penalize” them) by choosing their investments based on international indices that rank companies in accordance with their business ethics.
  3. Increasing promotion of corporate governance and adopting the approach of the Goshen Committee, as reflected in the proposal of the Israel Securities Authority (ISA).
  4. Voluntarily adopting the provisions of UNCAC until its ratification by the state. Israeli companies in the global arena that adopt international regulations will earn worldwide stature and credibility and prevent corruption from infiltrating Israeli corporations.
  5. Accepting responsibility for developing the local economy. Israeli businesses and entrepreneurs have a social responsibility to make Israel the administrative center of their global operations and to develop Israel’s employment infrastructure.

The Third Sector

The third sector and philanthropic organizations should direct resources toward social responsibility and ethics in both commercial entities and the public sector. Individual efforts should be encouraged in the following areas: reducing discrimination, lessening the abuse of foreign workers, preserving workers’ dignity, and assuming increased responsibility for nature and the environment.