Knesset Scales Down Pyramids

YERUSHALAYIM -

The Knesset Finance Committee moved on Tuesday to scale down business pyramids, a prime culprit in the over-concentration of wealth in the Israeli economy, Globes reported.

The committee’s approval of a bill limiting business pyramids to just two levels is expected to hit some of Israel’s major holding companies hard, among them Israel Corporation, Delek Group, and IDB.

The so-called pyramids consist of business groups organized as cascading tiers of companies controlled by one at the top.

Former Finance Ministry director-general Avi Ben-Bassat told the committee earlier in the week that he is opposed to allowing a private company whose main source of funding comes from issuing bonds to the public to sit above two publicly traded tiers of companies, Haaretz said.

Pyramid structures are highly problematic because they circumvent the very basic rule of having equal voting rights for all shareholders, explained Ben-Bassat. “Two layers is also one layer too many,” he said.

During the meeting on Tuesday, MK Merav Michaeli (Labor) demanded that lobbyists be removed from the committee room. At times, there are more lobbyists than MKs at committee meetings.

But Finance Committee chairman MK Nissan Slomiansky (Jewish Home) refused, saying that “MKs are strong enough to withstand pressure.”

He was staunchly supported by other committee members.

The absence of Minister of Finance Yair Lapid was noticed. He had excused himself in order to attend an OECD finance ministers’ meeting in France. Then that trip was called off by even more pressing business—the coalition crisis over the draft.

The pyramid measure is part of a larger bill aimed at reducing concentration in the economy in order to promote compeitition and lower prices.