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Yesterday, at the Knesset Finance Committee hearing, the Turner Foundation appeared. The place is no stranger to her, she was sitting there in her role as CEO of the Ministries of Finance and Transportation. This time she came to the discussion as part of her role as a senior operating partner in the Vintage venture capital fund, which manages over two billion shekels of the public’s savings and, with a lack of transparency, sucks double management fees at the expense of the pension of all of us.
What is a “Senior Operating Partner”? As it became clear to me in the Finance Committee discussion yesterday, this is actually someone who acts as a lobbyist.
The discussion was held around the reform of the direct expenses – management fees that are collected from the pension savers, in addition to the current management fees that are transferred to external entities for the management of the investments. This is about NIS 2 billion per year.
In the discussion, I saw how Turner is using the aura she has left as a public servant, to thwart the implementation of the recommendations of the Yaffe committee for transparency in management fees. This is a model in which the public knows exactly how much it pays for the management of pension funds. A model that apparently harms the business model of Vintage and the other investment funds.
Turner used every false fact and every possible manipulation to do her lobbying work in the Knesset. She claimed, for example, that the reform would harm the public’s returns, because it would limit investments in funds such as Vintage. But in practice, the Yaffe committee found that the opposite is true – the investment in these funds does not justify itself and does not contribute to savers’ returns.
After that, Turner moved to an international analysis, with a flavor of local interests: she claimed that the returns of the pensions in the world are higher than the returns of the pensions in Israel, because here investment in funds like Vintage is limited. This is simply not true – the pension bodies in Israel are among the leaders in the world in terms of returns.
Then came the cliché that always works in the Finance Committee: “High-tech needs the money,” Turner said. “We don’t want to see that because of transparency investments in high-tech stop.” Of course, transparency is our big problem, the barrier that stops the high-tech nation from flourishing and prospering. This is how it is when you switch sides – suddenly the interest of the public, who wants to know how many fees it pays, dissolves and disappears compared to the money that your company wishes to accumulate.
But the intimidation did not end here. In the next step, Turner brought up a gear: “There is chaos”, she scared the members of the Knesset in the finance committee. The reform will harm the management of the pension bodies, while there is already a decrease in the managed funds, when the pension bodies have to sell assets, exit investments and lose returns.
Sounds bad, right? Because that was the intention – to confuse and frighten the members of the Knesset. In practice, there is no decrease in the scope of assets. In the last year, the volume of funds managed by the pension, provident and insurance funds increased from NIS 1.7 trillion to NIS 1.8 trillion.
The desired situation for Turner is not to tell the client how much he pays for the management of his finances, but only to inform him retrospectively. Tell me, would you subscribe to a newspaper that only tells you at the end of the month how much you will pay for it?
For years I have been appearing in the finance committee on behalf of “Lobby 99”, to fight against entities like Vintage. I see again and again the CEOs and civil servants who pave the way for those with vested interests to profit off our backs. I wonder if and when they will switch sides.
At the end of Turner’s words, there was a small moment that illustrated everything. Out of the corner of my eye, I caught Turner checking with the CEO of the Insurance Companies Association and with the CEO of the venture capital funds that she did indeed say everything, section by section, as she should have said. This is exactly how you cash the check on the other side of the revolving door.
Turner did her job faithfully and served the interest of the investment funds, who enjoyed payment without transparency over the years, but in the end the public won. The Finance Committee approved the implementation of the conclusions of the “Yafa Committee” to increase transparency in management fees. From next year everyone will be able to know exactly how much they are paying for managing their savings with a single number, simple and clear.
We have contacted the Turner Foundation for a response, we will publish it here when received.
Moshe Kashi is the director of finance at Lobby 99