Dozens of senior officials in the Histadrut (New General Federation of Labor) were arrested this week, chief among them Chair Arnon Bar-David. The arrest and investigation are not surprising given the Histadrut‘s conduct.

Along with other organizations, the Histadrut operates under the legal definition of an “Ottoman Association.” Such organizations are exempt from the The Amutot (Non-Profit Organizations) Law, lack transparency, and afford their managers tremendous power. This legal status allows organization head to receive excessive benefits, distribute appointments, make purchases and sales without tenders, and influence the economy in a draconian manner.

Membership in the Histadrut is mandated by law; membership fees are taken directly from employees’ salaries, whether or not they wish to join the union. And although this money belongs to the workers, they are not privy to the Histadrut‘s financial management or expenses.

None of the workers paying their dues can read the Histadrut‘s financial reports, no one knows the scale of funds being managed or what the decision-making processes look like. Were funds spent on leisure and welfare activities for the workers, or were they spent on a campaign the Histadrut ran against government policy? The Histadrut is subject to an Ottoman law enacted in 1909, back in the days of a nod and a wink and bakshish (bribes). Its status as an Ottoman Association exempts the Histadrut from obtaining a Certificate of Proper Management, and no official body examines the integrity of its conduct.

This “workers’ union” dupes its workers: they finance the Association without the slightest ability to oversee its management or how their hard-earned shekels are being spent – and now the police suspect that dozens of Histadrut senior officials embezzled funds.

Over the years, various Ministers attempted to cancel the status of Ottoman Associations, but the tremendous power of these organizations and their ability to paralyze the economy have an intimidating influence on legislators, so public interest falls to the wayside, and worse yet, workers’ interests are trampled on. Only think of the shutdowns that Histadrut Chair Arnon Bar-David led: shutting down the economy after Israeli hostages were murdered in Hamas tunnels, leading a general strike in protest of judicial legislation, and the like. Bar-David shut down the economy over issues wholly unrelated to workers’ employment conditions, and intimidated politicians who out of fear of him don’t dare cancel the Histadrut‘s status as an Ottoman Association.

The Teachers’ Union is an Ottoman Association as well; educators who finance the Teachers’ Union employees’ salaries from their own pockets are not entitled to know, for example, how many millions were allocated to the Secretary-General’s salary.

The wonders of Ottoman Associations are endless: the ‘Beit Lessin’ complex that was owned by the Histadrut was sold without a tender. The Secretary-General of the Teachers’ Union, Yaffa Ben-David, appointed a general-manager for the Teachers’ Union without a tender, as though it were her private organization. And he, in turn, appoints family members and associates without tenders – though always with a salary.

The former Secretary-General of the Teachers’ Union, Yossi Wasserman, was convicted of fraud and breach of trust in the course of his duties; he decided, approved, and executed budgetary expenditures without oversight or transparency. Israel’s Secondary School Teachers’ Organization is also an Ottoman Association, that contributes its fair share to the theater of the absurd. Ran Erez has served as head of the organization for seven consecutive terms. Make no mistake, he wasn’t chosen by the teachers each term anew; Erez and the organization’s management changed the regulations so that he could run and win again and again while manipulating voting data.

As long as Ottoman Associations continue to operate in regulatory darkness, they will continue to serve as an incubator for criminals and a safe haven for financial irregularities. Yesterday’s exposure and shocking arrests are a golden opportunity to address the Ottoman handicap, amend the regulatory failure, create oversight of Ottoman Associations, and no less importantly, expose their budgets, some of which reach billions of shekels. Knesset members from both the right and the left must lead this much-needed change, for the benefit of workers and the state as a whole.

(First published in Hebrew in the Israel National News (Arutz 7). For more on Ottoman Associations, see Kohelet’s policy paper summary)