[2] The Israel Corp was founded by the government of Israel in 1968, together with Shaul Eisenberg, who was one of the first strategic foreign investors in Israeli history, under the initiative of then Minister of Finance, Pinchas Sapir of the Israeli Labor Party, who changed the Encouragement of Capital Investments Law to attract foreign investment.

[3] In 1975, the director general of Israel Corp, Michael Tzur, was sentenced to 15 years in prison after he was convicted on 18 counts of embezzlement, theft, fraud and bribery.

The Israel Corporation was criticized in a documentary film examining the influence of big business on Israeli politics.

The movie The Shakshuka System chronicles the history of the company, and how it had allegedly benefited from a "revolving-door" practice between the public and the private sector, from its extensive network of connections in Israel's political system and economic circles, and from a high degree of influence on local media to squelch potential criticism.

Among the major allegations presented by the film was the Bazan sale incident, in which the company's stake in the country's largest oil refinery was bought out by Israel's treasury, for what many considered to be an overvalued sum, especially since Israel Corp. was bound by an agreement to return its holding of Bazan to the state without compensation.