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Bank Crisis Worsens

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Premier Yitzhak Rabin has telephoned Finance Minister Yehoshua Rabinowitz who is attending the International Monetary Fund conference in Washington today to return home immediately because of the worsening crisis involving investments by the Israel Economic Corporation in the tottering financial empire of Swiss-Jewish banker Tibor Rosenbaum.

The government–sponsored corporation, established in 1969 with the assistance of Jewish businessmen from North America and Europe, is believed to have sustained losses in excess of $20 million as a result of the failure of Rosenbaum’s International Credit Bank of Geneva.

The situation was discussed at length at yesterday’s Cabinet meeting where Minister of Commerce and Industry Haim Barlev, filling in for Rabinowitz, announced that he has asked Treasury officials to draft new criteria for investments and deposits by government and government-sponsored corporations.

Meanwhile, Michael Tsur, managing director of the Israel Economic Corp, has been suspended, and board chairman Baron Edmund de Rothschild has reportedly asked Israeli legal authorities whether criminal action could be brought against Tsur for his conduct of the IEC’s affairs.


Tsur said today that he would defend his conduct and his investment of IEC funds after the money was recouped or collateral secured. He refused to say how much money was involved but strongly denied that his investments had been speculative in nature as alleged in financial circles here. He refused to divulge details of the emergency board meeting last Friday called by Baron de Rothschild.

According to unconfirmed reports, Baron de Rothschild had ordered Tsur to withdraw all IEC funds on deposit with the Rosenbaum bank in the spring of 1973 after learning of Rosenbaum’s financial difficulties. Tsur complied but subsequently invested larger sums in Rosenbaum’s bank and other companies controlled by the financier without the knowledge of the IEC board, the unconfirmed reports allege.

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