16 Top Israeli Economic Financial Figures Face Legal Action in Bank Shares Crisis

Some of Israel’s top economic and financial figures in both public and private sectors have been officially notified that they may be incriminated by the findings of the special commission of inquiry into the collapse of bank shares in October, 1983.

Among 16 individuals to whom letters were sent yesterday are two former Ministers of Finance, the incumbent Governor of the Bank of Israel, the country’s central bank, and one of his predecessors, and three former directors general of the Finance Ministry. Similar warning letters were sent to 11 commercial banks, among them the largest in Israel.

The letters are mandated by law if the commission reaches the conclusion that some or all of the persons and institutions involved in the collapse might face legal proceedings as a result of its findings.

HEAVY LOSSES FOR INVESTORS

The collapse of bank shares — stocks issued by banks — caused severe financial losses to thousands of investors. Bank shares were a favored security among Israelis. But the sharp devaluation of the Shekel and rumors of further devaluations, triggered a mass sell-of of bank shares in order to purchase Dollars. The banks have been accused of taking questionable measures to inflate the value of their shares and concealing information from the public.

One purpose of the warning letters is to allow the recipients time to prepare defense against charges that might be brought against them. They are allowed to cross-examine witnesses and to testify in their own behalf when the next stage of the inquiry begins, probably in September.

Individual recipients of the warning letters include former Finance Ministers Yigael Hurwitz and Yoram Aridor; Yaacov Neeman, Ezra Sadan and Ben-Am Zuckerman, all former directors general of the Treasury; Moshe Mandelbaum, Governor of the Bank of Israel and a predecessor, Arnon Gafni; Galia Maor, the Bank Examiner of the Bank of Israel and her predecessor, Oded Messer; and Meir Het, chairman of the Tel Aviv Stock Exchange.

The leading bankers notified of possible charges against them are Ernest Japhet of the Bank Leumi; Giora Gazit and Ephraim Reiner of the Bank Hapoalim; Raphael Recanati of the Discount Bank; Aharon Meir of the Bank Hamizrachi; and David Shoham former managing director of the Israel General Bank.

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