Controversy over Pension, Severance Deal with Former Bank Leumi Official
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Controversy over Pension, Severance Deal with Former Bank Leumi Official

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Bank Leumi Governor Leon Dulzin declared Wednesday that the controversial pension and severance deal with the bank’s former chairman and chief executive officer, Ernst Japhet, would “have to be put right” because “it is beyond the bounds of reason.”

Dulzin, who cut short a visit to the U.S. to attend a special meeting of the Bank Leumi Board of Directors in Tel Aviv Wednesday night, spoke after angry Knesset members denounced the deal with Japhet as “the biggest bank robbery in Israel’s history.”

The former Bank Leumi chief, who was forced to resign last year in the wake of the 1983 bank shares scandal, was reportedly awarded between $4 million and $5 million in severance pay by the bank’s directorate, plus a monthly pension of $30,000.


Much of the Knesset’s criticism was directed at Dulzin who in his non-business capacity is chairman of the World Zionist Organization and Jewish Agency Executives, and at Eli Hurwitz, Japhet’s successor, who ratified the payment of “excessive sums” to the man he replaced.

Knesset members cited the old adage, “the fish begins to stink from the head,” in charging that members of the Bank Leumi board received preferential treatment which included the bank’s purchase of shares in their own companies at inflated prices.

Dulzin reminded reporters that his role as Governor of the bank was ex-officio. “I am not a member of the Board of Directors as such,” he said. “I do not sit in the bank. I do not receive a salary from the bank. I just attend (Board meetings) some times.”

The Jewish Agency, which Dulzin heads, is the majority shareholder in Bank Leumi, Israel’s largest bank. It is one of the country’s five biggest banks accused by an investigatory panel last year of precipitating the 1983 financial panic that wiped out the savings of thousands of Israelis. The banks were found to have artificially inflated the value of their shares to mislead the public. The chief executives of all of them were forced to resign.

Japhet, who stepped down last year, reportedly earned a salary of about $1 million a year. Dulzin said Wednesday that he had not been familiar with the details of Japhet’s compensation or pension.

Israel Radio reported Wednesday that the Bank Leumi Board meeting will be a stormy one and several members are expected to resign or be fired.

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