Israel’s High Court Orders New Probe of Bank Scandal
Menu JTA Search

Israel’s High Court Orders New Probe of Bank Scandal

Download PDF for this date

The High Court of Justice on Thursday ordered Attorney General Yosef Harish to re-open his investigation of senior bank executives involved in a 1983 financial scandal, with the possibility of criminal prosecution.

The court order was a rebuke to the attorney general, whose decision not to prosecute the bank chiefs touched off an uproar in parliamentary and financial circles when it was announced last November.

Harish said at the time that he based his decision on the possible lack of sufficient evidence to sustain criminal charges, and “a lack of public interest in the affair.”

He also maintained that the bank managers had already paid a price by loss of their jobs and that in any event, state supervisory bodies had been equally lax.

But High Court Justices Meir Shamgar, Aharon Barak and Shlomo Levin brushed aside those arguments.

Acting on the basis of public petitions, including several from Knesset members, they expressed sharp criticism of Harish’s reasoning and dismay over the fact that he never specified just what evidence there was against the banks and their managers.

Harish said Thursday that he accepted the High Court’s order, “as a judge who receives an order by a higher hierarchy, even if the higher instance overturns his sentence.”

He said he would consider all the implications of the ruling and make a decision based on a thorough study of the case.

The investigation will involve former managers of Bank Hapoalim, Bank Leumi, the Mizrahi Bank and Bank Igud, which are among Israel’s largest banking institutions.

The bank managers were charged with fraudulently inflating the value of their banks’ shares, to mislead the public into investing in them.

Bank shares were for years the most popular form of saving for tens of thousands of Israelis, including many of modest income.

The shares, traded on the Tel Aviv Stock Exchange, collapsed on Oct. 6, 1983, because investors, panicked by a rumored 7.5 percent devaluation of the shekel, rushed to cash them in order to buy U.S. dollars and other hard currency.

Founding Funders

The digitization of the JTA Archive would not have been possible without the generous support of the following donors:
  • The Gottesman Fund
  • Righteous Persons Foundation
  • Charles H. Revson Foundation
  • Elisa Spungen Bildner and Robert Bildner, in honor of Norma Spungen
  • George S. Blumenthal
  • Grace and Scott Offen Charitable Fund