Decade-old Bank Fraud Ends

A shares scandal more than 12 years ago that cost Israeli taxpayers $9 billion has come to an end.

The Israeli Supreme Court last week accepted an appeal by eight former banking executives to overturn their jail sentences.

But the court Feb. 28 upheld fines of up to $300,000 from some of the former executives, earlier found guilty of manipulating the price of bank shares on the Tel Aviv Stock Exchange in the early 1980s.

The banking heads were from the Jewish state’s four largest commercial banks: Bank Leumi, the Israel Discount Bank, Bank Hapoalim and United Mizrachi Bank. The government is now in the process of privatizing these banks.

Because of the artificial inflation of share prices that resulted from the scandal, prices collapsed in 1983, costing hundreds of Israelis their life savings.

The government spent $9 billion to buy out the banks.

Two justices dissented in last week’s ruling.

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