A two-man committee set up to study excessive severance pay and pension awarded to former Bank Leumi chairman Ernst Japhet when he was forced to resign last spring, recommended Tuesday that the matter be resolved through negotiations with Japhet or by legal action in court.
The committee, composed of Eli Hurvitz, who succeed Japhet as chairman and then resigned on Sunday, and former Justice Minister Haim Zadok, also recommended that the pension payments be placed in escrow until the matter is settled. It maintained that a suitable severance and pension should be calculated on the basis of a “suitable salary.”
But Japhet’s salary and emoluments in 1986, his final year as Bank Leumi chairman and chief executive officer, exceeded $800,000, a sum the committee plainly does not consider “suitable.”
Japhet was forced to resign as a result of his role in the bank shares manipulation scandal which touched off a panic on the Tel Aviv Stock Exchange in 1983, with severe losses to thousands of Israelis who had invested their savings in shares issued by the country’s largest banks.
The committee’s report contained disclosures embarrassing to the former Board members who resigned en-bloc Sunday when a new Board was installed.
PAYMENTS TO OTHER BANK DIRECTORS REVEALED
It reported, for example, that Japhet managed to delay his final act of resignation until the compliant bank directors agreed to his demands for severance pay of $4.5 million and a $30,000 a month life pension.
The committee also revealed that payments of hundreds of thousands of Dollars were made to several other top executives of Bank Leumi, in salary and later pension and severance pay.
The committee believes that the payments to Japhet can be brought in line with normal Israeli standards either through negotiations with him, binding arbitration or by going to court. According to the committee, Bank Leumi could legally cut back the payments and win in a court action.
Hurvitz, who was replaced as chairman by Meir Heth Sunday, urged that the committee’s recommendations be accepted in order to end the affair so that Bank Leumi, under its new chairman and Board of Directors, can rebuild public confidence. Apart from the scandal, the bank is considered sound.
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The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
