The Cabinet Sunday gave Bank of Israel Governor Michael Bruno a free hand to remove Raphael Recanati from his office as managing director of the Israel Discount Bank in compliance with recommendations of a commission of inquiry into the 1983 bank shares scandal.
Recanati is the only top executive of Israel’s five largest banks who has refused to step down voluntarily. The Cabinet decided, reportedly by a 12-5 majority, that he must go. The vote followed five hours of acrimonious debate. Seven ministers abstained, including Premier Shimon Peres.
The decision was a victory for Bruno who staked his prestige on the Cabinet’s support for Recanati’s removal. There was no immediate reaction from the bank. But a Board member, Yehoshua Rothenstreich, told reporters that the Cabinet’s decision “radically changed the situation.” He intimated that Recanati would be asked to resign by the Board which hither to has backed him.
The commission of inquiry, headed by Supreme Court Justice Chaim Beisky, found the Israel Discount Bank and the country’s four other major banks guilty of misleading investors by grossly inflating the price of their shares, precipitating a financial panic when bank shares collapsed in the fall of 1983. The Israel Discount Bank has been owned by the Recanati family for 50 years.
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