Cabinet Postpones for 2 Weeks Decision on Yadlin’s Appointment

The Cabinet today deferred for two weeks a decision on whether or not to revoke the appointment of Asher Yadlin as Governor of the Bank of Israel. Yadlin, 55, an economics wizard and until recently chairman of Kupat Holim, the powerful Histadrut sick-fund. has had allegations of bribery brought against him in a report by State Attorney General Aharon Barak.

the Cabinet, which had been expected to go on the appointment today, accepted a proposal by Justice Minister Haim Zadok to wait until an on going police investigation yields more substantive information. Yadlin himself has stated flatly that he will not step down voluntarily.

The Cabinet has published Barak’s report–an unprecedented step in a case of this kind–and Yadlin’s response and statements of innocence. Today’s Cabinet session was devoted almost exclusively to the Yadlin affair and the five-hour debate was described as stormy. Unless the Cabinet convenes in special session earlier, its action on Yadlin will come on Oct. 31, just one day before the new Israel Bank Governor is to assume his post. The Cabinet rejected a proposal to name a Deputy Governor immediately.

The case, which has occupied the news media for weeks, was described by some sources as Israel’s “Watergate.” The allegations of bribery were made against Yadlin by a former woman friend, identified as Chava Ehrlichman. What was originally dismissed as attempted revenge by a rejected lover began to unfold into a major scandal as police investigators probed events surrounding an unsuccessful project by a group of Latin American Jewish physicians to build a medical center in Israel.

The investors who ran out of money before the skeleton of the building was completed, managed to sell it to Kupat Holim for what was described as an excessive price. According to allegations by police investigators, part of the price was paid in kick-backs to Yadlin and others.

The charge involving the purchase of the uncompleted medical center is only one of six allegations against Yadlin. The others include possible violations of fiscal regulations and the acceptance of commissions–bribes–in connection with various transactions by Kupat Holim. There were also rumors within the Labor Party that Yadlin was instrumental in directing Kupat Holim funds to the party treasury.

The investigation has also spread to the financial dealings of Shikun Ovdim, Histadrut’s housing company, which was headed by Avraham Ofer before his appointment to the Rabin Cabinet as Minister of Housing. Ofer, who has declared that he believes Yadlin innocent, says he can prove the legitimacy of all Shikun Ovdim transactions.

So far, no criminal charges have been filed against Yadlin as a result of the investigation and Yadlin has rejected all but one of the charges. He noted that he had cooperated fully with the investigators because he had nothing to hide. Yadlin’s professional credentials for the job are not in question. A former member of Kibbutz Hammadiyeh, he studied economics in the U.S. and is regarded as a prodigy in that field.

The Yadlin affair has already tarnished the image of the Labor Party of which he is a member and which named him to the post of Governor of the Bank of Israel. Premier Yitzhak Rabin and other Labor ministers insist they had no idea that Yadlin was under investigation when the appointment was announced. Cabinet ministers Moshe Kol and Gideon Hausner, both of the Independent Liberal Party, reportedly told Rabin today that considering the atmosphere of suspicion already generated, it would be better to revoke Yadlin’s appointment even if the charges against him are not proven.