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Report on the Israel Corporation

February 1, 1977
See Original Daily Bulletin From This Date

–State Comptroller Yitzhak Nebenzahl released a scathing report sharply critical of Baron Edmund de Rothschild, chairman of the board of directors of the Israel Corporation (IC), and Mordechai Limon, chairman of the directorate’s General Council, for their alleged negligence in permitting the development of a major scandal that rocked the corporation in 1974.

The report, described by Knesset members as one of the “sharpest ever written by the State Comptroller,” accused them of failure to supervise the activities of the corporation’s director general, Michael Tzur, who is serving a 15-year prison term for embezzlement and fraud. No criminal action was taken against Tzur’s alleged co-conspirator. Swiss-Jewish financier Tibor Rosenbaum.

The Comptroller’s report, released last Thursday, was prepared in response to an agenda motion introduced in the Knesset two-and-a-half years ago. Rothschild retorted angrily on a radio interview from Paris. He said it was absurd to release the report at this late date when the IC is getting back on its feet. He praised the integrity of Limon and accused the Comptroller of singling out the IC although other Israeli companies were victims of illegal transactions by Tzur and Rosenbaum.


The Comptroller explained that the report was delayed because of the Tzur trial and because its preparation required time-consuming investigation. The investigation was conducted by Arnold Spaer, a private attorney engaged by the Comptroller. Spaer interviewed 36 witnesses under oath at 54 separate hearings. Rosenbaum refused to testify and there was “no need” to question Baron de Rothschild, the Comptroller explained, although the Baron agreed to it.

The report does not question the integrity of either Rothschild or Limon. It claimed, however, that lack of supervision and control over Israel Corp, activities by senior members of its directorate-allowed Tzur to commit the offenses for which he was subsequently indicted. The Comptroller rejected explanations by board members that they had failed to supervise Tzur because at the time they had absolute confidence in him.

The report accused Limon of signing documents submitted by Tzur without reading them. Tzur was charged with the embezzlement of $8.7 million of IC funds earmarked for capital development projects in Israel and funneling them into shaky banks and dummy corporations maintained by Rosenbaum.

Meanwhile the Knesset State Control Committee met today to discuss Nebenzahl’s report and decided to look into the consequences of the report. Yitzhak Modal, the Control Committee’s acting chairman and a Likud member of Knesset, proposed that the three protagonists in the Israel Corporation drama–Finance Minister Yehoshua Rabinowitz, Rothschild and Rosenbaum — be invited for an on-the-spot confrontation. “In a direct confrontation much of this may be clarified.” Modal said.

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