Nissim Refuses to Convene Panel Involved with Bank Fraud Scandal
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Nissim Refuses to Convene Panel Involved with Bank Fraud Scandal

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Finance Minister Moshe Nissim refused Sunday to convene the ministerial committee charged with implementing the recommendations of the Beisky commission which rendered its report two months ago on the 1983 bank shares scandal.

Energy Minister Moshe Shahal demanded that the committee meet early this week amid growing consternation over one bank director’s refusal to resign and charges that another received disproportionate compensation for stepping down. But Nissim insisted there was no point for the committee to meet until the team of professionals studying the report completes its work.

The commission, headed by Supreme Court Justice Chaim Beisky, issued a scathing report on April 20 accusing Israel’s five largest commercial banks of grossly inflating the value of their shares to mislead investors, leading to the financial panic of October, 1983.

The commission recommended that the chairmen of the banks be forced to resign within 60 days and that they never again occupy positions of trust at the banking institutions at home or abroad.


Attention was focussed on Raphael Recanati, chairman of the board of the Israel Discount Bank, who refused to quit when the deadline passed last week. His colleagues at the other banks have all stepped down, and Michael Bruno, the newly appointed Governor of the Bank of Israel, demanded that Recanati do likewise.

Recanati threatened in media interviews over the weekend to pull the Recanati family out of the Discount Bank which they have largely owned for years. Bruno refused to comment but apparently decided to wait several days to study legal means to bring about Recanati’s departure.

Nissim, for his part, argued that the Cabinet had no reason to discuss the personal implications of the Beisky report since that was the province of the central bank, headed by Bruno. The Cabinet did not take up the issue at its weekly meeting Sunday, contrary to expectations that it would discuss the Beisky report.


Meanwhile, Labor MK Haim Ramon, a member of the Knesset’s State Control Committee, received a sharp rebuff from a top official of the Bank Leumi whom he had asked for details about compensation awarded its former chairman, Ernest Japhet.

Japhet resigned immediately after the Beisky report was released. According to Ramon, he was awarded $5 million, plus his year’s salary in advance along with “very generous” expenses, and receives a monthly pension.

Ramon alleged that the decision to grant him a $5 million severance was made in secret by a four member committee of the bank’s directorate.


Noting that Bank Leumi is a public trust, Ramon asked, “If Japhet and other directors of the bank deserve this money, why should it be kept from the public and if this is not the case, the shareholders should know about it.”

He wrote to Leon Dulzin, chairman of the Jewish Agency and World Zionist Organization Executives who is the Bank Leumi Governor, demanding answers. Dulzin responded that he has no know ledge of the amount of compensation given Japhet nor is he required to know.

He said he was informed by the bank that all payments were legal, in compliance with agreements, and “not a penny beyond what was required.” He added, “I have never asked about the salaries of its (Bank Leumi’s) officials and it is not my business.”

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