The new Board of Directors of Bank Leumi was formally ratified Sunday by the members of the outgoing Board whose resignations became effective immediately. But controversy continued to simmer over the new chairman, Meir Heth, a former president of the Tel Aviv Stock Exchange.
One member of the new Board, Oded Winkler, quit even before it took over in protest against the choice of Heth. Winkler, director general of the Federation of Kibbutz Industries, announced his resignation saying he was dissatisfied with the selection of Heth who was report on the 1983 bank shares scandal and the stock market panic which ensued.
Heth, who replaced outgoing Board chairman Eli Hurvitz, replied to his critics at a press conference, noting that the Beisky Commission had not barred him from any future executive position with an Israeli bank. The heads of Israel’s five largest banks were barred.
Heth was selected from a field of five candidates by the Board of the Jewish Colonial Trust, owner of the Bank Leumi by virtue of its founders shares and as majority stockholder. He maintained that mere mention of his name in the Beisky report did not disqualify him.
The report found that he was aware of the manipulation of bank shares by the country’s leading banks but did nothing about it when he headed the Tel Aviv Exchange.
According to Heth, he had in fact warned against the practice and no longer headed the exchange when the scandal broke. He noted that he would receive compensation as chairman of the Bank Leumi Board but unlike his predecessors, it would be “within normal, acceptable Israeli standards.”
The outgoing directors announced their resignations two weeks ago after a new scandal erupted over excessive compensation given Ernst Japhet, former chairman and chief executive officer of the bank, when he stepped down last spring in compliance with the recommendations of the Beisky Commission.
Japhet reportedly was given $4.5 million in severance pay and a $30,000 per month pension.
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.
