Bank of Israel to Allow Political Appointment at IDBI

The Bank of Israel would not intervene in the appointment of Labor Minister Ra'anan Cohen as chairman of the board at the Industrial Development Bank of Israel (IDBI), a statement from the central bank read yesterday. Sources at the bank have, nevertheless, expressed their dissatisfaction with the political appointment.

In view of recent developments, and the embezzlement affair at Trade Bank in particular, the chairman of the board at IDBI should have some financial qualifications, the sources said.

This weekend, directors at the bank were informed of the plan to appoint Cohen to replace Shlomo Borochov, and Cohen's confidants have said that if the minister is appointed, he will withdraw from the political arena.

IDBI is owned by the three large commercial banks, Hapoalim, Leumi and Discount, which, together, hold a 50-percent stake in the financial institution, and by the state, which owns the remaining 50 percent.

Although the central bank has the authority to veto unsuitable candidates, since IDBI is government owned, different practices have evolved for this bank.

Over the past few weeks, the board at IDBI has been pressing Borochov, an appointment of Housing and Construction Natan Sharansky, to resign after five years in office, both because of the bank's poor results in 2001 and because of the intention of Industry and Trade Minister, Dalia Itzik to appoint someone who is more to its liking.

Borochov agreed to resign provided that he received NIS 2.5 million in severance pay - about 8.5 times the compensation he has accumulated. But the treasury's wage director, Yuval Rachlevsky, and Accountant-General Nir Gilad adamantly objected. Apparently, Borochov will be getting a sum of NIS 800,000, which, directors at the bank say, is guaranteed in his contract.