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Retired justice Victoria Austrovski-Cohen will complete her tenure as chair of Israel Discount Bank's stock committee in two months, a position she has held since the early `90s. The committee's job is to represent the state at shareholder meetings and to appoint directors.

Stock committees in state-owned banks - Discount and Bank Leumi - were established after the bank shares scandal, and were designed to prevent the state using its position as the largest shareholder and intervening in appointments and routine bank operations.

Austrovski-Cohen's impending retirement is a wonderful opportunity to review the role of the stock committees and reconsider their necessity.

If we examine Discount Bank's performance during Austrovski-Cohen's tenure we find that the bank deteriorated seriously, eroding its equity by huge losses in real estate and reached the point of being forced to sell off its greatest asset, Discount Bank New York, in order to keep up routine banking operations.

Its battered state led last week to international credit ratings agency Standard & Poor's downgrading it to BB, a problematic rating that will prevent international institutional investors from holding Discount Bank shares or granting it credit lines.

The responsibility for Discount Bank's erosion lies first with its managers and directors in those years, and most certainly not with Austrovski-Cohen. Nonetheless, one can wonder if the retired justice's stock committee did everything possible to properly represent the Israeli public - Discount Bank's stockholder - at shareholder meetings.

The shareholders meeting approves the banks financial reports and determines the chairman of the board's salary and bonuses. The meeting's should determine that the managers did everything they could to rehabilitate the bank, invested tremendous efforts in its recovery, and did all necessary to prevent its deterioration.

If the meeting feels the board of directors didn't act properly, it can and even must replace the directors including the chair.

In addition, the shareholders meeting and stock committee can demand directors explain the running of the bank and the problems involved. In other words, the stock committee's job is to serve and act as the bank's owners. Judging by where the bank is now, the committee didn't succeed in preventing its downward slide. Austrovski-Cohen will pass the position on to her replacement in far worse condition than she received it.

The necessary conclusion is not to disband the stock committee since it serves as a buffer between the government and the bank, a very important function (see the Dalia Itzik-Ra'anan Cohen-Industrial Development Bank affair).

It appears that the necessary action is in fact strengthening the committees, maybe even granting them additional authorities that will allow the state to maintain the assets and improve them before privatizing the banks. The future role of the Discount Bank and Bank Leumi stock committees is preventing perpetuation of the managers command and forcing management and directors to provide stockholders with explanations. No one can do that but them.