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The director general of the Meuhedet health maintenance organization, Shmuel Muallem, yesterday submitted his letter of resignation to the HMO's board, more than a month after the state comptroller accused him of nepotism and other corruption offenses.

The board had convened to discuss the Health Ministry's demand last month that it act to oust Muallem.

The board also rescinded signature authority from Meuhedet's CFO, Gil Haimovich, and transferred it to Haimovich's deputy.

Muallem was accused of nepotism and other corruption offenses in a comptroller's report released in November. Haimovich was cited for inappropriate conduct in the same report.

The board also decided yesterday that within 14 days, it would produce a list of candidates to replace Muallem.

Muallem said he would train his replacement for two months in coordination with Meuhedet's chairman, and would then retire. The board transferred Muallem's powers to its chairman, Yerahmiel Boyer, until a replacement is selected.

Responding to the accusations against him, Muallem said in his resignation letter: "Until recently I believed that my silence would serve the goals of the organization. But when this silence became a kind of admission of guilt, I feel there is no recourse but to break the silence. ... The decision of the Health Ministry director general to end my term in office, which contradicts the stand of the state comptroller, is in some way a mystery even to me."

Muallem, who has worked at Meuhedet for 42 years, became CEO in June 2007 after serving as assistant director general and deputy director general for human resources.

The report said Muallem had approved contracts without tenders and that he and his wife had attended conferences abroad at the expense of pharmaceutical companies that have business dealings with Meuhedet. He also allegedly cashed in vacation days without deducting those days from his annual quota.

Last month, Meuhedet's 12-member board of directors, which includes Muallem, announced that it would begin the dismissal process of four of the health fund's highest-ranking officials (pending hearings ) and that five top officials would return the monetary value of the vacation days they are accused of cashing in without deducting the days from their quota.

The board, which also said it would issue tenders for the health fund's accountant and other positions, announced the steps in response to the report, considered one of the harshest ever written by the State Comptroller's Office.