The national fraud squad last week released the findings of its investigation into a case code-named "business client." The suspects, however, were not clients of one of Israel's leading companies, Bank Hapoalim, but rather its executives - a former chairman of the board and the current CEO.

Police have recommended to the State Prosecutor's Office that the former chairman, Dan Dankner, be charged with receiving a bribe, corporate fraud, breach of trust and money-laundering. They also recommended charging CEO Zion Kenan with corporate fraud and breach of trust. The core of the case is a loan that police say was given to Dankner, with Kenan's knowledge, when it should not have been, because Dankner had a conflict of interests.

This is the latest in a series of shocks Bank Hapoalim has suffered in recent years. It is worrying for anyone who has deposited money in the bank or done business with it. The controlling shareholders were not wise enough to stabilize it and appoint the right people to key positions.

Banking is supposed to be fundamentally conservative, to prevent a sudden public panic that could bring down the bank, and perhaps other banks in its wake. It is a business built on the appearence of trustworthiness and credibility. When cracks appear in this image, the result can be disastrous not only to those with accounts at the bank in question, but also, due to chain reactions, to the entire economy.

One ray of light in this affair was the determined intervention of the Bank of Israel, which forced Bank Hapoalim to make changes at the top, at least as far as Dankner was concerned (it is possible that the supervisor of banks and the governor of the Bank of Israel did not know of Kenan's alleged involvement ). The bank's controlling shareholder, Shari Arison, fought Bank of Israel Governor Stanley Fischer; she, too, was evidently led astray by her people. That does not speak well of her judgment; it is fortunate that Fischer stood firm and did not give in.

The law does not oblige Kenan to resign; the State Prosecutor's Office has not yet approved the police recommendation. But the key question is whether it is proper for a CEO against whom there is evidence of alleged wrongdoing to continue making decisions at the bank. For the good of the investors, the depositors and the Israeli economy, it would be best for Kenan to take a leave of absence until his situation becomes clear.