Controversy Erupts Over Stanley Fischer’s Candidacy for Israel's Bank Hapoalim Board

Government nominating committee approved candidacy of former Bank of Israel chief over objections by one member

Michael Rochvarger
Michael Rochvarger
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The logo of Bank Hapoalim is seen at their main branch in Tel Aviv, Israel on July 18, 2016.
The logo of Bank Hapoalim is seen at their main branch in Tel Aviv, Israel on July 18, 2016. Credit: Amir Cohen/ REUTERS
Michael Rochvarger
Michael Rochvarger

Plans by Stanley Fischer, the former Bank of Israel governor, to return to the Israeli banking scene, after several years in the United States as deputy chairman of the Federal Reserve, became ensnared in controversy a day after he received an initial go-ahead.

The government committee responsible for nominating board members to commercial banks that don’t have a controlling shareholder on Wednesday approved Fischer’s candidacy to serve as a director of Bank Hapoalim. Hapoalim’s shareholders are due to vote on Fischer and other nominees in October.

However, a day after the appointment, a member of the committee said Fischer’s candidacy was approved improperly and quit in protest. David Avner, a committee member and Hapoalim director, accused his colleagues on the appointments panel of “chang[ing] the voting rules retroactively, so that they suited their preferred candidate” and of lack of transparency.

Moshe Gan, the appointments panel chairman, defended the procedure.

File photo: U.S. Federal Reserve Vice Chair Stanley Fischer addresses The Economic Club of New York in New York, U.S. on March 23, 2015. Credit: Brendan McDermid, Reuters

At issue, was the absence of a second Hapoalim representative on the appointments committee after Reuven Krupik was named Hapoalim’s chairman in June. That left Avner as Hapoalim’s sole representative on the panel and he opposed Fischer’s candidacy, giving him a low rating, according to Gan. The other three representatives on the committee preferred Fischer.

”This created an absurd situation in which the majority believed that Fischer was a worthy candidate while the minority thought otherwise,” Gan recounted. “[We] talked to each other about what we are allowed to do by law. We have decided to exercise the authority of the majority because the scoring system is only a tool for making the decision.”

The committee then voted in favor of Fischer’s candidacy. He will now be competing with two other candidates for two openings on the board.

Fischer served as Bank of Israel governor between 2005 and 2013, stepping down from his second term early and returned to the U.S. where he served under Janet Yellen at the Fed. During his term at the Bank of Israel, Fischer forced Danny Dankner out of the post as Hapoalim chairman in 2009. Dankner was later convicted for fraud and breach of trust during his stint at the bank.

Before joining the Bank of Israel as governor in May 2005, Fischer was vice chairman of Citigroup.

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