Investigate Fishman’s Collapse

The state and the Knesset must take action to restore trust in the banking system

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Eliezer Fishman in a Tel Aviv courtroom, March 23, 2017.
Eliezer Fishman in a Tel Aviv courtroom, March 23, 2017.Credit: Ofer Vaknin
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Businessman Eliezer Fishman has racked up debts of some 4 billion shekels ($1.1 billion), the largest personal debt in Israel’s history. Most of the money is owned to Israeli banks, and the debt ballooned to these monstrous proportions because the banks treated Fishman leniently. They didn’t prevent his debts from growing, nor did they even attempt to collect the money once it started becoming clear that he was incapable of repaying it.

Effectively, the banks knew for many years that Fishman was insolvent, but nevertheless refrained from taking any action against him. It was the state that ultimately went to court to demand that he be declared bankrupt, due to the taxes he owed.

Fishman was always known as a businessman with a tendency to take financial risks, but he also wielded enormous personal power, partly because of his holdings in two daily newspapers, Globes and Yedioth Ahronoth. The enormous debts the banks allowed him to run up thus raise serious questions about their decision-making processes. Their ongoing refusal to take aggressive steps against him also raises questions about their oversight processes. And their ongoing opposition to declaring him bankrupt creates the impression that in their eyes, some customers are more equal than others.

The greatest danger created by the banks’ conduct in this case – as well as in the cases of other tycoons, such as Nochi Dankner and his IDB corporation – is that the public’s trust in them will continue to erode. Without public trust, the banks’ stability will be undermined and they are liable to be at risk of collapse.

Nevertheless, the Fishman case isn’t a moral stain only because of the banks’ shameful behavior. The Bank of Israel, specifically its banking supervision unit, is also responsible for this long-running failure. The unit employs dozens of researchers and supervisors, and they should have investigated who allowed Fishman’s debts to keep accumulating and why he received such indulgent treatment.

The state and the Knesset must take action to restore trust in the banking system. The way to do this is with a thorough investigation of the way decisions were made in this affair. The probe’s findings must also be made public. Only thus will it be possible to restore public trust in the banks.

The above article is Haaretz's lead editorial, as published in the Hebrew and English newspapers in Israel.

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