All That Glitters / Fischer Won, but the Spin Goes on

If you thought that the affair involving Bank Hapoalim and its chairman Danny Dankner ended with the official announcement of his resignation, think again. First of all, the media spin and twists continue. Now the battle is raging over how the affair will go down in history and in public memory.

Second, battle for control of over Hapoalim isn't over: It's just begun. Until now the ones controlling the bank and calling the shots were Danny Dankner and his cronies. It definitely wasn't Shari Arison. One question is therefore who will be in charge of Hapoalim from now on, and more important who will pull the strings of the person "in charge" behind the scenes.

Third, Bank Hapoalim is just one example, the symptom of a disease that has spread throughout the Israeli economy: managers, advisers and controlling shareholders seem to be running their businesses with their own ends in mind, ignoring the fact that the companies they lead are public bodies. The battle between them and the authorities supervising them goes on, and is far from over.

But let's start with the media spin that ensued after the official announcement of Dankner's resignation in the newspapers that sided with him against the Bank of Israel, which had called for his ouster. The headline in one paper was, "The greater good of the bank prevailed: Dankner quitting Hapoalim." The subhead read, "Bank Hapoalim chairman decided to end the story."

This isn't just spin, it's untrue.

Dankner didn't decide anything, certainly not to quit. Dankner was deposed by the Bank of Israel and he kicked and yelled all the way to the curb. The headline is even sillier: "The greater good of the bank prevailed." Dankner was fired precisely because the investigators of the Bank of Israel's supervisory department realized that Dankner's actions were not in fact based on the best interests of the bank.

Another spin that appeared in several papers was that "everybody lost" from this sorry affair. That implies there was a cockfight between two bantams of roughly equal weight, in which both were injured and no winner was declared; it's a tie.

That, dear reader, is double balderdash. First, because it presents the businessmen of Bank Hapoalim and the governor of the Bank of Israel as players on the same ballfield, without real differences in role or substance.

But this was no battle between two businessmen of equal power. It was the ouster of a manager by a regulator acting on behalf of the public. The affair involved a manager (Dankner) suspected by the investigators (supervisor of banks Roni Hizkiyahu) and the judge (Bank of Israel Governor Stanley Fischer) of running the bank in a manner that did not have the best interest of the public at heart. Since when is it said, when a defendant is convicted and tossed into prison, that "everyone lost?" And this was no tie. Fischer won. Dankner and Arison lost.

Another paper, also a supporter of Dankner and critic of the central bank, had a different spin: Fischer won, but his status was undermined. Dankner did nothing wrong other than a few tactical mistakes in crisis management. His only sin was being a bad politician.

Both arguments are misleading. Fischer won hands down. Some papers reported two weeks ago that the central bank was to give Dankner a letter stating that he'd done nothing wrong. The Bank of Israel gave him nothing. Fischer's status is higher than ever. He proved that when he has to he will do more than merely making polite suggestions. And the idea of calling Dankner and his associates "nonpoliticians" is hilarious. They swim like fish in politics, they sup with politicians, they employ ex-, present and future politicians.

To demonstrate the point, we haven't seen many politicians meddling in this story: They didn't want to take on Dankner and Arison.

Dankner's problem was just the opposite. He'd become accustomed to being left alone by regulators, politicians and business associates alike, and he lost his sense of caution. Instead of managing his affairs prudently he was brazen, only to be taken aback when the regulator called foul.

Most Israeli papers played it cool or supported Dankner and Arison, abetting the attempt to weaken the status of the banks supervisor and the reputation of the governor.

But the spin doesn't matter. Nor does the fact of certain newspapers throwing their weight behind Dankner. What matters is the outcome.

Fischer won this round. He must continue to make sure that the hands controlling Israel's banks and calling the shots are responsible ones.

The result of the Bank Hapoalim scandal, or at least this round of it, is that the state, the rule of law and the greater good of the public won. The tycoons, the bankers, the cronies and their senior advisers at Bank Hapoalim lost.

At least in the short run, we must hope, Israel's bankers won't try to force their will on the Bank of Israel. Fischer's victory should lift the spirits of other regulators fighting bitterly for the greater good of the public. But let them not think for a moment that the tycoons and the "families" have given up or decided to forgo their ambitions.