Klein: We Can Force Dankner to Resign

"Danny Dankner promised us that he would resign from his position as deputy chairman of Bank Hapoalim. We relied on his word. This was part of our agreement with him and he must stand by this agreement... We'll take action during the coming days and there is no doubt that we can make him honor his word," Bank of Israel Governor David Klein said Thursday in an interview with Haaretz.

According to Klein, the central bank does not oppose the appointment of deputy chairmen at the banks, but insists on Dankner's resignation because of his ownership status. "There is no chairman or bank manager in Israel who is a controlling shareholder," Klein noted.

Earlier this week, Bank Hapoalim's controlling shareholders - including the Arison group, the Dankner family and American investors - sent a letter to the supervisor of banks, Yoav Lehman (with copies to Klein and Finance Minister Benjamin Netanyahu), objecting to the intervention by the Bank of Israel in this matter.

In June 2003, Dankner agreed to resign from his position as deputy chairman as a proviso for winning Lehman's approval for the Ellern deal, in which the Dankners plan to reorganize their holdings, including an 11.4-percent stake in Bank Hapoalim via Salt Industries.

Dankner was slated to resign effective April 1, but announced at the beginning of the week that he was would stay on board in light of the central bank's delay in handling the Ellern deal.

The 1997 agreement under which the Arison-Dankner group acquired Bank Hapoalim stipulates: "The members of the group, their relatives or corporations controlled by any of them will not receive management fees or any compensation or other benefit from the bank or the corporations controlled by the bank."

Despite this clause, Dankner was appointed as deputy chairman in June 1999. Since assuming this post, the bank has paid out some NIS 11 million in salary costs. The supervisor of banks at the time gave his unwritten approval for employing Dankner, despite the stipulation in the purchase agreement.

The terms of this agreement were examined again when the Ellern deal was presented for approval and the central bank then decided to insist on adhering to the terms of the bank's purchase.