Watchdog Halts Retirement of Discount's Zohar Pending Probe

State Comptroller Micha Lindenstrauss has instructed Finance Ministry Accountant General Shuki Oren and the Bank of Israel Supervisor of Banks Rony Hizkiyahu to halt the procedures involved in the resignation of Israel Discount Bank chairman Shlomo Zohar until a full investigation is completed. That includes halting the payment of $1 million in special benefits offered to Zohar by the Bronfman family, the bank's controlling shareholders, in exchange for the chairman's voluntary resignation.

Lindenstrauss informed Oren and Hizkiyahu that he was looking into all the terms of Zohar's retirement: the retirement bonus, the expanded severance pay and other compensatory payments. The comptroller will examine whether Zohar's retirement package could constitute damage to the public interest. One quarter of the shares of Israel Discount Bank are held by the state.

The state comptroller made his decision before receiving a request from the Ometz good governance advocacy group to stop the $1-million severance payment promised by the Bronfmans and examine the circumstances of Zohar's ouster/resignation.

In a letter to Lindenstrauss, Ometz chairman Arieh Avneri said that Zohar's "golden parachute" was too big and did not conform to civil and ethical norms. "According to media reports, Zohar's ousting was related to sub-par job performance that was not in the best interests of the bank's customers," Avneri added. "This case might set a negative precedent regarding the size of retirement payments to the chairmen and CEOs of public companies."

Directing his attention to a different aspect of the circumstances under which Zohar is leaving the bank, Avneri wrote that Discount's "controlling shareholders forced out Zohar with proper disclosure as to the reasons for his ouster, which was not conducted in accordance with the guidelines of corporate governance or with the requisite board of directors meeting. It is not clear what report was submitted to the Bank of Israel on the matter. Discount is a banking corporation that is held mainly by the public and the State of Israel. The authority to fire the chairman lies with the board of directors and not with the controlling shareholder," Avneri wrote.