BOI: Report preaches to converted

Central Bank claims problems are being addressed, changes are underway.

By ZEV STUB
April 7, 2006 02:31
2 minute read.

 
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State Comptroller Micha Lindenstrauss's report attacking benefits given to Bank of Israel workers is merely "preaching to the converted," the central bank said Thursday. The scathing report charged that the central bank's workers receive non-cash compensation that is "excessive by any yardstick." Workers would take out huge private loans from the bank averaging NIS 225,000 per person, and retirees receive benefit packages worth an average of NIS 2 million apiece, the report said. The Comptroller also found that cash benefits were laundered as "special vacation days," which could later be redeemed for cash when unused. The Bank of Israel insisted, however, that the abuses in question have already been addressed and are close to resolution. "Nine months ago, long before this investigation was launched, the Bank's management started dealing with the issues ... which are mentioned in the report. On its own initiative, the Bank, acting in complete transparency, gave the Director General, Wages and Labor Agreements in the Ministry of Finance up-to-date and full reports on the wages and pension agreements in effect at the Bank for many years. Since then, intensive negotiations have been under way," the bank said. A source within the Bank of Israel said accusations in the report were already known to everybody within the bank, and that the people who were responsible for the abuses have since been deposed from their positions. "People like [former personnel division head] Ephraim Gross have already been fired by bank Governor Stanley Fisher," the source noted. Furthermore, according to the source, the Director General of Wages in the Finance Ministry sent a letter to then-bank governor David Klein in 2003 demanding changes to the workers' compensation plans. Klein took the issue to the Supreme Court, which ruled that the central bank was outside of the treasury's jurisdiction. Nonetheless, the report has raised new suspicions against Klein, Gross, former governor Jacob Frenkel and others who ignored the problems. It is not yet clear whether criminal charges will be brought against former officials. It is also unclear whether the courts will demand that funds be returned to the State, as the comptroller suggested. If the report was expected to generate public outrage, the response has been more of bitter cynicism. "This is no different than the corruption going on anywhere else in the government," said one government worker. "I'm no more surprised at the Bank of Israel than I was at Israel Electric, or Omri Sharon or Naomi Blumenthal, when their scandals came to light. We know that [Attorney-General Menachem] Mazuz isn't going to touch anyone over this." Others expressed general frustration about the social inequalities of Israeli society. "I have no problem with what the bank managers are getting," said Hanna Zohar, manager of Kav Laoved, a non-profit organization concerned with workers' rights. "It's their choice to use their power for their own benefit. What I am angry about is that so many other people are not getting, that the weak are losing out at their expense." The Histadrut labor union and Association of Banks both declined to comment on the report.

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