Lapid rejects calls for new BOI nomination method following Frenkel, Leiderman ‘farce’

Labor MK Braverman calls for formation of vetting committee, says individuals chosen for top positions must be honest.

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August 4, 2013 17:07
4 minute read.
Yair Lapid at cabinet meeting, 20 May 2013.

Yair Lapid at Cabinet Meeting, looking official 370. (photo credit: Marc Israel Sellem/The Jerusalem Post)

Finance Minister Yair Lapid on Sunday rejected a growing chorus of calls to reform the nomination process for Bank of Israel governor by introducing a parliamentary search committee.

“Everybody is talking about a search committee,” Lapid said at the opening of a new railway line between Ashdod and Ashkelon. “If there will be a search committee, will it hire a detective agency? These are respectable people that have careers spanning decades in the State of Israel.”

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The calls followed an embarrassing week for Lapid and Prime Minister Binyamin Netanyahu, in which two of their nominees for governor, Jacob Frenkel and Leo Leiderman, withdrew their candidacies in the face of alleged scandals.

Lapid argued that there was no way of knowing what details might be dug up, even with the aid of a search committee.

But his stance did not stop the opposition from pushing reforms forward.

MK Itzik Shmuli (Labor) submitted a bill Sunday to regulate the appointment process.

“Save us all the next embarrassment, and instead of choosing another inappropriate candidate from within [Netanyahu and Lapid’s] group of good friends, let’s establish a transparent, professional process with an official search committee led by a judge,” said Shmuli, who co-sponsored the bill with Knesset Economics Committee chairman Avishay Braverman (Labor).



Shmuli added that he’d be happy for the government to adopt his bill as its own policy, as long as it is implemented.

“Netanyahu and Lapid’s decision-making process looks like it’s offhand and spontaneous,” he stated.

“Who knows who the final candidates will be and on what basis or criteria they will be selected?” Currently, the prime minister and finance minister are responsible for nominating a governor, who then must be approved by a committee on senior civil service appointments, colloquially referred to as the Turkel Committee because it is chaired by retired Supreme Court justice Jacob Turkel. Complaints are made to the committee only after the candidates are nominated.

Shmuli and Braverman’s bill would require the establishment of a search committee led by a retired Supreme Court or District Court judge. The committee would bring its recommendations to the government for authorization at least six weeks before the serving governor leaves his position.

“The public has lost its faith in the public sector,” Braverman told Army Radio Sunday.

Opposition leader Shelly Yacimovich on Saturday night told Israel Radio that she was in agreement over the need to change the system.

Another surprising advocate of reform is former BOI governor David Klein.

“There is something defective in the process,” Klein told Army Radio on Sunday. “The method in which a governor is chosen today, as it was for decades, is no longer suitable. The fact that there were two quick withdrawals is testament that the selection process was not right.”

In the meantime the country’s business sector is impatiently anticipating the nomination of a third candidate to replace Stanley Fischer, the well-respected governor who stepped down in June after eight years in the position.

“Any delay in appointing a governor is a strategic threat to the Israeli economy,” Israel Manufacturers Association chairman Zvi Oren said. “In the absence of economic leadership that can deal with the foreign exchange crisis, the Israeli economy could go into a tailspin.”

A weekly analysis by Bank Leumi noted that “prolonging this situation might, in the end, affect the Israeli capital market for the worse.”

Karnit Flug, the current acting governor who was twice snubbed for the position, remains an unlikely choice despite vocal support from the likes of Braverman, Yacimovich and Klein.

According to Globes, however, Netanyahu and Lapid are running out of options. They reportedly were turned down by both Eugene Kandel, who heads the National Economic Council, and another unnamed candidate described as a senior official at the Bank of Israel.

For his part, Lapid vowed to “conduct the discussion on choosing the governor slowly, calmly and without pressure, and we will find the best man or woman to be governor for Israel.”

Meanwhile, in an interview with The Jerusalem Post’s Hebrew-language sister publication The Post – his first since withdrawing his nomination – Leiderman said the complaint lodged against him with the Turkel Committee had nothing to do with sexual harassment, but merely suggested that the circumstances of his leaving Deutsche Bank should be examined.

“My record is totally clean,” he said. “No claim or complaint of any kind has ever been filed against me in my 34 years of work at Tel Aviv University, my 10 years at the Bank of Israel and 10 years at Bank Hapoalim, and the two-and-a-half years at Deutsche Bank.”

Leiderman expressed confidence that the Turkel Committee would have approved his candidacy had he remained in the race, but said the process would have taken over two months.

“I was not ready for that for reasons of my health and my family,” he explained.


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