Central Bank workers accused of fraud

Report: 3 officials allegedly submitted false reports on employees' salaries.

jp.services2 (photo credit: )
(photo credit: )
The Israel Police have recommended indicting three former senior officials at the Bank of Israel on charges concerning alleged false salary reports issued to the Finance Ministry. The three are suspected of having padded the already cushy salary deals within the central bank with unreported "extras." Army Radio released Wednesday that police were pressing DA's to deliver an indictment against the three. The investigative file on Efraim Gross, Tzvi Tadmor and Bentzion Ben-Shushan was delivered to the Jerusalem District Attorney's office two months ago, and since then prosecutors have been reviewing the file to determine whether there is evidential basis to build a strong indictment. The three former Bank of Israel employees may face charges including violation of the public trust, fraud and receipt of an item under fraudulent terms. Police believe that between 1993 and 2004, the three would offer false reports to the Finance Ministry concerning the salaries of bank employees. During that period, Gross was a senior manager, Tadmor, the head of human resources and Ben-Shushan was a senior worker and would prepare the salary reports that were submitted to the Finance Ministry. Their salaries were among those "adjusted" in the reports. The affair was first uncovered following the 2005 appointment of Stanley Fisher to head up the troubled institution. Later, it was revealed to members of the government at a meeting of the Knesset State Control Committee. It was Fisher's second-in command, Bank of Israel Director General Yaakov Danon, who both discussed the matter with committee members and also reported the matter to the police. The National Financial Crimes Unit was tasked with handling the criminal investigation. Unlike other government offices, the Bank of Israel's budget is set internally and not subject to approval by any external body. Salaries are paid from the revenues from the State's foreign currency investments, which the bank is in charge of managing, the report noted. In February 2007, Danon told the Knesset State Control Committee that for years, the central bank neglected to detail salary increases in its reports to the Finance Ministry's supervisor of wages. At that point, Danon told committee members that the unreported sums count to some tens of millions of shekels. Almost a year earlier, in April 2006, State Comptroller Micha Lindenstrauss published a biting report in which he criticized the "excessive benefits" that had been received by Bank of Israel Employees. According to that report, employees of the central bank received more vacation time than those elsewhere in the public sector and even private loans from the State's coffers. The report described a situation similar to the one described by investigators a year later: "Many of the bank workers' benefits are not expressed in their monthly paychecks. These benefits have names that are similar to those of benefits given elsewhere in the public sector, but at the Bank of Israel, there is no link between the name of the benefit and its content, and are ruses for giving large sums of money to its workers," the report said. According to the report, workers received extra "special vacation" days to be redeemed for cash when they retire. They also were entitled to 80 percent more sick days than other public sector workers, also redeemable for money. As of May 2005, special loans taken out by central bank workers totaled as much as NIS 222m. as of May 2005, an average of NIS 225,000 per person. The report also blasted the bank's retirement packages, which totaled an average of NIS 2 million in addition to the standard pension plan.