Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid have agreed to appoint Bank Hapoalim chief economist Prof. Leo Leiderman as the ninth Governor of the Bank of Israel, after Prof. Jacob Frenkel withdrew his candidacy on Sunday, and Prof. Stanley Fischer stepped down at the end of June. By law, the prime minister picks the governor in consultancy with the finance minister.
In a related development Deputy Governor Dr. Karnit Flug announced she is stepping down from her post after 25 years at the central bank. She congratulated Prof. Leiderman on his expected appointment. Fischer had recommended that Flug succeed him.
Top officials in Jerusalem said today that Netanyahu and Lapid will officially announce the new candidate for the Bank of Israel's governorship tonight or tomorrow. One source told "Globes" that the decision had already been made, and that Netanyahu and Lapid were sorting out details.
Another source says that Netanyahu and Lapid have both decided on Leiderman, but that an announcement has been delayed because Netanyahu sent National Economic Council chairman Eugene Kandel to investigate all the banking, financial, academic, and public institutions where Leiderman has held senior posts, to make sure that there no embarrassing incidents that could cause further unpleasantness. Netanyahu and Lapid's aides said today that Leiderman has already been asked about this, and said that he has nothing to hide.
Pressure to nominate a new governor for the Bank of Israel mounted on Monday, after Frenkel withdrew his candidacy over alleged shoplifting from a duty-free shop at Hong Kong's airport. Netanyahu again approached Leiderman, who also met Lapid at his home in Tel Aviv on Tuesday night. The meeting was described as "positive," but Lapid did not promise to support the appointment.
Two days before nominating Frenkel to the governorship, Leiderman met Netanyahu at his home in Jerusalem to discuss his possible appointment to the governorship. Netanyahu told Leiderman that there was another candidate for the job, and when Frenkel was picked, he offered Leiderman the post of deputy governor. Leiderman declined, saying that he had previously served as Frenkel's deputy in the 1990s.
In the past few hours, rumors have surfaced that Leiderman, like Frenkel, received an increased pension, and was forced to refund money. However, top Bank of Israel sources said that the money was refunded under an agreement between the Bank of Israel and the Ministry of Finance, after the ministry charged that Bank of Israel governors had set improper pension arrangements without permission from the director of wages at the ministry. These arrangements covered dozens of Bank of Israel managers, including Frenkel, Galia Maor, David Klein, Prof. Avi Ben-Bassat, and Meir Heth, as well as 200 pensioners under a labor court ruling. This was not a private arrangement for Leiderman, in contrast to the case of Frenkel, who had to return NIS 240,000 in illegal payment for sick days, vacation days, and overseas lodging and food.
Published by Globes [online], Israel business news - www.globes-online.com - on July 31, 2013
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