Jacob Frenkel
Photo: Flash 90

Frenkel, you again?

Op-ed: Rotten Israeli system embracing old-new Bank of Israel chief who dipped his hands into public's coffers

On the morning of the appointment of Jacob Frenkel to his third term as governor of the Bank of Israel, the finance minister said the government had to appoint someone who was "familiar with the system from within." By making this innocent statement, Lapid unwittingly called attention to the scandalous aspect of the appointment and also to the rotten state of the system one has to be familiar with in order to land such an appointment.


In 2002 the state comptroller dedicated several pages in his semiannual report to Frenkel's conduct on the eve of his early retirement during his second term as the central bank chief. According to the report, the retiring Frenkel dipped his hands into the public's coffers in a way that only someone who is "familiar with the system from within" could. Frenkel demanded, and received, $20,000 for expenses incurred during the 623 days he spent abroad - almost two full years. But this was not enough for him. Frenkel was also paid NIS 107,506 ($29,000) for the redemption of 101.4 unused sick days and an additional NIS 30,000 ($8,000) for 25 unused vacation days, neither of which he was entitled to by law. In light of the report, Frenkel was required to refund the government, but there were no indictments, because in Israel indictments are not filed against retiring senior officials from within the system.


After leaving the Bank of Israel, Frenkel served as chairman of Lumenis, but could not save the company from collapse. The "credibility" he was supposed to project as a former BOI chief did not help Lumenis. After all, how credible can someone who dipped his hands in the public's coffers be? But strangely, the failure served as a springboard for Frenkel's next job. And why wouldn't it? The astounding deficit, which will cause all Israeli citizens who are not tycoons to suffer, is the result of PM Netanyahu's policy in the previous government. Did that prevent him from being reelected?


המערכת שונאת להשתנות. מינוי הנגיד (צילום: פלאש90)

System hates change. Frenkel (L) with Netanyahu and Lapid (Photo: Flash 90)


As vice chairman at AIG, Frenkel's next post, he did not foresee the collapse of the financial markets in the US. Many executives did not foresee it, but Frenkel led the insurance giant to such a spectacular collapse that Washington was forced to commit $182 million to the company in order to save it. Did Frenkel resign? Did he take responsibility? Admit that he had made mistakes? Of course not. He continued to receive a huge salary and laugh all the way to the bank.


Anyone who is familiar with the Israeli system knows that it cannot stand people who take responsibility or resign when they have failed at their jobs and caused damage.


The finance minister mentioned that Frenkel would be leaving his high-paying job as chairman of JP Morgan, the largest investment bank in the US, to serve as the head of Israel's central bank, where he will earn a significantly lower salary. Well, under Frenkel's management, JP Morgan lost at least $6 billion in 2012 alone due to speculative bets. The bank's performance indicates that Frenkel is an expert only on issues related to the terms of his salary.


He is 70 years old. Even Supreme Court judges retire at this age. But, as we know, the system is rotten, so it will embrace a man who has already earned much more money outside of it and knows how to illegally make money inside the system. The system, just like the failing prime minister and the finance minister who has yet to convince anyone that his actions and statements are serious, hates change.



פרסום ראשון: 06.27.13, 10:59
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