Micky (Menachem) Friedman, CEO of Bank Leumi in England, was arrested Tuesday on suspicion that he oversaw a massive fraud ring during his tenure as director of the bank's main branch in Tel Aviv.
Thirteen local businesspeople were also arrested during the sting.
Friedman is suspected of providing NIS 25 million in loans to local entrepreneurs in violation of bank regulations. He has been accused of failing to demand co-signers, guarantors or collateral for loans. Police are expected to try and establish whether or not Friedman received personal favors or benefits in exchange for the loans.
The arrests followed a request by Bank Leumi officials after an internal audit revealed irregularities surrounding the loans, some of which are still outstanding. In a statement released Tuesday, bank officials said they reported the findings to the relevant authorities at the Tel Aviv Stock Exchange and the Bank of Israel and stressed they would cooperate fully with law enforcement agencies.
Bank officials stressed that the arrests would have "no effect" on Leumi customers and said they believed the investigation would be limited in scope. "The internal investigation appears to be an exception, one that will have no effect on customers of this bank… To the best of our knowledge, the bank has suffered no significant losses as a result of the current issue," they said.
Soccer Players, Business Execs
In addition to Friedman, 13 local business professionals have been indicted on charges including fraud, use of forged documents, bribery, breach of trust and falsification of public documents.
Of the group, several are major players in the local business community. They reportedly include a former professional soccer player, the head of a local fast food chain and a top executive of a local air travel company.