Labor head Shelly Yechimovich
Labor head Shelly Yechimovich Flash 90

Labor party head MK Shelly Yechimovich, the head of the Opposition, issued a warning Wednesday against forgiving the debts of businessman Nochi Dankner. According to various reports, the chairman of Bank Leumi is considering erasing most of Dankner’s debt.

Yechimovich wrote a letter to David Zaken, who is responsible for oversight of Israel’s banks, calling on him to nix the planned debt erasure.

Dankner’s debts through his various companies are approaching a total of one billion shekels, she said. “Given the situation, there is reason to fear that forgiving his debts could hurt banks’ financial stability,” she argued. The decision “would be a dangerous precedent… with implications for the entire banking system,” she warned.

“I am convinced that Bank Leumi’s decision is connected to the issue of centralization of accounting services,” she continued. “I have warned you about this multiple times in the past, and do so again: Gad Somech serves as both the accountant for the IDB group [owned by Dankner] and for Bank Leumi (and most of the other banks), to which the group owes money.”

Somech’s dual roles “give real cause for concern… that it will prevent him from adequately assessing the financial risks and risks to stability posed by the chairman’s decision to erase debts of customers he does the accounting for,” she explained.

In addition to the worry that forgiving Dankner’s debt could impact the bank’s financial stability, she said, “this is a discriminatory decision… Banks use all the tools at their disposal to collect debts from households and from small and medium-sized businesses. How can they at the same time decide so easily to give up on a debt of hundreds of millions of shekels owed by one man, as important and influential as he may be?

“It hurts, it’s infuriating, it’s not rational and not economically sound – especially when small and medium-size businesses are suffering from a severe credit shortage,” she argued.

Yechimovich called on Zaken to put a stop to the current proposal, and to issue orders regarding bank policy on business debts, including those owed by influential figures.