In short: Aharon Meir was chief executive of United Mizrahi Bank from 1970 to 1986. At the end of 1990 he and the bank were indicted in the bank-shares regulation affair. In February 1994 the bank and its former CEO were convicted, and in February 1996 the Supreme Court left his sentence in place. The facts of the proceedings on this page are taken from the Supreme Court judgment and from the prospectus the bank itself published in 1998.

The trading floor of the Tel Aviv Stock Exchange, 20 October 1983
The Tel Aviv Stock Exchange, 20 October 1983, preparing to resume full trading after about two weeks of closure. Photo: Tsevi Goldfarb, Dan Hadani collection, National Library of Israel, CC BY 4.0.

Who Aharon Meir was

According to Bizportal, Meir was born in Budapest in 1923, joined Bank HaMizrahi in 1961 as deputy CEO and became CEO in November 1970. According to the same article, the bank became the fourth largest in Israel under him, and he resigned in April 1986, after the inquiry commission on the bank-shares regulation published its conclusions.

The regulation and the crash

For years the major banks, Bank HaMizrahi among them, worked to stabilise the prices of their own shares. According to JTA, the shares collapsed on 6 October 1983. According to the bank’s prospectus, the inquiry commission’s report, published in April 1986, found among other things that the bank and its managers at the relevant time bore responsibility in everything connected with the regulation of the shares.

The indictment

According to JTA, the Attorney General first decided not to prosecute the bankers, and in May 1990 the High Court of Justice ordered him to reopen the investigation.

According to the prospectus, on 31 December 1990 the State Attorney’s Office filed indictments in the Jerusalem District Court against several banks and bankers, including the bank, Mr Aharon Meir, “who was the bank’s CEO during the period relevant to the indictment”, and the bank’s then deputy CEO and comptroller. The indictment covered three separate subjects: “managers’ offences, false advice and false reports and prospectuses”.

Conviction and sentence

The verdict was given in the Jerusalem District Court on 16 February 1994. According to UPI, it was written by Judge Miriam Naor and ran to 820 pages. According to the prospectus, the bank itself was convicted under section 415 of the Penal Law, obtaining something by deceit in aggravated circumstances, in cases of false advice, and acquitted of the other offences. It was fined NIS 1 million, paid, and did not appeal.

According to the appeal judgment, Criminal Appeal 2910/94 Japhet et al. v. State of Israel (Hebrew), the district court convicted Meir on three counts:

  1. An offence under section 13B(a) of the Banking Ordinance: the district court found that, as a bank manager, he “knowingly conducted the bank’s business in a way that impaired its ability to meet its obligations”.
  2. Obtaining something by deceit in aggravated circumstances, under section 415 of the Penal Law, in the cases listed in Annex E to the indictment. He was acquitted “on grounds of limitation” of the other offences on this count, securities fraud and misleading a customer.
  3. False entries in corporate documents, under section 423 of the Penal Law, in the financial statements.

The district court sentenced him to “a two-year suspended prison sentence… and a fine of NIS 600,000, or 6 months’ imprisonment in lieu”. No actual prison time.

The appeal

The Supreme Court heard the appeal with a panel of five: Justices D. Levin, A. Mazza, Y. Kedmi, T. Strasberg-Cohen and Z. E. Tal. Judgment was given on 28 February 1996:

  • The first count was quashed by a majority, Justices Kedmi and Strasberg-Cohen dissenting.
  • The appeal on the second and third counts was dismissed. Both convictions, for deceit and for false entries, stand.
  • The sentence: under Justice Levin’s opinion, “two years’ suspended imprisonment and a NIS 600,000 fine”.

Afterwards

According to Globes, Meir died at the end of August 1997. Bar-Ilan University runs a banking research centre named after him.

The bank’s conviction appears on the first page of the 1998 prospectus, among the warnings to investors. Full background and the other proceedings of those years: Criminal and regulatory proceedings, 1990-2004.

Source documents

Frequently asked questions

Which Bank HaMizrahi CEO was convicted in the bank-shares affair? Aharon Meir, CEO of United Mizrahi Bank from 1970 to 1986. According to the bank’s prospectus, he was convicted on 16.2.1994 of some of the offences attributed to him.

What were the charges? According to the prospectus, the indictment of 31.12.1990 covered three subjects: managers’ offences, false advice, and false reports and prospectuses. The bank itself was convicted only under section 415 of the Penal Law.

What was the sentence? The bank was fined NIS 1 million. The CEO received a two-year suspended sentence and a NIS 600,000 fine, with no actual prison time. On appeal, on 28.2.1996, the first count was quashed; the other two convictions and the sentence stand.