Leo Leiderman is a victim of the most macabre invention in Israeli history: The Committee for the Appointment of Senior Public Officials.

4 August 13 11:02, Adrian Filut

1. It isn't his consultations with astrologers. Nor a YouTube video showing Prof. Leo Leiderman, the nominee to head the Bank of Israel, playing with his grandson, let alone the "warm recommendations" of Rafi Melnick, who has lived his whole life in Leiderman's shadow and who has been denigrating Leiderman for years wherever and whenever possible. It's the system.

2. Leiderman is a victim (we hope the last) of the most macabre invention in Israeli history: the mechanism for self-destruction of Israeli leadership, officially known as the Committee for the Appointment of Senior Public Officials. It began, of course, with good intentions, but it has become a threat to our existence.

This is how it works

3. How does the method work? Send anonymous letters about the candidate for a job - a leading figure in the economy, the military, or the judiciary. It may be true, or it may not (usually it's not). The letter reaches the committee, which must, as demanded by its conscience and by the letter of the law, require an explicit answer from the candidate.

The person who sent the letter, the sole purpose of which is to torpedo the appointment, contacts a journalist, and "leaks" that a complaint about an "anonymous" criminal offense has turned up. The journalist who receives the "scoop" is protected from being sued for slander because he is reporting a letter that actually was received, and in doing so he relates the alleged offense.

Following this, for a week, or two, or three, the newspapers are full of articles stating that the candidate committed an "alleged" terrible criminal offense. Most candidates, who come with good will, are not resilient enough and mentally collapse. They forego the job, mainly due to pressure from their family, when it sees the candidate's frailty in the face of this torture.

4. What happened to Leiderman. By Friday, his opponents sent letters (anonymous of course) to the Turkel Committee alleging sexual harassment and tax evasion. Leiderman's associates say that the accusations made in the letters are utterly baseless. Judge Jacob Turkel asked his to respond specifically to each letter received. After all, Turkel cannot take risks. He has already been the target of enough public criticism.

It does not matter whether the complaint is true or not. It really does not matter. Turkel must answer to the public. He must check. Leiderman wants to continue, he consults his friends, and they implore him to continue. Until he reaches his lawyer, who tells him that, by Sunday at the latest, all the letters will be splashed across the front pages of every newspaper. He also tells Leiderman that this this ritual will last a week, or two, and probably three, just like with Jacob Frenkel. Leiderman tells his lawyer that he has done none of the things the letters accuse him of. He is told that whether he did them or not, it does not, but really does not, matter.

The lawyer erred in just one thing: it took only hours, not days. Everybody now knows about the letters. This is where Leiderman's family enters the picture - and that's the end.

Israel has lost a governor

5. Thus it happened that one of Israel's most talented economists, who had dreamed all his life about becoming the governor of the Bank of Israel, who had prayed every morning for the day when the prime minister and finance minister would say, "Will you be our governor?" - was forced to forego his dream. Leiderman will not be the governor. Not today, or ever. There is no prime minister in Israel who will take the risk.

For Leiderman, the end result of his decision is the worst of all worlds: the letter-senders achieved their goal, he will not be governor; the stories will be splashed across the newspapers (but really splashed); the general public, which does not know him, is allowed to think that if he withdrew then there must be "something" in the complaints; and his opponents who claimed that he was no leader will be allowed to think that they were right, because he failed to deal with a few tough questions from Turkel. And worst of all, he harmed the economy, and most of all, himself. He also disappointed. This is a real worst case scenario.

6. Maybe he really is hiding something? Leiderman's friends assure that he had, and has, nothing to hide. But didn’t Leiderman know that there were people who would try to torpedo his appointment?

"Listen," says one of his associates, "He's a straight arrow. Suddenly, he's told that he's in a criminal investigation, in the public domain, about terrible crimes, which he did not commit, and that, tomorrow, everything will be in all papers. What do you want from him? You begin to wonder whether you paid for yesterday's bottle of Coca-Cola at the gas station. You feel as if you know nothing."

Netanyahu's dilemma

7. Prime Minister Benjamin Netanyahu is furious. He faces a serious dilemma. He is trapped, embarrassed. Deputy Governor of the Bank of Israel Karnit Flug? No way; now it's a matter of principle. Twice, he could have picked her. He does not want her. Twice he battled her appointment against everyone: against Stanley Fischer; against Minister of Finance Yair Lapid. He does not want her, which is why she (justifiably) resigned. Moreover, Lapid has wanted Flug from day one. It's the ultimate trap.

8. Netanyahu has two choices. He can get on a plane, or put National Economic Council chairman Eugene Kandel on one, with the order, "Get me a governor or don’t come back." Netanyahu cannot give up. He wants a world-renowned professor with experience in the private-capital-financial-banking market. That's what the economy needs and he insists on it.

The second choice is to establish a search committee and set criteria. Let the committee members rack their brains.

Economic anarchy

9. What about the economy? The sense that Israel has been in a state of anarchy for some time is accurate. The old regime of tycoons, deals, and monopolies, and a public willing to accept it all - is over. There was a social protest and it was good.

The problem is that a new regime has not yet emerged. Sociologists call this "anomy". The changes were too fast. Revolutions tend to create such situations. Values, principles, rules - nothing is clear. What's good? What's bad? Banks, bonds, the stock market - are they bad? Powerful unions, defense cuts, tax hikes are - they they good? Frenkel, Fischer, Leiderman, Karnit - what do we need?

Published by Globes [online], Israel business news - www.globes-online.com - on August 4, 2013

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