Another scandal has erupted at Israel Credit Cards-Cal Ltd. (ICC-Cal) (Visa). "Globes" yesterday revealed that MasterCard Worldwide Inc. (NYSE: MA) has fined the company $8 million for problematic clearing of betting activity. Banking sources believe that ICC CEO Boaz Chechik will be asked to step down later this year.
The Bank of Israel is also concerned about the new problem at ICC.
Israel Discount Bank (TASE: DSCT) owns 71.8% of ICC and First International Bank of Israel (TASE: FTIN1;FTIN5) owns 28.2%. Discount Bank CEO Giora Ofer, who also serves as ICC chairman, will reportedly now lead a campaign to remove Chechik, who has served as ICC CEO since 2003.
The leading candidate to replace Chechik is Discount Bank head of retail operations Israel David, who has held this position since 2006, and is considered an associate of Ofer. However, David holds a key position at the bank, and Ofer may prefer keeping him in place.
Other possible candidates for the ICC CEO post include Ace Auto Depot Ltd. (TASE:ACDP) chairman Yuval Gavish, a former CEO at Leumi Mortgage Bank; and former head of the retail division at Bank Hapoalim (TASE: POLI) Uri Paz.
In the aftermath of previous clearing problems at ICC, which "Globes" revealed in October 2009, Visa Inc. (NYSE: V) unit Visa Europe levied a €9 million fine on the company. ICC had been clearing online transactions for nutritional supplements and unauthorized drugs, including Viagra. MasterCard began its own investigation into ICC in the wake of Visa's findings. Visa accounts for about 60% of ICC's clearing transactions, and MasterCard for about 40%.
MasterCard Europe president Javier Perez will come to Israel in two weeks for meeting with all the parties involved.
Meanwhile, Discount Bank is conducting its own in-depth in-house investigation into ICC, which has led to the resignation of ICC CFO Sigal Fattal.
Published by Globes [online], Israel business news - www.globes-online.com - on February 7, 2010
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