Sunday, April 20 1986, was perhaps the worst day in the life of Raphael Recanati, chairman of the IDF group, who died this Saturday night, aged 75. On that day, the Beijski commission for the investigation of the bank share collapse published its conclusions. One of its findings was the Raphael Recanati must resign from the posts he held at that time, as chairman and general manager of Discount Bank.
For many a long month, Recanati, one of the most seasoned veterans of the Israeli banking scene, was unable to reconcile himself to the commission’s conclusions. True, the heads of Bank Leumi, Bank Hapoalim and United Mizrahi Bank were also forced to resign; but Discount’s case, Recanati maintained, was different. Discount was a private bank, founded by paterfamilias Leon in 1935; and a man could not be banned from running his private business. The government found it could not easily force Recanati to resign.
However, after a five-month struggle, Recanati threw in the towel. His good friend, the then Prime Minister Shimon Peres, had a private chat with him and persuaded him to resign.
Raphael Recanati, sixty-two years old at the time, was drawing a salary of $700,000 a year from his family management company. Nobody forced him to carry on. He could have slipped into quiet, honourable retirement. Alternatively, he could have dedicated himself to the management of his businesses in Europe and the United States, despite being forced, at the same time to resign as head of Discount Bank New York. But that was not his style. A man who never knew a day’s idleness in his life, Recanati continued working and contributing to the Israeli economy. He stilled handled the IDB Holdings group, and went on developing its business in the fields of industry, high-tech, real estate, shipping and services.
After a number of years, he appeared to have put banking aside, and IDB’s business surpassed that of the bank in volume. The group entered energetically into all spheres of modern economic endeavour. In the past decade, Recanati brought multi-national companies to Israel, while also fostering Israeli and foreign investors. The Clal group and its members, Discount-Investments, Properties & Building, Super-Sol and Cellcom, are just a partial list of the family’s long-standing and new investments. The last decade of Recanati's business activity was one of the most glorious in his life, aptly crowning a career that spanned decades. Born in 1924 in Salonika, Raphael was brought to this country as a child, by his family, at age 11. In the War of Independence he helped organise the illegal immigration of Egyptian Jewry to Israel. He went on to found a shipping company that carried foods and arms to Israel. In 1953, he founded the El-Yam shipping line, and thereafter focused increasingly on foreign business. In the sixties he established Discount Bank New York, which he headed for many years. He was also active in the group’s investment arm.
The four Recanati brothers maintained a clear division of labour between them: Daniel managed the bank in Israel, Raphael concentrated on overseas business, Yaakov (Jacques) managed El-Yam until his demise two years ago (when he was succeeded by Raphael’s son Ehud). The fourth brother, Harry, for years a head of the group, withdrew after a stormy dispute with his brothers, and has since kept his distance from them.
Raphael Recanati never forgot an ostensibly secondary occupation of the bank, the companies and the family, namely making donations to and assisting a great many of Israel's cultural and artistic enterprises. The Recanati family, headed by Raphael, was one of Israel's most generous, if not the biggest, contributor. It donated to the establishment of the Tel-Aviv University’s School of Business Administration, the Haifa Science Museum, the School of Nursing at the Ben Gurion University of the Negev, the Tel-Aviv Museum, hospitals, dance troupes, artistes, painters and sculptors.
For all his successful investments, Raphael Recanati never forgot the family bank. The controlling shares in Discount Bank, as in other large banks, passed to the government, as part of the bank shares arrangement. For years, Recanati fought for the right, ultimately denied him, to buy back the family bank. In the end, he had perforce to rest content with the purchase of 13% of the shares, making his family the largest single shareholder.
Nor was he allowed to forget his Discount Bank chairmanship and ownership. At the beginning of the nineties, the State of Israel brought a criminal action against the heads of the major banks, including Recanati, in relation to offences involved in the share pegging. Jerusalem District Court judge Miriam Naor convicted him of obtaining under false pretences, fraud, deceiving a customer, falsifying the bank‘s books and jeopardising the bank’s stability. Recanati, then 70 years of age, was sentence to an eight-month prison term, a suspended sentence and a NIS 600,000 fine. He lodged an appeal with the High Court of Justice, which quashed the conviction on bank stability, and handed down a more lenient, suspended sentence in lieu of the gaol term.
Three years ago, Raphael Recanati fell ill. He came to the clear-eyed realisation that he must hand down the management of his businesses in an orderly fashion during his lifetime, to other family members. His son Ehud (Udi) was made head of the Discount Investments group, while his second son, Michael, runs the family business in New York. His nephew Leon was appointed chairman of Clal. A new chairman must now be appointed for IDB Holdings.
To the end of his days, Raphael Recanati never forgot the Beijski commission’s findings or his removal from the head of Discount Bank. He never missed an opportunity to reiterate that, throughout the entire share pegging affair, the standing of Discount Bank was never at risk even for one day. His sons and heirs may now try to regain control of the bank, a tender for whose controlling shares will be issued shortly.
Published by Israel's Business Arena May 30, 1999