The Jewish Colonial Trust (JCT), which owns approximately 5% of Bank Leumi shares, reported a difference of opinon between its acting board of directors and JCT's controlling shareholder, the World Zionist Organization (WZO).
In recent meetings between WZO and JCT representatives, the JCT was asked to consign the founder' shares it holds in Bank Leumi to the WZO, so that they may be sold to a private entity at a profit, benefiting the WZO.
This request, the JCT announced to the TASE today, was unacceptable to its board, as it "negates the company's basic guiding principles, goals and Israeli law." The JCT said it made several offers to settle relations between the two organizations, but no agreement was reached.
According to the JCT, it was recently informed of plans to raise the matter at the World Zionist Congress, which opens tomorrow in Jerusalem. The JCT's official representative therefore notified Jewish Agency chairman Sallai Meridor, and others, that if any suggestion were raised at the Congress on this matter that might harm the JCT board's mandate or decision-making ability, the JCT would be forced to take action.
The majority shareholder in the JCT is YKT Trust, which owns a 40% share and 20% of voting rights. Most YKT Trust shareholders are assumed to have perished in the Holocaust. YKT Trust and, through it, the JCT, are managed by a 20-person board of trustees, in coordination with the General Ombudsman.
Board members include many prominent Zionist leaders including Hanan Ben-Yehuda, Mattityahu Drobless, Masha Lubelsky, and Dov Shilansky. The board members jointly hold 100 founders' shares in JCT, granting them majority rule in general shareholders meetings.
Jewish Colonial Trust - Background information
The JCT was founded at the Second Zionist Congress and incorporated in London in 1899. The JCT was intended to be the financial instrument of the World Zionist Organization, and was to obtain capital and credit to help attain a charter for Palestine. It quickly became clear that the amount of capital raised by the JCT was far from sufficient to attain this goal; the sum raised was only £395,000 of the £8 million target.
The JCT's main activities in Palestine were carried out by the Anglo-Palestine Bank, formed as a subsidiary in 1902. Its seed capital was only £40,000. The bank opened its first branch in Jaffa in 1903 under the management of Zalman David Levontin, and quickly made a name for itself as a reliable and trustworthy institution, which did not consider business transactions and profitability its only goals. In its early years, the bank conducted transactions in support of the Zionist enterprise: land purchase, imports, obtaining of concessions and so on. Branches were opened in Jerusalem, Beirut (then the region's main commercial center), Hebron, Safed, Haifa, Tiberias and Gaza.
The Anglo-Palestine Bank established a network of credit unions in the pre-State settlements and gave farmers long-term loans. It also helped with the construction of the first 60 houses in Tel Aviv. During World War I, when the Zionist enterprise faced severe difficulties, the bank managed to keep its funds intact, transferring them to safe locations. The Turkish government, considering the bank an enemy institution because it was registered in Britain, ordered its branches shut and its cash confiscated. The liquidation of the bank's branches proceeded very slowly and business continued surreptitiously. After the war, the operations of the bank expanded, and other banks were founded in Palestine. In 1932, the main office of the Anglo-Palestine Bank was moved from Jaffa to Jerusalem.
In 1934, the JCT terminated its banking activity and became a holding company for Anglo-Palestine Bank shares only.
During World War II, the Anglo-Palestine Bank was able to use the large reserves it had built up to finance the developing industries that supplied provisions to the British army. When the State of Israel was established, the bank was given the concession to issue new banknotes and became the government's banker and financial agent. In 1950, the bank's registration was transferred from Britain to Israel, and it was renamed Bank Leumi Le-Israel (National Bank of Israel). When the Bank of Israel was founded as Israel's central bank (1954), Bank Leumi became a commercial bank.
In 1955, the Jewish Colonial Trust became an Israeli company, and in the late 1980s it was sold to private investors.
Source: The Israel Ministry of Foreign Affairs.
Published by Globes [online] - www.globes.co.il - on 16 June 2002