JERUSALEM, April 10 -- A Jerusalem court sentenced four former top bank executives to prison terms Sunday for their roles in a stock manipulation scandal 11 years ago.
Five other bank officials received large fines for their parts in the events that led to the collapse of the Israel's banking system in 1983 and forced a $7 billion government bailout.
Judge Miriam Naor levied fines of $333,000 against each of the banks involved in the scandal after they were convicted in February of manipulating price shares, falsifying forecasts and financial reports and misleading customers for several years.
However, Bank Leumi, Israel Discount Bank, Bank Mizrahi and Bank Hapoalim all had made allowance for the fines in their 1994 budgets, Israel Radio reported.
Although analysts had predicted only fines would be imposed, critics condemned the sentences as being too light.
'This is an injustice,' said lawyer Yoram Sheftel, known for his defense attorney of American John Demjanjuk, 'the punishments are too lenient. Today there are thousands who sit not eight months, but two or three years for minor crimes compared to those of the bankers.'
Naor sentenced Raphael Recanati of the Israel Discount Bank and Mordechai Einhorn of Bank Leumi to 8-month prison terms and fined them each $200,000. Former Discount deputy chairman Eliyahu Cohen was given a 6-month jail term and a fine of $135,000.
Giora Gazit, former managing director of Bank Hapoalim, received a sentence of 3 months community service. Five other bank officials received sentences of community service and fines up to $133,000.
The sentences cast a shadow over the hopes of multi-millionaire Ernst Jaffet, the former director of Bank Leumi who fled Israel but returned voluntarily from the U.S. earlier this year to avoid being deported. Authorities agreed not to arrest Jaffet upon his return and to try him separately on the same charges.
The sentences may help restore some investor confidence in the Tel Aviv stock market where a dozen major brokers were arrested earlier this year on charges of stock manipulation. The market lost over $12 billion in the first three months of 1994.
Judge Naor agreed to postpone the execution of the prison terms by 45 days in order to allow defense lawyers to appeal the sentences.
(Edited by Jonathan Ferziger in Jerusalem)