Published On: Sat, Aug 10th, 2013

Third Candidate to Head Israel’s Central Bank Comes With His Own Mini-Soap Opera


2059820172 Mario Blejer Getty Prof. Mario Blejer / Getty

/ By Joseph Gelman,  Washington DC /

When Prof. Stanley Fischer, the internationally respected economist who successfully navigated Israel through the global financial meltdown, announced in early 2013 that he was stepping down from his post as the Governor of the Central Bank of Israel, everyone knew that it would be difficult to find a comparable replacement. They just didn’t realize how difficult.

Fischer arrived in Israel in 2005 with a squeaky-clean reputation and an impeccable resume as a former MIT Economics Professor and Deputy Managing Director of the International Monetary Fund. He is departing his Israeli post after eight years with an even greater reputation.
This towering new standard for a Governor of Israel’s Central Bank may have greatly helped the country’s economy over the past eight years of global economic turbulence, but it has decidedly not helped Prime Minister Benjamin Netanyahu and Israel’s new Finance Minister, Yair Lapid, in their troubled search for a suitable replacement of similar stature.

Their first choice was Dr. Jacob Frenkel, the former Vice Chairman of AIG, former Chairman of Merrill Lynch International, and current Chairman of JPMorgan Chase International. Frenkel had already served as Israel’s Central Banker between 1991 and 2000, and seemed like the perfect choice until news of his arrest in a 2006 shoplifting incident at the international airport in Hong Kong. There was no conviction, charges were dismissed, and Dr. Frenkel explained the entire incident as a giant misunderstanding.

Unfortunately, the damage to his reputation had been done and his candidacy collapsed when the incident was publicly exposed. Choice number two was Tel Aviv University Professor Leo Leiderman, who also serves as a Chief Economist for Israel’s Bank Hapolalim. Shortly after his nomination, the leaks about his personal life began. Allegations of sexual harassment, tax improprieties, and an unhealthy obsession with astrology, which apparently involve daily consultations, emerged. When Professor Leiderman realized that he would have to address these allegations before a vetting committee, he promptly withdrew his nomination.

The disastrous appointment of Professor Leiderman then prompted the resignation of Karnit Flug, the Deputy and Acting Governor of the Bank of Israel, who was Stanley Fischer’s first choice for his replacement. Flug felt that her passing-over was an insult to her years of service and record of competency, while others accused the Prime Minister of flat-out sexism.

Dominique Strauss-Kahn - getty

Piroska Nagy                                                                                                           Dominique Strauss-Kahn / Getty

The process had turned into a train wreck

Enter candidate number three: Former Governor of the Central Bank of Argentina and advisor to the Bank of England, Prof. Mario Blejer. One might assume that following two scandalous nominations, that anything surrounding candidate number three will fall somewhere between Mother Teresa and George Washington on the scandal-free scale. Unfortunately, that is not the case.

As it turns out, Prof. Mario Blejer was married to former IMF employee Piroska Nagy, while she was having a steamy affair with the notorious former IMF Chief Dominique Strauss-Kahn. Strauss-Kahn is mostly famous for being arrested on a plane at New York’s JFK airport, after allegedly having forced a New York City hotel maid into giving him oral sex; a case that was later thrown out. Piroska Nagy had also complained to the IMF that her relationship with Strauss-Kahn was not entirely consensual, and that she was “damned if she did and damned if she didn’t”.

Prof. Mario Blejer was said to be “furious” when he found “explicit emails” that his wife had exchanged with Strauss-Kahn. He publicly accused the IMF Chief of having “a reputation on this highly charged issue of sexual harassment…”.

Strauss-Kahn was a likely candidate for the presidency of France before revelations surrounding his sex-life became global news, thanks in part to Dr. Mario Blejer who, along with his wife, outed the IMF Chief as a serial sexual harasser.

None of this, of course, is a disqualifier for candidate number three, Dr. Mario Beljer, from becoming the next Governor of Israel’s Central Bank. But it is one more small contribution to a process that has evolved into a complete soap opera. Or as Israel’s Finance Minister joked on his facebook page recently; economics professors are “a very colorful and wild bunch”.

Stay tuned as the vetting process continues.

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