High Court rejects Bank Yahav petition on salary deductions
By Nurit Roth
The High Court of Justice yesterday rejected the petition from Bank Yahav against the minister of finance and Bank Discount. Bank Yahav, "the bank of state employees," sought permission to continue dipping into state workers' wages at the source, withholding funds from their salaries for loan repayments and for savings plans.
For years, Bank Yahav has provided a wide range of services to public employees on the basis of state contracts that were renewed periodically - without a tender. In 1997 the accountant general informed the bank that it intended to issue a tender for banking services provided to public employees, but that idea never got off the ground.
Advertisement
A state comptroller's report published in May 2005 was highly critical of the long-standing, tender-free relationship between the state and Bank Yahav. This led to the publication by the accountant general, in September 2006, of the tender that was originally discussed a decade earlier.
Among other provisions, the tender included an arrangement concerning the winning bank's right to withhold money from state employees' salaries and expressly stated: "No other withholding shall be performed for the bank and no withholding whatsoever shall be performed for a third party without the express permission, in advance and in writing, of the accountant general."
In April 2007, bids were submitted and Bank Discount won the tender. Yahav petitioned the High Court of Justice, arguing against the suspension of the withholding arrangement with regard to savings plans opened at the bank by state employees, among other issues.
The court rejected the petition, and in November 2007 the accountant general issued criteria regarding the entities authorized to deduct sums owed to them from the salaries of state employees.
In the current petition, the bank argued that the provision according to which the body that won the tender to provide services or goods to state employees is permitted to deduct loan repayments and savings deposits discriminates against it in favor of Bank Discount.
In rejecting the petition, Justice Yoram Danziger, who was joined by justices Eliezer Rivlin and Elyakim Rubinstein, wrote, "It is my belief that there is a difference between Bank Yahav and Bank Discount that stems from the fact that Bank Discount was awarded the tender and from the obligations that it took upon itself as a result of that, including the promise to provide the range of banking services defined in the framework of the tender and the contract with the state and in accordance with the terms and conditions stated therein.
"This difference justifies the right that was given to Bank Discount to deduct sums from the salaries of state employees, which, as Bank Yahav itself has argued, is of significant financial value."
Danziger said that Yahav should have taken account of the value of the right to make salary deductions and expressed that value in its bid for the tender, "and for not doing so, it has no one to blame but itself."
However, Danziger did rule that in light of the treasury's agreement, Yahav will be permitted to deduct monies from state employees' salaries for savings plans and loans established before the end of March 2008 and which are for a specific length of time and carry no commission fees.
Bank Yahav issued the following response: Bank Yahav honors the verdict of the court and emphasizes that despite this decision the customers of the bank will continue to receive services as is customary in the banking systems.
Nevertheless the bank believes the decision not to permit state employees to issue a payment order except to one specific bank, without the right being part of the tender, represents improper discrimination and violates the principle of equality and competition in the banking system."
Haaretz.com, the online edition of Haaretz Newspaper in Israel, offers real-time breaking news, opinions and analysis from Israel and the Middle East. Haaretz.com provides extensive and in-depth coverage of Israel, the Jewish World and the Middle East, including defense, diplomacy, the Arab-Israeli conflict, the peace process, Israeli politics, Jerusalem affairs, international relations, Iran, Iraq, Syria, Lebanon, the Palestinian Authority, the West Bank and the Gaza Strip, the Israeli business world and Jewish life in Israel and the Diaspora.
