Visa Cal CEO resigns from Israel Credit Cards-Cal Ltd

By Eti Aflalo

Only a week before the company was scheduled to release its 2009 financial report, Boaz Chechik, the CEO of Israel Credit Cards – Cal, better known as Visa Cal, resigned yesterday. Chechik has been CEO since September 2003.

His resignation was not a surprise, as Visa Cal has been involved in a number of problematic affairs over the past few months, including receiving a $10 million fine from Mastercard – which ICC Cal is appealing – and demands from the Bank of Israel for changes in the firm’s procedures. Visa international also fined ICC Cal 9 million euros last November, for problems with its clearing transactions for health and nutritional supplements, among other products. In January, ICC Cal announced it would stop clearing transactions for pornographic sites.

Mastercard’s complaints were related to ICC Cal’s alleged clearing services for Internet gambling sites, which it is accused of hiding by using false transaction code numbers.

In addition, Israel Discount Bank (All so known as IDB Bank in New York), which owns 72% of Visa Cal, is conducting a thorough audit of the company’s books. The First International Bank holds the remaining 28% of ICC-Cal. The audit is expected to be finished in the next few weeks, and TheMarker has learned that auditors have found suspicions of accounting irregularities, such as dating certain expenses to different financial years. For example, there are suspicions that some of the company’s advertising expenses were recorded improperly. Visa Cal’s advertising agency is Geller-Nessis.

One suspected accounting irregularity is that Visa Cal – in a year when it had high profits – would book next year’s advertising costs on the present year. This may have slightly lowered this year’s profits, but would have left the company better off on the bottom line the next, and allowed it to show improved profitability or growth.

However, this would still not have a major effect on Visa Cal’s financial results, said sources close to Discount, and no suspicions of serious ethical problems were found related to those involved. For example, the audit has not found any cases of inflating profits to receive higher bonuses for employees. But at Discount they have not ruled out that other heads will roll once all the improprieties are uncovered.

Chechik will continue in his post until a replacement is named and they have time to transfer responsibilities. But rumors have been flying for weeks, and a number of names, from within Discount and outside, have been mentioned. The chairman of ICC Cal is Giora Offer, the CEO Discount.

Chechik told theMarker yesterday that it may have been a mistake, but there was a decision made to enter high-risk sectors, which were very profitable. He emphasized that such businesses are legitimate.

Offer and Chechik returned last week from a visit to Visa’s European headquarters. It seems that despite the criticism, Visa International does not intend to carry out its threat to cancel ICC Cal’s right to issue Visa cards.

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