Bank Leumi (TASE: LUMI) wants to set up a committee to consider whether to sue the officeholders, headed by former chairman Eitan Raff and former CEO Galia Maor, involved in the tax evasion affair in the US. The bank today applied to Judge Chaled Kabub for permission to establish an independent committee to consider the matter.
Bank Leumi has already chosen the members of the committee, which will be headed by former Tel Aviv District Court President Judge (ret.) Uri Goren. Other members include Prof. Sharon Hannes, who specializes in corporate governance, and who has already been hired by the board of directors to examine its conduct during the investigation; Judge (ret.) Orit Efal Gabai; and two Bank Leumi directors appointed after the investigation was concluded, and who therefore ostensibly have no conflict of interest: Prof. Yedidia Stern and Haim Samet.
Bank Leumi said the committee's role will be to examine and recommend to the board of directors the right course of action for the bank in this affair: first of all, whether to file, and in whose name, lawsuits against former or present officeholders in the Leumi Group for damage to the bank; secondly, to consider whether to seek compromise settlements in derivative claims already filed, and finally, whether to file, and in whose name, a lawsuit for the return of the bonuses granted on the basis of profits during past years from the US customers.
"The independent claims committee will summarize its conclusions in a report within four months from the date it is formed. The board of directors will consider its recommendations soon after their submission for the purpose of adopting them," Bank Leumi stated.
In the affair, Bank Leumi admitted to the US authorities that it had abetted tax evasion by its US customers. The bank had to pay the US authorities a huge NIS 1.5 billion fine. Publication of the particulars of the settlement included details of the ways that Bank Leumi had helped its US customers, showing that the bank had given active assistance to tax evasion, and had not merely looked the other way. Bank Leumi sent its employees from Israel to conduct secret meetings with the US customers in parks and hotels, and enabled them to cover up their identity through coded accounts.
Publication of the details led to a major public scandal, particularly concerning the personal responsibility for these grave actions. At the same time, two derivative lawsuits have been filed against the relevant officeholders. Given these claims and the public scandal, the bank decided to establish a neutral committee to consider whether it should sue its former officeholders.
Published by Globes [online], Israel business news - www.globes-online.com - on February 19, 2015
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