Court tending to side with Shlomo Eliahu in Leumi spat

Shlomo Eliahu, owner of a 10% stake in Bank Leumi, may have the court on his side in his battle to name former central banker David Klein to the bank's board of directors.

Empowered by the Companies Law and his stake in the bank, Eliahu summoned a general assembly of shareholders for March 11. On the agenda: Klein's candidacy to join the board. Ultimately Eliahu wants Klein to become chairman of Bank Leumi.

However, the Israel Securities Authority counseled the Leumi board of directors to postpone the general assembly for technical reasons.

Last week Eliahu motioned the court to order Bank Leumi to convene its general assembly of shareholders on March 11, at which time Klein's candidacy to join the board would be voted upon.

Yesterday in court the representative of the Israel Lands Administration, attorney Liav Weinbaum, repeated the organization's opposition to the assembly being held on March 11.

Weinbaum, who also represents the Bank of Israel in the process, added that the central bank isn't comfortable with the way events have unfolded either. Because Bank Leumi is one of Israel's biggest banks, he said, control battles that could be allowed to develop elsewhere were unthinkable there.

Judge Hila Gerstl suggested a number of compromises. One was that the assembly indeed convene on March 11, and the shareholders vote on Klein's candidacy to join the board of directors - and also on the candidacy of any eligible person who had applied by February 18. Eliahu had done nothing wrong that might have warranted the cancellation of the assembly, Gerstl wrote: He had acted in compliance with the law.

Eliahu said he accepted the compromise, but the Israel Securities Authority did not. The vote on Klein would likely result in his acceptance, the watchdog explained, reducing the number of available seats for persons who might not have realized in time that they had the right to run too.

The case continues today.

Galia Maor, CEO of Bank Leumi, had also hoped to join the board and run for the chairmanship of the bank. But she withdrew her candidacy after firm opposition from state officials, including the attorney general, on the grounds that she needs to undergo a two-year cooling off period first. She will remain as CEO.