Bank Leumi le-Israel CEO Galia Maor resigned three weeks ago as chairman of the board of directors of the bank's subsidiary, Bank Leumi France. Her resignation came a few days after the French supervisor of banks submitted to the state prosecutor findings suggesting that Bank Leumi France allegedly violated French anti-money laundering laws.
Bank Leumi le-Israel's draft prospectus published earlier this week ahead of its planned share issue notes that Maor resigned the position on May 2, 2002, but does not mention the circumstances of her resignation.
At the end of 2000, Bank Leumi France received from the French supervisor of banks the findings of an audit conducted in 1999. The report included comments on procedures for preventing money laundering. In response to the report, the bank said it had tightened internal auditing.
In March 2001, the supervisor informed the bank that it may have violated certain clauses of the money laundering law, and in October the supervisor held a hearing for the bank concerning the "know your customer" clause - a procedure that obligates banks to check the backgrounds of customers opening accounts - and money laundering prevention. The bank was cautioned and fined half a million francs.
In April 2002, the French supervisor of banks announced it had handed over to the state prosecutor material against a number of banks in France, including Bank Leumi France. Bank Leumi's prospectus notes that it should be assumed that Bank Leumi France is one of the banks being investigated by the French state prosecutor.
The French police investigation concerns a money-laundering network allegedly operating between Israel and France since 1996. As part of this probe, Bank Leumi France was questioned under warning in connection to its operations as a correspondent bank transferring checks deposited in Bank Leumi in Israel and drawn in French banks.
A Bank Leumi spokesman said yesterday there is no connection between the events concerning Bank Leumi France and Maor's resignation. He said that Maor had served as chairman of the board of directors of Bank Leumi France for seven years and that following a reorganization of her schedule, it had been decided to replace her in the position with Leumi's chairman of the board, Eitan Raff.
Maor also serves as chairman of the board of directors of Bank Leumi le-Israel Switzerland. In January 2001, the bank had to make provisions of 163 million Swiss Francs following an embezzlement affair involving a senior employee of the bank's private banking department. In September 2001, Switzerland's Federal Banking Commission ordered Leumi to replace the head of its Swiss banking subsidiary after it failed to exercise due diligence in opening a bank account for Vladimiro Montesinos, the former Peruvian spy chief.
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