Amid Sexual Harassment Reports, Israel's Largest Banks in Talks for New Chair

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Bank Hapoalim's former chairman Yair Seroussi, left, and ex-CEO Zion Kenan.Credit: Sivan Peres

Oded Eran is widely expected to become chairman of Bank Hapoalim after the lender confirmed reports Tuesday it was in talks for its current chairman, Yair Seroussi, to step down before his term is due to end in September 2017.

In a short statement to the Tel Aviv Stock Exchange, Hapoalim, Israel’s largest bank, gave no further details. But the report comes weeks after the bank was reprimanded for failing to report a sexual-harassment complaint filed by an employee against a senior executive.

Seroussi was responsible for negotiating the agreement with the employee, who accused former CEO Zion Kenan of harassing her some 10 years ago. Kenan stepped down in August in a move not connected with the affair.

The allegation was examined this year by an arbitrator who ruled there was insufficient evidence to support a claim of sexual harassment or abuse against the executive but supported making a 6 million shekel ($1.6 million) payment to her. The employee has since left the bank.

Banks are required to disclose matters such as sexual harassment and other allegations of misconduct at a senior level to the regulator as they could disrupt the running of the bank.

Seroussi, who has been chairman for seven and a half years, has not officially announced he will be leaving but he is expected to meet with Bank of Israel Banks Supervisor Hedva Ber soon to discuss the harassment affair and other issues. Hapoali may be forced to pay him an enlarged severance package to win his agreement to quit.

Shares of Hapoalim finished down 0.8% at 23.14 shekels in TASE trading on Tuesday.

Not only were banking regulators not informed about the case or the payments, but neither was Shari Arison, Hapoalim’s controlling shareholder. When she did learn, she declined to support Seroussi. She initiated the search for his successor several weeks ago and approached Eran about the post.

Eran, 61, joined Hapoalim’s board in February and it is believed to be interested in the chairman’s job, although under the new pay-cap rules for financial executives his compensation can’t exceed 2.5 million shekels a year. Eran was a partner in the Goldfarb Seligman & Co. law firm for 23 years before retiring from active management six years ago. He retains an office at the Tel Aviv firm and acts as an adviser,

Eran has known Arison for many years, since he advised her about buying out her partners in the bank at a cost of 3 billion shekels. By hiring him as chairman, Arison would be signaling to the Bank of Israel that she is determined to solve Hapoalim’s corporate governance problems.

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