Editorial |

Israeli Bank’s Apology Not Enough

It is surprising that a bank which is also a public company that is fed by the public’s money while having the responsibility of watching over these funds operates in the shadows when a senior employee is entangled in accusations.

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Bank Hapoalim's Kenan
Bank Hapoalim's KenanCredit: Moti Milrod

The behavior of Bank Hapoalim these days is worrisome. The former CEO, one of the most powerful figures in the Israeli economy, Zion Kenan – a remnant of the period of the bank’s rule, directly and indirectly, by the Dankner family – was accused by a female employee of a sexual assault that allegedly occurred in 2006 when Kenan served as deputy CEO.

The affair was closed in arbitration between the bank and the complainant, without its being reported to the bank’s board of directors, the Supervisor of Banks in the Bank of Israel, the Israel Securities Authority or the police. The complainant was given a large severance package, also at the recommendation of the arbitrator, former president of the National Labor Court Steve Adler. The matter was revealed first by the “Uvda (Fact)” investigative program on Channel 2 News.

The bank’s chairman, Yair Seroussi, who was appointed after his predecessor Dan Dankner was forced out by the Bank of Israel – and later convicted of criminal acts – failed to report this case to the external bodies that supervise the bank, or even to the bank’s own board, which Seroussi heads. The present CEO of Bank Hapoalim, Ari Pinto, a protégé of Kenan, was the one whom Seroussi asked to “close” the final details of the severance deal with the complainant. In doing so, Seroussi himself made the question of what Pinto knew at the time into an issue.

This affair joins a long list of incidents that leave a bad taste when one examines the actions of the bank in recent years. Only two years ago Dan Dankner went to prison over a corruption case in which he exploited his position to advance his personal business interests – and a year later, when he was released from prison, he began serving a separate sentence for bribery in the Holyland affair.

Yet another scandal involving Bank Hapoalim came to an end only recently when another senior executive, Shimon Gal, who had a romantic relationship with a female subordinate, retired suddenly. In this case, the suspicion was investigated that the woman involved was silenced by other senior bank executives; in the end, police recommended that prosecutors close the case.

It is surprising that a bank which is also a public company traded on the stock exchange, and thus is fed by the public’s money while having the responsibility of watching over these funds, operates in the shadows when a senior employee is entangled in such accusations. The Kenan affair joins the previous cases, which altogether reveal a poor organizational culture at Israel’s largest bank.

That is why an investigation by the authorities, the Bank of Israel and the Israel Securities Authority must be conducted in depth with the goal of uprooting improper norms of behavior. And if this means the firing of senior executives, including the chairman, Seroussi, then there must be no hesitation, and Bank Hapoalim should be allowed to cleanse itself and start on a new path.

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