Shari Arison Complains to State Comptroller About Bank of Israel

Shari Arison, the controlling shareholder of Bank Hapoalim, yesterday complained to the state comptroller about the Bank of Israel.

Top Bank of Israel officials are demanding that she fire Hapoalim chairman Danny Dankner and employ a search committee to find a new chief executive. Arison's complaint to State Comptroller Micha Lindenstrauss concerns the conduct of Bank of Israel governor Stanley Fischer and supervisor of banks Roni Hizkiyahu.

She and Efrat Peled, chief executive of Arison's holding company, Arison Investments, met with Lindenstrauss at midday yesterday.

The Bank of Israel is the regulator in charge of the banks, and as a state body, it is subject to the scrutiny of the state comptroller. It is therefore within the state comptroller's mandate to investigate Arison's complaint, if he chooses. But he may well not, sources in Jerusalem surmised.

Lindenstrauss' bureau said he would issue his decision on whether or not to investigate the complaint in a matter of days.

The conflict between the Bank of Israel and Arison erupted in late March, following the sudden resignation of CEO Zvi Ziv one day before Hapoalim delivered its financial statement for fiscal 2008. The same day that Ziv resigned, Hapoalim announced that Zion Keinan, head of corporate banking, would replace him. No search committee was formed to thoroughly research who would be best for the bank.

Hizkiyahu immediately demanded that Keinan's appointment be suspended until he investigated the matter. As the bank declined to obey, the regulator wrote a biting letter to Hapoalim two weeks ago, criticizing the bank's management methods. He also demanded in that letter that Keinan's appointment be voided.

The board of directors, under Dankner, devoted less than three minutes to discussing the circumstances of Ziv's resignation on the day of the event, and its combined discussion of Ziv's notice and the appointment of Keinan as his successor took no more than an hour. The Bank of Israel took grave exception to this situation.

Last week, Hapoalim finally agreed to set up a search committee, but not one that met the Bank of Israel's demands: While the central bank wanted the committee to consist entirely of external directors, Hapoalim decided to man it with three representatives of Arison and two external directors, with one of the latter chairing it.

The Bank of Israel, for its part, is preparing to oust Dankner in the event that Arison continues to refuse to do so herself. So far, Arison has been protecting the chairman and denies rumors that she is looking at potential replacements.

However, Hapoalim has given the Bank of Israel a list of candidates for vice chairman, including Irit Izakson, currently the chairman of Isracard and a director at Bank Hapoalim. Another candidate is Avraham Bigger, a serial corporate restructurer who is CEO and chairman of agrochemicals giant Makhteshim Agan.