Bank Hapoalim (LSE: BKHD; TASE: POLI) today notified the Tel Aviv Stock Exchange (TASE) about the circumstances behind yesterday’s resignation of outside director Prof. Amir Barnea. Israel Securities Authority chairman Moshe Tery demanded explanations from the bank. The bank released the information following internal discussions and consulting with its legal counsel. The convoluted formulation of the notice is apparently intended in part to protect the bank from a class action lawsuit over the resignation.
Bank Hapoalim claims that it had no constraint against firing Barnea as a director, because “Barnea was not a protected outside director under the Companies Law, but a different kind of outside director in accordance with proper banking procedures.”
Bank Hapoalim added that Barnea was appointed director as part of the quota of directors of a foreign shareholder, who had subsequently sold his shares.
Sources at the Israel Securities Authority told “Globes” that it supports Bank Hapoalim’s interpretation. “Barnea was in effect an ordinary director who could be fired by a majority at a shareholders’ meeting. Since Arison Holdings Ltd. has a majority in the shareholders’ meeting, Shari Arison can bring about his resignation anyway, should she want to do so.”
The Bank of Israel is studying Bank Hapoalim’s statement.
For the first time, Bank Hapoalim confirmed that Barnea resigned under pressure from controlling shareholder Shari Arison, after her attorney, Adv. Pinchas Rubin spoke with Barnea. The bank said in its statement, “A month ago, Adv. Rubin initiated a discussion with Prof. Barnea, during which they spoke about the possibility that he would terminate his term at this time. He was told, in effect, during this conversation, and following prior talks, that the controlling shareholder in the bank would be interested in his favorably weighing the possibility of his leaving the bank.”
Bank Hapoalim did not explain how or why Rubin, who has no official standing at the bank, became involved in the matter.
The bank’s statement goes on to imply that chairman Dan Dankner played a major role. The bank said, “Prof. Barnea had a meeting with chairman Dan Dankner, during which Dankner said, in response to a question by Barnea, that following the replacement of the previous chairman (Shlomo Nehama - E.P.), he thought it better if Barnea would resign from the board of directors of the bank.”
Nehama appointed Barnea as director a year ago in an effort to rehabilitate the board’s image in the wake the scandal over executive bonuses. Arison ousted Nehama in March this year.
Bank Hapoalim says that Barnea had wanted to leave the board for a long time. The bank stressed that he resigned at his own initiative. “As part of his response to the replacement of the chairman of the bank, Prof. Barnea had been saying for several months that he might end his term as a director of the bank. At his own initiative, he shared these thoughts with Rubin and Dankner,” the bank said.
Next Monday, Bank Hapoalim’s board will approve the appointment of three new outside directors: Prof. Oded Sarig, the dean of the Arison School of Business at the Interdisciplinary Center Herzliya, who specializes in risk management; Leslie Litner, an expert in derivatives who worked at Citigroup for many years; and Mali Baron, a former VP at Mercantile Discount Bank and budget department official at the Ministry of Finance. Each director will be appointed for a three-year term. The bank will also have to appoint an outside director to replace Barnea, whose resignation will come into effect the day after the board meeting.
Published by Globes [online], Israel business news - www.globes.co.il - on September 3, 2007
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