Blue Square Israel (NYSE: BSI; TASE: BSI), has filed suit for NIS 10 million in the Petah Tikva District Court against Yehuda Porat, who was CEO of the company's haredi (ultra-orthodox) branded chain Shefa Shuk, and transferred to Blue Square's rival Super-Sol Ltd. (TASE:SAE;Pink Sheets:SSLTF.PK).
"Blue Square discovered that it had a senior manager who used the chain as if were his own, and mixed his private business with that of the chain, as if it was his own private estate," Blue Square said in its statement of claim.
The suit comes against the backdrop of the fierce competition between the two largest retail chains in Israel over the haredi sector. Porat was a member of the Blue Square management and CEO of Shefa Shuk until 2007, when he informed the chain that he wanted to leave to pursue business in real estate. Porat stepped down in April 2007, but instead he joined Blue Square's competitor Super-Sol, where he founded the chain's own branded chain of stores for the haredi sector - "Super-Sol Yesh."
Blue Square, through its lawyers, Adv. Boaz Benzur, Hagay Halevy, and Moshe Mazor, has made a series of grave allegations against Porat. The chain said that, as a gesture of goodwill and based on his intentions as he disclosed them to management, it had awarded him a retirement bonus of NIS 1.5 million. But it was later shocked to discover that Porat had "told an outright lie and breached his fiduciary duties, his obligations for non- competition and disclosed confidential information to its competitor, Super-Sol."
Blue Square is demanding that Porat and the company he owns return the retirement bonus. It is also seeking NIS 6 million in compensation for the damage he caused it by disclosing confidential commercial information about the business of Blue Square and Shefa Shuk to Super-Sol. In addition, it is also seeking the repayment in full of the money Porat received on all the deals his own company concluded with Blue Square's manufacturers, suppliers, marketers, or any other entities. It estimates this amount at NIS 2.7 million.
Additionally, Blue Square has also asked that Porat be ordered to return the discount vouchers for needy people which he unlawfully kept for himself. Porat, who is currently abroad, was unavailable for comment. No statement of defense has as yet been filed.
Published by Globes [online], Israel business news - www.globes-online.com - on August 13, 2008
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