The suspicions regarding the illegal profits raked in by senior managers at Psagot Investment House Ltd. by using its nostro portfolio are a blow to the good name of Israel's largest investment house, and in particular its respected CEO Roy Vermus.
Psagot itself is an investment house that has been exemplary in corporate governance and undertaking activities like underwriting which are fraught with the dangers of conflicts of interest. Now Psagot's clean image has been damaged and the company has taken a bruising blow to its character.
Moreover, the image of Vermus himself has been tarnished. A reputation built up over years of dedication and hard work has been seriously harmed over the past 24 hours.
In contrast to so many of the major players in Israel's capital market whose character and behavior can be problematic, Vermus is different. He is honest, old-fashioned, pedantic and does not cut corners. And this happened under his leadership of all people. Those who spoke to Vermus today report that he was talking like a man who had suffered a stinging blow and was feeling extremely disturbed. He is a man who takes everything to heart he cares about everything and is easily hurt.
However, now Vermus faces the true test of his leadership at Psagot. The investment house has 1.3 million customers who will be closing scrutinizing what happens next. They will expect to see Vermus taking responsibility and learning lessons from what has happened. He will be expected to thoroughly investigate if there were others involved in the scam and other breakdowns in accountability, while those guilty must be removed from their posts.
Vermus will be expected to improve checking procedures while investing all the necessary resources in internal auditing and regulation. There must be no whitewashing or blurring of the truth, if Vermus wants to prove that Psagot truly is a different kind of investment house.
Published by Globes [online], Israel business news - www.globes-online.com - on February 2, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010