BoI slams Hapoalim on sexual harassment affair

Zion Kenan  photo: Tamar Matzapi

A report criticizes the bank's handling of a sexual harassment complaint by a former employee against then-CEO Zion Kenan.

The Bank of Israel has published its audit report on Bank Hapoalim's (TASE: POLI) handling of a complaint of sexual harassment against former CEO Zion Kenan. "Our impression is that the bank acted correctly in preventing sexual assault. Our examination revealed, however, that the procedure carried out by the bank was not transparent, lacked sufficient challenging of the witnesses, supervision, and inspection, and was not carried out in accordance with the provisions of the banking supervision regulations and proper corporate governance," the report states, and adds that Bank Hapoalim audit committee chairperson Dafna Schwartz cannot continue serving in her position. The report calls for bringing order into the bank's use of external lawyers.

In its response, Bank Hapoalim said, "The bank plans on studying the report in depth and acting in accordance with the recommendations. The report clearly finds that where the Prevention of Sexual Harassment Law is concerned, the bank acted properly, and that the Bank of Israel found nothing improper in the confidentiality clauses and the amount paid to the employee (who alleged sexual harassment) in question."

Former Bank Hapoalim chairperson Yair Seroussi said in response, "The allegation of harassment was handled with strictness and sensitivity with the help of external legal consultants. I also consulted with the audit committee chairperson. Out of real concern that particulars of the examination would be leaked, I acted according to legal advice that the matter should not be reported to the board of directors as long as the facts had not been clarified, in order to avoid breaching the privacy of the complainant and the CEO.

"I want to emphasize that I joined Bank Hapoalim three years after the event in question in Kazakhstan, and that I had no personal interest involving the CEO, who had previously announced that he was leaving his position. I acted in good faith in the matter for the good of the bank.

"As part of the Bank Hapoalim's examination of the affair, Judge (ret.) Steven Adler, who was recommended by the legal advisors, and who is regarded as a leading authority in labor relations, was appointed. In addition, the bank's regular legal advisor signed the agreement with the complainant, and issued an opinion that the agreement was legal, and that the bank had the authority to contract it. An opinion submitted to the Bank of Israel by Prof. Uriel Procaccia, a leading Israeli expert in corporate law stated that I acted properly in preferring the maintenance of obligatory discretion under the Prevention of Sexual Harassment Law to a discussion in a broad corporate forum, because it involved the specific Prevention of Sexual Harassment Law, which takes precedence over general corporate law. Prof. Procaccia also stated that I acted correctly by appointing an external examiner and accepting his recommendations, and also at the stage of examining the facts, after the external examiner ruled that no harassment had taken place. As for not reporting to the Bank of Israel, I immediately apologized publicly when the affair was reported, given the good relationship that had been formed over years with Bank of Israel, although there was no possibility of the matter materially affecting the bank's stability. I also served for four years as president of the Association of Banks in Israel.

"I twice initiated a review of the rules on sexual harassment at the bank in recent years, and took action to find ways to make it easier for complainants. Had I remained in my position, I would have put sexual harassment complaints against senior executives in the hands of an external party, who would be selected in a prearranged procedure. I resigned immediately as soon as I realized that the matter had been taken out of context, and had become a tool for censuring and damaging me, which could have caused additional damage to the bank. During my seven-and-a-half-year term at the bank, I achieved record results in cooperation with all parties at the bank. I made many improvements in corporate governance and took hundreds of decisions, most of which were successful and contributed to the bank's prosperity. I always acted in cooperation with the board of directors, management, and the workers, while being attentive and accessible to every single worker."

Published by Globes [online], Israel Business News - - on December 26, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Zion Kenan  photo: Tamar Matzapi
Zion Kenan photo: Tamar Matzapi
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