New information obtained by "Globes" indicates that Bezeq Israeli Telecommunication Co. Ltd.'s (TASE: BEZQ) board of directors decided several months ago to regularly exclude the company's legal advisor and CFO from all meetings of the board of directors, and to invite them to the meetings only when necessary.
The decision was led by the company's controlling shareholders, and it cannot be ruled out that it was done in order to prevent them from asking troublesome questions and raising difficulties concerning party at interest transactions, which are by nature very sensitive, although they were a matter of course at Bezeq. Excluding the legal advisor and CFO from meetings of the board of directors, including meetings of the various committees, contravenes the spirit of the report written by the committee headed by Judge (ret.) Yoram Danziger, which clarifies all of the rules governing work by the Bezeq board of directors and its corporate governance, after a serious fault was found in the board of directors' actions concerning the terms for the options received by then Bezeq CEO Jacob Gelbard.
Deal with an absolute conflict of interest
Leading lawyers recently explained that in a proper state of affairs, in which the watchdogs at Bezeq fulfill their duty as expected, party at interest transactions, like those exposed in the Israel Securities Authority investigation, in the way they were carried, would never have passed.
The lawyers explained that the legal advisors of the board of directors and the lawyers accompanying the deals would have been obligated to halt transactions in which it emerged that information was leaked to the other party, and that negotiations were held in an manner extremely biased to one side. Furthermore, in a state of affairs in which they detected that an improper transaction was taking place, they would have been obligated to threaten to halt the deal.
In the DBS Satellite Services (1998) Ltd. (YES) deal, the directors who conducted the negotiations on behalf of Eurocom Group for the sale of Yes to Bezeq were also directors at Bezeq, and they were therefore in a complete conflict of interest. Nevertheless, no one stopped them.
As reported in "Globes," the Bank of America Merrill Lynch investment bank, which accompanied Bezeq, warned that the negotiations in the Bezeq-Yes deal were taking place in an extremely questionable manner, because the Eurocom representatives, who were on the seller's side, had advance information leaked from Bezeq about the demands that Bezeq's representatives were going to raise in the negotiations.
Gilad Rosolio of Bank of America Merrill Lynch more than once expressed astonishment to Yitzhak Edelman, chairman of the Bezeq special committee dealing with the matter, as well as other parties in the company that the legal advisors were not fulfilling their duties as watchdogs. Bezeq said in response, "The board of directors is regularly accompanied by an external legal advisor, who participates in all of its meetings. Furthermore, during the period in question, both the CFO and the company's legal advisor took part in most of the meetings of the board of directors that took place."
Published by Globes [online], Israel Business News - www.globes-online.com - on August 20, 2017
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