A bitter confrontation has erupted over the decision-making procedures and conduct of the committee that selects directors in Israel's banks without a controlling core. The committee nominated the candidacy of former Bank of Israel governor Prof. Stanley Fischer to the Bank Hapoalim (TASE: POLI) board of directors and de facto removed incumbent Dalia Lev, having made the decision without the required quorum, and changing its rules as it did so.
On one hand, the committee revealed in brief yesterday that committee member and Bank Hapoalim representative David Avner had resigned from the committee "due to allegations he raised", while on the other hand, announcing laconically that the Bank's other representative on the committee, Reuven Krupik, had resigned due to his very recent nomination as Hapoalim chairman, with no replacement on the committee.
Only after several hours had passed did the committee elaborate slightly on the circumstances of Avner's departure, implicitly accusing him of making a problematic decision in his opposition to Fischer's appointment, stating that "It is not true that the committee would not propose a candidate that most committee members find most suitable, due to a single point of exception".
On the other hand, Avner himself clarifies, his sudden departure from the committee was because he identified, "serious flaws in the manner in which the committee selects candidates for the board of directors of Bank Hapoalim."
Avner's representative said, "At the end of the selection process for the final candidate, when the result did not suit the external representatives (who are not bank directors and are not responsible for the functioning of its board), the committee chairman, backed by two outside representatives, changed the voting rules retrospectively, so that they suited their preferred candidate, while at the same time effectively nullifying the opinion of David Avner, an external director of the Bank and the only bank representative who is also a committee member, all while violating elementary rules of fairness and equality, and relying on the secrecy of the committee's work and the lack of transparency about its activities."
"In order to achieve this result, the external representatives, outside the committee framework, coordinated their vote behind David Avner's back and without giving him the opportunity to express his opinion or properly prepare for the move they made. In this way, they converted the committee discussion into a rubber stamp of their will, not to mention the pain caused to the candidate who was actually selected by the committee and her candidacy was removed, all without that candidate’s knowledge, and taking advantage of the secrecy and lack of transparency of the committee's deliberations."
Avner's representative added, "During that discussion, in which the rules of the game were changed in retrospect, the chairman of the committee accused David Avner, in blunt terms, of unusual, self-interested, and harmful motives. Given these circumstances, David Avner was left with no choice but to resign."
In this context, it should be noted that the committee's announcement stated that, "The allegations were examined by the committee's legal counsel, Adv. Malkiel Balas, who determined there was no fault in the procedure."
In any case, Avner, who serves as the bank's outside director and is a former director at Bank Leumi (TASE: LUMI) and the former CEO of Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), further stated that, "From its initial stages, the committee acted wrongfully as, contrary to the law stipulating that the committee must have two outside directors, there was only one outside director and in the end, he also resigned and the committee made its decisions without any representatives from the bank at all.
"Three members who were not from the bank, who are unaware of its activities and needs, lacking business and corporate experience and mainly without responsibility for the composition of the board and its effectiveness, selected the bank's directors without regard for bank representatives."
"Moreover, the committee posted a presentation on the its website as if it were operating as a full quorum. The announcement on this matter remains, to this day, on the committee's website. "
Published by Globes, Israel business news - en.globes.co.il - on August 27, 2020 © Copyright of Globes Publisher Itonut (1983) Ltd. 2020