The independent committee appointed by Bank Leumi Le-Israel Ltd. to examine former bank officials’ responsibility for the bank’s entanglement with the US authorities recommended that top mangers of the bank both return bonuses after the bank agreed to pay a fine to U.S. authorities in a tax probe.
Galia Maor, who served as Leumi’s president and chief executive for 17 years, former chairman Eitan Raff and former head of the bank’s International and Private Banking Division Zvi Itskovich should return about $1.3 million bonuses.
This sum should represent 11 percent of their gross bonuses paid to them during the period of the affair involving the US customers.
In addition, the comittee said the bank should accept a compromise payment of $92 million offered by the executives’ insurers to settle all outstanding claims.
The three former managers have already notified the committee that they will return the $1.3 million, bank Leumi said.
Bank Leumi agreed to a $400 million fine in December after a seven-year U.S. probe into offshore tax evasion focused on Switzerland. The settlement triggered investigations by Israel’s attorney general, state comptroller and banks regulator.
The committee, headed by a former judge, recommends adopting a precedent-setting settlement whereby the bank will receive about $93.7 million from its insurance company.
It says that prolonged litigation involving close examination of the bank’s behavior vis-a-vis its US customers would be liable to harm its reputation, and that a lawsuit against former employees for actions that they considered to be legitimate and for the good of the bank “could in the future suppress initiative and reasonable risk taking that are part of any bank’s business.”
The committee understand that the repay of 11 percent ($1.3 million) is not a large sum in absolute terms, but represent the ability to demand more is limited, mainly because the settlement with the insurance company is conditional on the agreement of the three former managers to forego any further claim on the company.