Danziger report on Bank Hapoalim entanglement: look at the half full glass

Retired Supreme Court Justice Yoram Danziger wrote a 42-page report over the weekend summarizing the legal aspects of Bank Hapoalim’s involvement in the U.S. tax evasion case.
Since retiring from the Supreme Court, Danziger has specialized in writing surprising reports that run counter to early expectations. For example, the report he wrote on the issue of the struggle between the chairman and CEO of Clal Insurance, at the end of which the chairman Danny Naveh was forced to retire.
In the current report, too, the early expectation was that the bank’s managers’ responsibility for violating the duty of care would also be reflected in personal financial punishment, but in practice this did not happen. While executives at Leumi such as Eitan Raf, Galia Maor and Zvi Itzkovitz were fined NIS 5.1 million for their responsibility in a similar case, at Bank Hapoalim CEO Zion Keinan and chairman Yair Seroussi were exempt.
The reason is a lack of direct responsibility and a lack of proper banking practice for them, but this is a weak excuse. In any case, there were executives whose responsibility for the unfortunate affair was not in doubt, such as Orit Lerer or Alberto Garfunkel, so why was it also decided to exempt them from fines?
This part of the Danziger report evokes a sense of frustration, sourness and miss, due to the lack of connection between personal responsibility and payment. Despite this, from a business point of view, and given the fact that the bank’s payment for the entanglement is about $ 1 billion, the fine demand from the executives is negligible.
The bottom line is to look at the report on half the full business glass. The report takes into account the good of the bank and of course the shareholders, who are the general public. It allows the current management, headed by CEO Dov Kotler, to leave behind the sediments of the past and conduct itself with a forward-looking view. The bank has made the financial provisions following the provision in the balance sheets.
He will receive compensation from insurance companies in the record amount of $ 140 million, an amount that is considered the highest ever paid to a business company in Israel. The compensation will appear in the bank’s reports probably only in the first quarter of 2022, after the final approval of the arrangement in court and by the Attorney General.
The arrangement will allow Bank Hapoalim to leave behind the sediments of the past and launch its operations in New York, which are currently managed through a branch. Following the agreement with the American authorities, Bank Hapoalim will be able to turn the branch into a subsidiary.
He can also take advantage of the fact that Leumi New York is merging with the American bank and Eli National, and has in fact ceased to be an “Israeli bank”. The move may encourage the transfer of Israeli customers of Leumi New York and Discount New York to competitors from the workers.