Panel Says Leumi Execs Should Return Millions in Tax Scandal

YERUSHALAYIM (Hamodia Staff) -

A panel of inquiry appointed by Bank Leumi has recommended that two former executives should return millions of shekels they received in bonuses for their roles in a U.S. tax evasion case, Globes reported on Monday.

Former CEO Galia Maor and former chairman Eitan Raff were cited for possible negligence in the tax evasion affair, which resulted in Leumi having to pay fines to U.S. authorities amounting to NIS 1.5 billion.

The former executives, along with a third, have already agreed to give back bonuses of over 5 million shekels.

The panel advised against taking legal action against Maor and Raff. Prosecuting employees for actions that they undertook for what they thought was the good of the bank “could in the future suppress initiative and reasonable risk-taking that are part of any bank’s business.” In addition, a prolonged investigation could further damage the bank’s reputation.

Maor and Raff said in a statement in response to the report: “The officers served the bank faithfully for over fifteen years, and led it successfully even during difficult periods, including the time of the economic crisis in 2008–2009, when other banks in Israel and around the world sustained huge losses.

“The officers believe that in their conduct at the bank in relation to the management of the accounts of U.S. customers, they acted in accordance with the law and with accepted banking practice in Israel and around the world.”

Nevertheless, and despite the fact that the committee stated in its report that the return of bonuses could not be compelled legally, they agreed, in order to bring the matter to a rapid conclusion, to accede to the committee’s request and to relinquish the sums.

The report will be submitted to a Tel Aviv District Court, which will examine it in the context of related actions filed against Bank Leumi in the tax evasion affair. The report does not, however, bind the court.