The Bank of Israel many demand that former senior Bank Leumi (TASE: LUMI) executives will return the bonuses that they received, following the investigation by the US authorities against the Israeli bank. Supervisor of Banks Dudu Zaken is expected to examine the events being investigated when Leumi completes matters with the US authorities, and if it sees fit it will demand the return of some of the bonuses that were handed out during the years relating to the investigation.
Bank Leumi, currently led by CEO Rakefet Russak-Aminoach, is being investigated by the US authorities over suspicions that it helped American customers evade US taxes. Leumi had already set aside NIS 1.1 billion (in anticipation of the fine that will be imposed on it). Then two weeks ago it was learned that the New York State regulator is also demanding a further fine of $300 million. Leumi rejected the demand and it is not yet clear what will be the final amount of the fine that Leumi will pay and it could climb as high as NIS 2 billion.
The investigation relates to the years 2002-2010 when Galia Maor was CEO and Eitan Raff was chairman. During that period the bank welcomed US customers who deposited large sums of money with no questions asked. The US authorities have waged a fierce war against this phenomenon and investigated banks suspected of assisting tax evasion. In addition to Leumi there are such investigations against Mizrahi Tefahot Bank (TASE:MZTF) and Bank Hapoalim (TASE: POLI). These investigations are in earlier stages.
Between 2002 and 2010, Maor's salary totaled NIS 54 million - averaging NIS 6 million annually, while Raff earned NIS 36 million. It is impossible to know how much of these sums were in bonuses as until 2008 reports listed salaries and bonuses as one amount. However, between 2008 and 2010 Maor earned NIS 8.8 million in bonuses and Raff earned NIS 5.5 million in bonuses.
Published by Globes [online], Israel business news - www.globes-online.com - on November 10, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014