December 26, 2017 / 2:53 PM / a year ago

Israel's Bank Hapoalim mishandled sexual harassment complaint -regulator

JERUSALEM, Dec 26 (Reuters) - Israel’s banking regulator chastised management at the country’s largest bank, Hapoalim , for the handling of a sexual harassment complaint against former chief executive Zion Kenan.

The Bank of Israel’s supervisor of banks last year began an investigation into the matter after Hapoalim failed to notify the central bank about the complaint, which led to Yair Seroussi stepping down as chairman.

In a report on Tuesday, the central bank said Hapoalim had generally acted properly according to the laws meant to prevent sexual harassment, but some things were mishandled.

“Our examination showed the process carried out by the bank was not transparent ... and did not comply with directives by the Supervisor of Banks and the rules of proper corporate governance,” the central bank said in a report on Tuesday.

It did not mention any Hapoalim executives by name, saying only that it investigated a complaint against the CEO who was serving in May 2016. The job at the time was held by Kenan.

The employee, who has since left the bank, claimed she was harassed by Kenan at a hotel in Almaty, Kazakhstan, in December 2006.

Israeli banks are required to disclose such matters to the regulator as they could disrupt the running of the bank.

The case was also investigated by Israeli police, which closed the case in August without bringing criminal charges against Kenan.

The report singled out Seroussi and the head of the audit committee for not informing the board or the banking regulator.

The Bank of Israel said it would not pursue action against Seroussi since he is no longer at Hapoalim. But it ordered the head of the audit committee to step down from her job, although she will be allowed to stay on as a bank director.

The regulator also said Hapoalim will be required to strengthen the board’s and audit committee’s corporate governance and policies on conflict of interest and set a clear policy to deal with complaints against senior bank officials.

Hapoalim said in a statement it would study the report and act according to its recommendations. (Reporting by Steven Scheer; Editing by Ari Rabinovitch and Hugh Lawson)

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