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The Supreme Court confirmed: The credit given to Fishman will be exposed - Walla! Business

2021-01-21T06:43:27.682Z


For many months now, Globes has been waging a legal battle to remove confidentiality over a derivative lawsuit filed against Union Bank and directors of the bank, in respect of credit given to businessman Eliezer Fishman. This week, the Supreme Court accepted the newspaper's position in a ruling in principle, stating that the publicity of the hearing is more important than the bank's interests.


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Supreme Court confirmed: The credit given to Fishman will be disclosed

For many months now, Globes has been waging a legal battle to remove confidentiality over a derivative lawsuit filed against Union Bank and directors of the bank, in respect of credit given to businessman Eliezer Fishman.

This week, the Supreme Court accepted the newspaper's position in a ruling in principle, stating that the publicity of the hearing is more important than the bank's interests.

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  • Eliezer Fishman

Chen Maanit

Thursday, 21 January 2021, 06:12

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Eliezer Fishman in court (Photo: Channel 10)

In the summer of 2011, the great social protest that grew out of Rothschild Boulevard in Tel Aviv broke out and spread throughout Israel.

This protest had many goals: it focused on trying to bring down housing prices and the cost of living in Israel, but also criticized for the first time in the public debate in Israel the preferential treatment of wealthy and connected businessmen called "tycoons" - from the state, regulators and banking system.



The protest was only partially successful.

Housing prices, for example, have since risen, as has the cost of living.

But if there is one significant achievement that can be registered in its name, it is a huge change of consciousness that has taken place in the Israeli public's attitude to the economy, to the relationship between capital and government and to interest groups.

The public no longer agrees to remain silent when it feels discriminated against in relation to tycoons.



This change led to continued protests whenever enough people felt hurt and discriminated against in relation to those tycoons, who ran leveraged businesses while receiving huge loans from the banking system alongside writing off debts when they ran into difficulties.

Against this background, the Parliamentary Inquiry Committee on the Credit of Large Borrowers (also known as the "Fishman Committee" or the "Tycoons Committee") was established.



The committee was set up mainly against the background of the financial collapse of businessman Eliezer Fishman, the previous owner of Globes, whose debts reached billions of shekels - but in the end he and his family managed to reach a debt settlement with the banks.

The arrangement, which was approved by the president of the Tel Aviv District Court, Eitan Orenstein, embodied a haircut of about 67% of the debt - which was initially estimated at about NIS 4 billion.

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The public interest is more important than that of the banks.

Fishman (Photo: Niv Aharonson)

In April 2019, the Commission of Inquiry into Credit Allocation Failures for Large Borrowers published its conclusions report, and it focused most of its criticism against the Bank of Israel and the Supervisor of Banks.

Report, written by consultants committee, Prof. Nitai Bergman, Professor Asher Blass and Mr. Rami Tamam, states that "the Commission's conclusion is supervision of the Bank of Israel takes place in front of a captive regulator of the banking system, which does not work to deter supervised."



The treatment The Capital Market Authority's issue of credit to large borrowers given by institutional investors has been sharply criticized. Written in the report.

Cable Committee: Handcuffed

However, the Parliamentary Inquiry Committee, the Eitan Cable Committee, operated with handcuffs.

When it was established, the expectation was that the committee would receive materials from the banks on specific borrowers - Eliezer Fishman, Nochi Dankner and Shaul Alovich - and would expose scandalous conduct in granting credit.

However, the banks were equipped with the best lawyers and advisers, and rejected the requirements for the transfer of information, on the grounds that they were protected under banking secrecy.



The pressures of the committee members did not help: the materials were not transferred, and the appearances of senior members of the banking system before them were trivial in most cases.

Once the committee realized that the findings would not come from the bankers, the main focus shifted to dealing with financial regulators, led by the Bank of Israel and the Capital Market Authority - and accordingly, the conclusions also focused on regulators.



Thus, in the absence of the committee's real ability to criticize the banks' conduct in allocating credit, this ball passed to the media and shareholders and lawyers, who filed lawsuits against the banks for their treatment of Fishman and others.

This is also the reason why we, at Globes, have been waging a legal battle for months in an attempt to remove confidentiality over a derivative lawsuit filed against Union Bank and bank directors, for credit given by the bank to Fishman and other parties on his personal guarantee.



The procedure is confidential, but in our opinion, there is a great deal of public interest in publishing the content of the hearing and the proceedings in the case, and there is no reason to make it confidential.

In petitions to the court, we wrote that "the public and the newspaper, following in its footsteps, have the right to learn about proceedings taken in the State of Israel, as well as in this case of a lawsuit alleging credit benefits granted to Mr. Fishman."



According to Globes, "In the case of Union Bank, it is a bank that is not large, and yet it became clear from a debt claim filed in Fishman's bankruptcy case that he is exposed to his debts in the amount of NIS 270 million, which constitutes about 11% of the bank's equity."



The Globes' request states that "this is another procedure related to the issue of the largest bankruptcy in Israel, in which the creditors of the banks managing public funds, and the public's right to know how the decisions regarding the allocation of credit to Fishman were made, also through others."

From District to Top: Removal of Confidentiality

The procedure that Globes requests to be made public concerns an application for the management of a derivative claim against Union Bank and members of the Bank's Board of Directors by a shareholder in the bank, Shlomo Golubinsky.

Through attorneys Renan Gersht and Ofir Naor, Golovinsky asks the court to examine whether the bank's board members violated their prudential and fiduciary duties when they did not prevent the bank from granting loans to Fishman, despite its financial entanglement.



Golubinsky claims that the debts were created due to loans taken by Fishman or loans that he had guaranteed in the last two decades.

According to him, although the repayment date of the loans that Fishman received has passed, "the bank stood as a bystander, and did not act as a creditor who sees that his debt is not being repaid."



According to Golubinsky, the liens registered in favor of the bank were allegedly recorded only after Fishman lost hundreds of millions of dollars following a failed bet on the Turkish pound in 2006, and also that these liens exist on assets valued at only NIS 5 million.

"The circumstances surrounding the bank's operations and its officers are at an all-time high. The bank knew that Fishman's debts to him could cause immense damage, and that Fishman could not repay his debts," the request said.



After the district court granted our request to remove the confidentiality, Union Bank appealed the decision to the Supreme Court.

This week, however, the Supreme Court accepted the position of Globes and the HM, and rejected the appeal filed by Union Bank in a way that removes the confidentiality over the details of the derivative lawsuit we want to publish. The court also allowed us to publish details from the bank's independent committee report, deciding not to sue the bank. In the relevant period due to their attitude towards Fishman, including the then chairman, Zeev Ables.



However, Judge Prof. Ofer Grosskopf ruled that the publication will be made in about two weeks, and that earlier the bank may announce that there is certain information that he claims should be disclosed due to trade secrets. It is also stipulated that the bank may request not to provide information that it claims is prevented from being disclosed, in order to protect Fishman's privacy. This information is also included in the report of the bank's independent committee.



According to a court decision, the bank will provide within 14 days A notice in this matter will be sent to Globes, and a copy will be attached with the blackouts required by the Bank's method, as well as an affidavit in which his position regarding the tastes of each of these blackouts will be clarified.

In the future, Globes will be able to state its position regarding blackmail, and in the event of disputes, the district court that heard the case will



decide

.

Judge Grosskopf ruled that "the matter of the request for approval that we are dealing with is important not only for the bank's shareholders but also for the bank's customers. And to the public at large.

It has already been stated that "the importance of the principle of publicity of the hearing becomes even more valid when it comes to an investigation into public companies, in which shareholders invest their money."



In this situation, Judge Grosskopf believed that disclosing the details "but will increase public confidence in bodies that make his money and property ... This is in view of the volume of credit we are dealing with, which affects the general public, and at least the general public of the bank's customers (and we already knew of cases where the public coffers were required to rescue a bank in crisis due to irresponsible conduct by its management). To the public, in mediation proceedings before former Supreme Court President Asher Grunis.

Grosskopf actually criticizes it.

Privacy claim: Not for corporations

As stated, the bank objected to Globes' request, arguing that confidentiality should be imposed on the documents we seek to publish.

Among other things, the bank argued that the principle of publicity of the hearing does not prevail in this case over a right to privacy, which is a constitutional right, and "because it is reasonable to assume that this right also exists for corporations."



In this context, the Bank noted that the corporation's right to privacy is not limited to information that is a "trade secret", as defined in the Commercial Torts Law, but extends to actions and information whose non-disclosure allows the corporation to perform the activities for which it was created.



The judgment stated that in the case in question, "it is clear to the Bank and the directors that there is no legal justification for closing doors, and equally, it should have been clear to them that there is no justification for sweeping recognition of the bank's right to restrict the bank's response to the request. Direct to the procedure. "



Judge Grosskopf further wrote, "I do not find much reason in the Bank's claim that the 'right to privacy of the bank' should be protected by a sweeping restriction on the right of access to the bank's response to the request for approval (of the derivative claim. H.M.).



" Privacy does not recognize that a corporation has a right to privacy, and even if we assume that the protection afforded by section 7 (a) of the Basic Law: Human Dignity and Liberty is broader, and also includes privacy of corporations, this protection certainly does not mean sweeping recognition of the bank's response to the approval request. ".



according to the verdict was" a matter of fact, given the company's position in relation to the application for approval of a derivative is a matter of importance to all shareholders of the company, not just shareholder or director who filed the request for approval, claim that there is overwhelmingly to keep secret the Company Response The request for approval from a person who is not a party to the proceedings is a claim that cannot be accepted. "



The judge noted that in the absence of a legal basis for recognizing a sweeping restriction of the right of access to the Bank's response to the request for approval as a whole, it is appropriate to examine whether it is appropriate to reduce the right of access of third parties regarding these or other documents.

The Bank has raised two reasons that may justify responding to a partial request of this type: the first is the protection of the Bank's trade secrets;

The second is bank secrecy, the purpose of which is to protect Fishman's private information.



According to the PSD, "these reasons may indeed justify preventing the disclosure of details or documents contained in the Bank's response to the request for approval, but in order to examine this matter, the Bank must respect and refer specifically to those details and documents whose disclosure may infringe Mr. Fishman's privacy, or disclose Trade secrets of the bank.

In general, the burden is on the litigant who opposes the review to convince that it should not be allowed. "

We have come a long way since then.

Social protest in 2011 (Photo: Dror Einav)

The judge added that the district court clarified this matter, and even granted the bank an extension to file a blackened copy of his response to the request for approval of those details that he believes constitute trade secrets, which he has the right to prevent their disclosure to third parties. In accordance with what is acceptable in relation to such claims, and in any case there is no justification for intervening in his decision in this context.



"The only clarification that should be added in this matter, and which was acceptable to the applicant for the permit and the Globes newspaper, is that a parallel arrangement will also apply in relation to information concerning Mr Fishman's private affairs."



The judge clarified that "a business competitor's request is not lawful as a request for a review aimed at journalistic coverage, and it is sufficient for us in the press' role as an 'intermediary' between what takes place within the court and the public's right to know, in order to recognize the legitimate interest of the applicant."



In conclusion, in light of all this, subject to an arrangement established to protect the bank's trade secrets and Fishman's privacy, Grosskopf stated that Globes' request for review complies with the requirements set forth in law.



Union Bank is represented by attorneys Israel Leshem, Dror Kedem, Chen Levy and Gal Yogev (RAA 6624/20).



Full disclosure: Businessman Eliezer Fishman is the previous controlling owner of the Globes newspaper.

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Source: walla

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