Israel’s Largest Bank Silences Sexual Assault Claims Against Top Management With Clients’ Private Money

Sexual harassment and assault in the workplace is a matter for the law and law enforcement.

But Bank Hapoalim, the largest bank in Israel, has developed a unique and worrisome way of handling the matter.

In at least two cases where women complained of sexual harassment or assault involving two very senior executives at the bank, the solution was appointing a judge as an external arbitrator to solve the problem.

This practice is misguided on several fronts. First, sexual assault and harassment are a matter for the police and the courts.

Handling them behind closed doors and without a public investigation leaves these incidents silenced by the company.

This in and of itself can encourage assaults by executives, because if it’s something to be worked out in-house, then maybe sexual harassment isn’t such a big deal.

Second, workers who say they were sexually assaulted need to settle for cash compensation, paid by the bank.

In the case of the employee allegedly assaulted by former CEO Zion Kenan, this was an expanded severance package that was given ostensibly logical justifications, not related to the assault allegations. In the case of former VP Shimon Gal, who allegedly had an affair with a subordinate whom he promoted, the compromise involved appointing the complainant to a senior position.

In these two cases, and possibly in other ones, it was the bank that paid the price. The fact that the bank bears the cost for its executives’ harmful behavior is a serious affront to the trust of the bank’s shareholders, customers and employees.

The third issue is the reporting – or the lack thereof. The Bank of Israel – and the public – need to be told about improper behavior by senior executives and about settlements at the bank following allegations of improper behavior.

Executives at a bank or any organization who are facing serious allegations cannot go on, entirely protected by the massive financial strength entrusted to them, paying outsize compensation from the bank’s money (or to compensate via a prestigious, well-paying job).

Solving problems in-house puts the bank and the accused in a bad light. It harms the women who were allegedly assaulted or harassed, as well as the concept of proper punishment for harassment.

You can’t really blame the victims, or expect them to fix the world and also bear the consequences of both the sexual assault and the financial hit that would come from addressing the matter in a means other than arbitration. And when it’s a matter of senior male and female employees, the organizational message of shutting mouths is much more damaging.

The formula – assault leads to complaint, which leads to secret internal arbitration, which leads to compensation paid from the bank’s money – can encourage more assaults and more complaints, without any transparency from actual inquiries.

This is a culture of lies and concealment, which is destructive to society as a whole and the company specifically.

These two cases at Bank Hapoalim must force the Bank of Israel to tighten its policy and forbid these types of arbitration cases, since the ones paying the cost are bank customers and shareholders – and not those who are allegedly at fault.

Hapoalim produced many scandals over the past decade, and tried to create the image that these failures were a thing of the past.

But this type of incident, even if it happened a decade ago and was hushed up until now, indicates that the bank has much more work to do in setting new norms and handling cases of sexual harassment or assault.

The bank’s management and board of directors haven’t proven that they know how to handle these types of incidents properly.

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