Activist investor Elliott Advisors (UK) Ltd. has called on Israel’s largest telecommunications firm Bezeq to appoint new independent directors to the board, and demanded as well the immediate resignation of directors who are implicated in an investigation by the Israel Securities Authority.
Elliott, which holds a 4.8 percent stake in Bezeq, is a private investment firm that is an affiliate of Elliot Management Corporation, founded by US billionaire Paul Singer.
Bezeq and its controlling shareholder Eurocom Communications Ltd., owned by Israeli business tycoon Shaul Elovitch, are embroiled in an investigation into the dealings between Elovitch and Bezeq executives and their relations with the Communications Ministry. Elovitch’s lawyers have said he is innocent. Eurocom holds a stake in Bezeq via units.
In a letter to Bezeq’s interim chairman David Granot published on Tuesday, Elliott said it was happy with Granot’s decision to propose new candidates for election to the board at the annual shareholders’ meeting in April or May 2018.
“Given the scale of the current governance problems at Bezeq, we believe it is critical that the new Directors who are proposed are done so via a transparent and professional process, resulting in high calibre candidates who can act independently in the best interests of Bezeq and all its stakeholders,” Elliott said in the letter.
The letter proposes also a number of steps Bezeq should take to increase investor confidence: commit to an intention to recruit at least five new independent directors, appoint an international executive search firm with a presence in Israel to help in the process, and commit to consulting with shareholders before finally determining the proposed directors.
Elliott said it noted the “disproportionate” influence Eurocom has upon Bezeq’s governance and management, and said that major Israeli investors have also started calling for a transparent process to reform corporate governance at the telecoms firm.
“This positive reaction to the prospect of meaningful change demonstrates a strong base of support for governance reform. We urge you to build on this momentum and to seize the opportunity to drive real, lasting change at Bezeq.”