The board of directors of Bezeq Israel Telecom, the nation’s largest telecom provider, on Wednesday appointed an interim CEO to replace Stella Handler, as she remains under police investigation in a high-profile corruption case involving confidants of Prime Minister Benjamin Netanyahu.
Bezeq announced the appointment of Yaakov Paz, a vice president at the company, as interim CEO, after a board meeting approved the move on Tuesday. Paz, who was to assume his post immediately, leads Bezeq’s business division. He has been with the company since 2007.
Handler and other suspects in the case, including the wife of Bezeq controlling shareholder Shaul Elovitch, Iris; his son, Or; and Bezeq’s deputy CEO for business development, Amikam Shorer, were released on Monday to house arrest. Elovitch himself was ordered held in custody until Sunday.
The case, known as Case 4000, involves suspicions that Elovitch ordered the Walla news site, which he owns, to grant positive coverage to Netanyahu and his family, in exchange for the prime minister advancing regulations benefiting Elovitch.
Separately, activist investor Elliot Advisors (UK) has said it is opposed to the appointment of candidates proposed by Bezeq parent company B Communications Ltd. (BCom) to the board of Bezeq, an indication of a power struggle that is developing between institutional investors that have stakes in Bezeq and the current and future controlling shareholders of the firm.
In a filing on Wednesday, Bezeq said that its board of directors received a letter from the activist investor, which holds a 4.8% stake in Bezeq, saying it was opposed to a BCom request to call a board meeting to appoint three new directors to replace Shaul Elovitch, Or Elovitch and Or’s wife Orna, all directors who are embroiled in the investigations. They deny any wrongdoing.
BCom said in a filing on February 27 that it had sent a letter to Bezeq requesting an urgent board meeting to discuss the composition of Bezeq’s board of directors. BCom, which is a unit of Eurocom Ltd., via which Shaul Elovitch controls Bezeq, suggested naming Shlomo Rodav, a former chairman of Bezeq; Doron Turgeman, the CEO of BCom; and Tamir Cohen to the board.
Tamir Cohen is a representative of the Saidoff Group, BCom said. An offer to buy Eurocom by group of investors led by US-Israeli businessman Naty Saidoff has been accepted by Eurocom creditors and is now awaiting a court ruling. Subject to obtaining the required regulatory approvals, the Saidoff Group is expected to eventually become the controlling shareholder of Bezeq, BCom said in its filing.
“Shaul Elovitch, Or Elovitch and Orna Elovitch will be ending their service on the Board of Bezeq in furtherance of their desire to calm the atmosphere and the media reports created over the past few days,” BCom said.
Until Cohen’s actual appointment, Orna Elovitch will appoint Ami Barlev, BCom’s acting chairman, as an alternate director on her behalf, the filing said.
“The appointments of Shlomo Rodav and Doron Turgeman will be implemented immediately subject to Bezeq board approval,” BCom said.
However, Elliott Advisors, an affiliate of Elliot Management Corporation, founded by US billionaire Paul Singer, said it opposed the BCom demand. “The demands made by BCom have no legal basis” and their sole purpose is to cause the board of directors of Bezeq “to act for the benefit of the controlling shareholder, against the best interests of the company, its shareholders and the law, through a false representation of the legal situation, and, yet again, in complete disregard for proper corporate governance.”
Bezeq’s board of directors “must publicly reject, promptly and explicitly, the BCom demand,” Elliott wrote, calling for the election of directors “who are professional and objective to the Board of Bezeq, to be elected at the annual meeting which should be promptly called in order to elect appropriate directors to the Company.”
In January, Elliott called for improved corporate governance at the telecom firm, and for the immediate resignation of some members of the Bezeq board.