Two Bank Hapoalim Employees Stole NIS 130,000 in Cash Hidden in Clothing, Bank to Pay NIS 10 Million

Two Bank Hapoalim employees stole NIS 130,000 in cash from customers over the course of several months, hiding the money in items of clothing. The bills had been deposited by a coffee shop. This week, after the bank had for a long time rejected the complaints, a settlement agreement was signed and filed with the District Court in a class action, under which Hapoalim will pay NIS 10 million to be transferred to the class action fund. Legal fees are expected to amount to NIS 2.25 million. ● Former Leumi UK CEO’s lawsuit dismissed, he will pay NIS 100,000 in costs ● Exclusive | The battle escalates: At El Al, Cal are accused of “consumer fraud”

Cafe Nataniel and its owner, Itamar Sharabi, claimed that over four months they deposited cash on several occasions and at different branches of Bank Hapoalim, and in all cases the amount written on the deposited bag differed from the amount actually deposited. According to them, the bank did not correct the “error,” and a bank representative even told them, “In my experience, in such cases the customer is always wrong.” After the matter went to court and an extensive examination was conducted at the bank, it was found that a “limited embezzlement” had indeed been carried out, totaling NIS 130,000, by two bank employees.

The request to approve the class action concerned a cash deposit service for business owners. According to the petitioners, the self-service cash deposit service is managed negligently by the bank, causing harm to customers and unjust enrichment for the bank. In doing so, they argued, the bank breaches its duty of trust toward its customers and its duty to act in good faith in fulfilling a contract. The bank, for its part, argued that the service is carried out according to a defined procedure that includes a series of built-in controls and is closely supervised to ensure the service is proper. Regarding the first deposit, the bank claimed it credited the coffee shop with the deposit amount, while the coffee shop made a mistake in recording the sum, confusing NIS 200 notes with NIS 50 notes. The bank also explained that under the agreement signed by customers, they accept that the bank’s count is binding on both sides in cases of cash bag deposits.

Unusual finding

In the settlement agreement submitted to the court, and now awaiting the response of the Attorney General before approval, Bank Hapoalim states that following the petitioners’ complaint regarding the deposits, the bank carried out an extensive examination, and an unusual finding emerged, namely that “the gaps between the deposit amounts and the account credit amounts resulted from embezzlement carried out by two employees at the cash center, who took cash from deposit bags that had been counted.”

The bank further found, based on review of its security footage, that this was an embezzlement “on a small scale”: one employee took NIS 115,000 and the other NIS 15,000. According to the bank, this involved “physically taking banknotes and hiding them in items of clothing.” At the end of the review, the bank fully reimbursed the embezzled funds that were identified, plus interest, retroactively to the coffee shop. At the same time, complaints were filed with the police against the employees after they were dismissed. One employee was convicted, based on her confession, of embezzlement she carried out over two years, totaling tens of thousands of shekels, and was sentenced to community service. No indictment was filed against the second employee because of the amount involved.

As part of the proceedings, the parties entered mediation led by retired judge Hila Gerstel, during which CPA Yehoshua Hazenfratz of the RSM Shiff-Hazenfratz firm was appointed, and an expert opinion was submitted that was asked to examine the reasons for the process, including with the aim of identifying systemic failures. The expert opinion concluded that there are no findings that can indicate that the alleged discrepancies caused damage, and that “we found no evidence of damage caused by the bank to its customers beyond the findings that emerged in the internal examination.” The petitioners were represented by attorneys Pinchas Michael Or and Guy Reshef.

Hapoalim: “An extensive lessons learned process”

Bank Hapoalim said in response: “During 2020, an embezzlement totaling NIS 130,000 was identified in the bank’s cash center. Following the findings, an extensive examination was carried out by an external expert, which showed that there is no indication of damage caused to customers beyond this amount. All customers in whose accounts the embezzlement was identified received full compensation. The bank carried out an extensive lessons learned process to prevent a similar case from happening again in the future.

“As part of the settlement agreement, the bank intends to donate the settlement amount as relief for the public, in accordance with the published notice and the provisions of the settlement agreement in full, especially in light of the fact that as of today no customer is known to have suffered any financial damage as a result of the case.”

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