February 28, 2018 / 12:28 PM / 8 months ago

UPDATE 1-Israel's Bezeq names Paz as acting CEO during police probe

(Adds opposition to new board meeting)

By Steven Scheer

JERUSALEM, Feb 28 (Reuters) - Bezeq Israel Telecom said on Wednesday it named Yakov Paz as interim chief executive for at least the next month while CEO Stella Handler remained under police investigation.

Paz, 54, is a vice president and head of Bezeq’s business division. His appointment came at a special board meeting.

Handler was arrested last week in connection with an investigation into allegations that included fraud, bribery and securities offences. She was released from police custody on Monday but remains under house arrest until March 4. A court ordered she stay away from Bezeq for 30 days.

Along with Handler, Bezeq’s controlling shareholder and former chairman Shaul Elovitch and a number of other officials connected to Bezeq were arrested. Most have been released from custody although Elovitch, a friend of Prime Minister Benjamin Netanyahu, remains in detention.

They all deny any wrongdoing.

Elovitch, who controls Bezeq through Eurocom, said on Monday he would step down from the board as would his son and daughter-in-law, a step sought by minority shareholders in the wake of the investigation by Israel’s markets regulator.

Eurocom unit B Communications (BCom), Bezeq’s parent, called this week for an emergency board meeting to propose former Bezeq Chairman Shlomo Rodav and Doron Turgeman, CEO of Eurocom subsidiary Internet Gold, as board members.

A group of investors led by U.S.-Israeli businessman Naty Saidoff has proposed biotechnology executive Tamir Cohen as a board member. The group has made an offer to buy Eurocom, which has been accepted by Eurocom’s creditors and submitted to court for approval.

Activist investor Elliot Advisors, which owns 4.8 percent of Bezeq and which has lobbied for changes to the board, has opposed BCom’s proposals for new board members, saying it had no legal basis.

“The sole purpose of the BCom demand is to cause you, 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,” Elliot’s lawyers wrote in a letter to board members.

It called for directors who are “professional and objective” to be elected to the board at the annual meeting, which it said should be called promptly.

Bezeq said its board was studying the letter and at this stage was unable to address it. (Editing by Tova Cohen and Edmund Blair)

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