Motion to approve a derivative lawsuit against Harel: Controlling shareholders memorialized their parents in the company's tower without consideration

Yair Hamburger and his siblings Gideon and Nurit, among the controlling shareholders (42%) of the public insurance and investment company Harel, have memorialized the names of their late parents in an 18-story tower owned by the publicly traded company, without providing any consideration to its coffers. This is claimed in a motion to approve a derivative lawsuit against the officers and directors of Harel, filed on Monday by a shareholder, the company All-Year, to the Economic Department of the Tel Aviv District Court.

According to the motion, filed through attorneys Lior Lahav and Hadar Stampo, the cause of action is the restitution of funds allegedly depleted from the company's coffers by "allocating a company asset to its controlling shareholders without consideration, and consequently without the transaction receiving the approvals required by law (interested party transaction)."

"The directors and officers of the insurance and investment company Harel were negligent in supervising the company's actions," the lawsuit claims, "when it named an 18-story office tower on HaHilazon Street in Ramat Gan 'Beit M.A.E. in memory of Margot and Ernst Hamburger,' to memorialize the late parents of the controlling shareholders. This was done without collecting consideration from the controlling shareholders, even though it is clear that the value of the right to name a tower after a person is very high."

The late Margot and Ernst Hamburger were the parents of Yair Hamburger, Chairman of the Board of Harel, and the grandparents of Ben Hamburger, Deputy Chairman of the Board of the company and son of Gideon Hamburger. Harel was first listed on the stock exchange in 1982.

"This is a significant and expensive real estate asset belonging to Harel," the motion states. "Despite this, it was named after the late parents of the controlling shareholders without any consideration to the company. The directors and officers at Harel breached their duties. They have a duty to ensure that the company does not grant the controlling shareholders a valuable benefit without consideration and without the approvals required by law."

It should be noted that the motion for approval filed with the court does not come in a vacuum. Previously, following a Calcalist investigation into the fact that funds from the public company Delek flowed to the construction of a synagogue at the Western Wall named after the parents of the controlling shareholder, Yitzhak Tshuva, a derivative lawsuit was filed against Delek and its directors for the return of funds. In July 2024, a settlement was signed between the parties, in which it was determined that Tshuva would return 8 million shekels to the company, and at the same time, an additional 8 million shekels would be returned by the company's directors who supported the move, through the insurance company.

Attorney Dori Klagsbald, representing Harel, stated: "We will respond in court."