"In practice, it can be said that the company does not have a board of directors (and in any case it is not possible to hold any board meetings and make decisions on the matter of the company in the absence of a legal quorum)... From the few minutes presented by the plaintiffs, a picture emerges according to which until 1998 regular meetings of the board of directors were conducted, which discussed all matters relevant to the management of the company, and received reports on what was happening in the company... From 1998 onwards, no meetings of the board of directors were held 'in a legal minyan', the minutes are only partial, and the person who signed them is only Pinkowitz (and in one case even Revas claims that his signature was forged)... It is more correct to say in light of the evidence that [the directors] were 'incapacitated' from fulfilling their duties" (paragraphs 168 and 172 of the trial judgment; emphases added, Z.Z.).
- The directors themselves, in their testimonies and pleadings, also presented a similar picture, which indicates that they were not aware of the scope of the decisions regarding the transfer of funds from the company to the subsidiary, did not understand the implications of these decisions, and did not make any special effort to overcome the information gaps and their lack of skills. Thus, for example, Ravas said in his testimony in the trial court that:
"Unfortunately, I was somewhat naïve. I believed everything and what was worse, I trusted the financial team, that what was written in the report, or what he said was based ... He said the factory was profitable and everyone believed it. There were indeed experts sitting there, so I had no doubts" (transcript of the hearing of January 23, 2008, p. 12).
Later, when asked if he was aware of the scope of the money transfers to the subsidiary, he replied: "Under no circumstances would I have received such a thing, nor did I receive this information... I had no idea what I read in the file now that he spent millions, 20 million or a little less on the factory's losses" (transcript of the hearing of January 23, 2008, p. 13).