The investigation into Bank Leumi and its assistance to US customers in evading US taxes is being stepped up. At the end of a meeting with regulators yesterday, Attorney General Yehuda Weinstein decided to deepen the investigation, which will be coordinated by the Ministry of Justice.
The investigation team will be led by Deputy Attorney General Adv. Avi Licht; Adv. Paul Landes, who heads the Israel Money Laundering Prohibition Authority; and Tel Aviv District Prosecutor for taxation and financial matters Liat Ben-Ari. They will be joined as needed by Israel Securities Authority chairman Shmuel Hauser and Israel Tax Authority director-general Moshe Asher or their representatives.
The fact that senior investigators have been appointed to the probe and the fact that State Prosecutor Shai Nitzan and head of the Israel Police Investigations and Intelligence Division Major General Meni Yitzhaki attended yesterday's meeting raises the possibility that the Attorney General and his staff consider that the acts committed by Bank Leumi in the US have illegal aspects in Israel as well, to do with money laundering, taxation offenses, or other offenses.
If this suspicion is confirmed in the next few weeks, the time allowed for the enquiry, then the matter could become the subject of a police investigation.
At this stage, no police investigator has been attached to the enquiry team.
Over the past few years during which the bank reported in its financial statements on developments in the US investigation, the reporting focused on events in the US and on American customers of Leumi subsidiaries in the US and Switzerland. However, with the release of the report by the US authorities, it became evident that there was also Israeli involvement in the matter through the parent company in Israel.
For example, according to the official findings, incidents took place in which Bank Leumi customers who were identified as US citizens made deposits in Israel and at the same time received loans in the US based on those deposits which were concealed outside the US. This places the bank in Israel within the scope of the investigation's findings. Although the customers to which the US report relates are American, they could also be considered Israeli if they have Israeli passports or if their lives are based and their affairs are conducted in both countries.
A Ministry of Justice spokesperson confirmed that "in concluding the meeting the Attorney General decided to set up a joint team made up of enforcement and advisory elements in order to deepen the investigation; it will present its conclusions to the Attorney General for his consideration."
Meanwhile, Supervisor of Banks David Zaken is continuing with the enquiry he instigated. Zaken was kept informed by Bank Leumi management as the affair progressed, and gave his blessing to the settlement reached with the US authorities, even at the price of handing over information on customers and internal correspondence of bank employees. One sanction that Zaken could impose is to make former Bank Leumi senior managers, headed by former chairman Eitan Raff and former CEO Galia Maor, repay bonuses they received during their time there.
Bank Leumi said in response: "Bank Leumi has announced that it will not raise for discussion in the bank's authorized forums any compromise settlement relating to claims against former officers before the joint team appointed by the Attorney General finishes its work and presents its findings. As it has stated in the past, the bank will cooperate fully with the team and will hand over all information as required. The bank is certain that it has not breached Israeli law."
Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2015
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