Gaydamak, Poalim Execs Indicted for Money Laundering

Seven years after their alleged crimes occurred, Arcadi Gaydamak, Nahum Galmor, Poalim Trust Services and a number of Bank Hapoalim executives were all indicted yesterday on a number of counts of money laundering and fraud, amounting to about NIS 650 million.

Israeli authorities charged the enigmatic Russian-born tycoon in Tel Aviv District Court. Gaydamak has fled the country, but his lawyer, former justice minister David Libai, rejected the accusations. "Arcadi Gaydamak has asked me to announce that he intends to return to Israel for his trial in order to show that there is no substance to the charge and to prove that he is being wrongfully persecuted," Libai said in a statement.

Prosecutors say Gaydamak conspired with senior Israeli banking executives to conceal his financial activities. Indicted with him were Galmor, who was accused of being the front man for Gaydamak in the affair, and former senior executives of Poalim Trust Services: chairman Shlomo Recht, CEO Haim Shamir, legal counsel Ram Levy; and Keren Laloum, former head of the French desk at the Hayarkon branch of Bank Hapoalim. The indictment also asks the court to seize NIS 40 million from the company if and when a conviction is handed down. The request calls for the court to take the money from the company itself and not its clients.

Gaydamak became a celebrity in Israel despite not speaking Hebrew and having a checkered past. He ran for mayor of Jerusalem last year and is the owner of the former Israeli league soccer champions Beitar Jerusalem. He's also known for his high-profile philanthropic projects, including a beachside vacation village for Israelis fleeing Hezbollah rocket fire in the north of the country in 2006 during the Second Lebanon War. He also faces an international arrest warrant stemming from a French investigation into alleged arms trafficking to Angola in the early 1990s.

He left Israel for Russia late last year under a growing cloud of suspicion of financial crimes, and after his campaign for Jerusalem mayor ended in a humiliating defeat.

The prosecution wants Gaydamak to put up a $10 million bond to guarantee his appearance at the trial, and for Galmor, who is not an Israeli resident, to put up $7 million.

The Justice Ministry spokesman said the main defendants were actually Recht and Shamir, despite media reports over the years fingering Gaydamak and Galmor as the masterminds behind the alleged crimes.

The main charges in the indictment relate to events that occurred in March 2002. It is alleged that Gaydamak decided at the time to buy a Dutch phosphorus and phosphates company, ThermPhos; because he knew the shareholders would never sell the firm to someone with his reputation, he used Galmor as a front.

Galmor approached a Dutch bank, Amro, which at the time held 20% of ThermPhos' shares, the indictment alleges, and expressed interest in the purchase. Galmor then opened an account with the Hayarkon branch of Bank Hapoalim, branch number 535, and presented himself as the the controlling owner of Kazphosphate, a Kazakhstani phosphate firm, listing the account in the company's name with Galmor as the only signatory. To demonstrate the seriousness of his intentions, Poalim Trust then abused the weight of its reputation and wrote a letter to Amro stating that Kazphosphate was a preferred customer, and presenting $50 million of Gaydamak's money as belonging to Galmor, claims the indictment.

"During the negotiations Gaydamak, Galmor, Recht and Poalim Trust Services hid the fact that the negotiations were on Gaydamak's behalf using a series of false presentations," the indictment states. They are all charged with aggravated false receiving and various fraud and money laundering offenses, including not reporting properly to the Israel Money Laundering Prohibition Authority.

Shamir, Laloum and Poalim Trust are charged with forging corporate documents and nonreporting according to money laundering laws. Levy is charged with acting to avoid reporting transactions to the authorities.

Gaydamak will be required to attend the official reading of the indictment in court, which must take place within 30 days, but the defense will then be given time to review the case and respond later.

Gaydamak's lawyers said he would appear in court to show the charges are false and prove he is being falsely persecuted. In addition, his lawyers said the charges relate to money laundering, but that it is clear the charges do not state that the money was obtained illegally. "All the funds were from legal sources," said Gaydamak's lawyers.

In addition, they said they would prove that Galmor had never acted as a front for Gaydamak, that Gaydamak did not buy the Dutch firm, and that no false presentations were ever made on his behalf.

Some of the defendants were given their first hearing to convince prosecutors not to file the charges three years ago.

Pinhas Rubin, the attorney representing Poalim Trust Services, Recht and Shamir, said: "It's natural that a trust company acts for others and not itself, and acts on the clients orders. A trust company is not a partner in any way in the business behind the funds entrusted to it. In my opinion, it is impossible to attribute to [Poalim Trust Services] the forbidden acts of others, if they are forbidden. The company has no way to evaluate the nature of the acts, which on the face of it seem to be perfectly Kosher."

Levy's lawyer was overseas and could not be reached.

Laloum's lawyer said that she will have a hearing, after which he believes the charges against her will be dismissed.

Galmor's lawyers Navot Tel-Zur and Jack Chen said there was no reason to indict their client, and the fact that the indictment was filed so long after both the events and the hearing spoke for itself. They denied he was a front man for Gaydamak and said the whole affair had caused him great harm.