Israelis Held $10 Billion in Secret Swiss Bank Accounts

Only people from five countries held more money at the HSBC branch between 1988 and 2007, according to the International Consortium of Investigative Journalists.

The HSBC headquarters.
Reuters

Some 6,500 Israelis held about $10 billion in secret bank accounts at the Geneva branch of HSBC between 1988 and 2007, according to information and documents obtained by Haaretz and by the International Consortium of Investigative Journalists.

Israeli citizens, as well as people born in Israel and/or listing an Israeli address, had secret Swiss accounts.

The only countries that held more money in the HSBC branch were 11,235 Swiss with $31 billion, 8,844 Britons with $21.7 billion, 1,138 Venezuelans with $14.7 billion, 4,193 Americans with $13.4 billion and 9,187 French with $12.5 billion.

The roster also included 55 people listed as citizens or others affiliated with the Palestinian territories, some in the West Bank and others in Gaza, with $148 million deposited at the bank.

The list was part of a wider exposé of about 81,000 accounts held at HSBC in Geneva by about 106,000 people from 211 countries during those years. In the final year of the period, the accounts held more than $102 billion. As of September 2006, 23,000 of the accounts were active.

The list includes the names of account holders, the amounts they deposited and in some cases notes on meetings and phone calls with bankers. The list was leaked by 43-year-old IT and systems engineer Hervé Falciani in 2007, who said the methods for managing some data would help tax evaders. He said his suggested reforms had been rejected by management.

In response to the report, HSBC said standards in those days were lower both for the bank and the financial-services industry. It said that in recent years it has taken steps to ensure that its clients are not using banking secrecy as a way of evading taxes in their home countries.

Israelis on the list include Beny Steinmetz and his brother Daniel, heirs to a diamond fortune. They were listed as having scores of accounts totaling more than $100 million.

Steinmetz has been in negotiations with Israeli tax authorities about his liability for 2003-2007; about a year ago he was ordered by a court to make available documents detailing the structure of his businesses.

“The Steinmetz family is the beneficiary of a trust controlled by various parties," a spokesman for the family said. "Mr. Steinmetz is making reports and payments to the tax authorities in accordance with the law.”

Rabbi David Pinto, the scion of a well-known rabbinical family who operates a network of nonprofit institutions, had $2.3 million in HSBC accounts as of 2007.

In an investigation by Haaretz in 2012, Pinto was found to have created a web of nonprofit groups, a hekdesh philanthropic collective and a private company that moved money back and forth among one another. This included loans of millions of dollars and reimbursements for travel expenses.

On the HSBC list, Pinto is shown to have several accounts that were opened in the 1990s through 2005. One appears under his name and another under the name of his wife Vivian. The biggest account linked to Pinto, which held $2.2 million, belongs to a company registered in the British Virgin Islands.

Pinto declined to comment on the report.

The name of Zadik Bino, the controlling shareholder of First International Bank of Israel, appears on an account belonging to a Virgin Islands company that held more than $22 million in it. The beneficiaries of the accounts are several of Bino’s children.

The list shows that Bino told HSBC bankers to provide his daughter Daphna with information on the account when she visited the branch in 2005 with the intent of reporting its existence to the Israeli tax authorities.

Avi Shubert, a spokesman for Bino, declined to comment on the specifics of the report. “The Bino family has ensured in the past and today reports entirely and in a timely way under the requirements of the relevant law to all Israeli authorities,” he said. “This includes the tax authorities and the Bank of Israel.”

Of the Israeli accounts on the list, 17 contained more than $100 million. Around 200 had $10 million or more, and 1,350 had at least $1 million. Many of the accounts listed more than one beneficiary, mostly family members but sometimes business partners.

Adi Mantel, an attorney a Calif & Co. specializing in tax matters, said beneficiaries of an account are required to report to the tax authorities, as is anyone with power of attorney over an account.

The list notes about 40 meetings in Israel by HSBC bankers with their clients, which could have put the bank in violation of local regulations.

“As a rule, the representative of a foreign bank that has no branch in Israel who comes here is prohibited from engaging in the activities conducted by a banking corporation, under the Banking Law (Registration),” said a Bank of Israel spokesman, Yoav Soffer. “Nevertheless, from the Banking Law’s perspective, providing information or advice is permissible.”

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This article was amended on February 9 to reflect the fact that documents obtained by the International Consortium of Investigative Journalists were not made public.