Attorney General Avichai Mendelblit has ordered the Israel Police to question three former Bank Leumi executives for allegedly helping U.S. customers of the bank to avoid paying U.S. taxes.
- Documents Detail How Leumi Aided Clients to Evade U.S. Taxes
- For Israel’s Banks, U.S. Tax Probe Refuses to Go Away Quietly
- Israeli Court Orders ex-Bank Leumi Execs to Repay $1.35m in Bonuses
- Israel's Bank Leumi to Pay $1.6 Million Over Unregistered U.S. Business
The investigation against Galia Maor, Eitan Raff and Zvi Itskovitz was reported on Friday on Channel 1 television news by Mordechai Gilat. He said police were to examine criminal aspects in the affair. The Bank of Israel’s banking supervisor has already reviewed regulatory aspects of the case.
The probe in Israel is unusual in that similar charges against Swiss, British and French banks ended in deals with the U.S. government; no charges were filed.
The Justice Ministry declined to comment on the report.
Leumi, the only Israeli bank to sign a deal with U.S. authorities, paid $400 million in penalties plus additional costs.
Under an agreement the bank reached with former CEO Maor, former chairman Raff and former private banking head Itskovits, the three were to repay a total of 5.1 million shekels ($1.42 million) in bonuses. Maor returned 2.6 million shekels, Raff returned 1.7 million shekels and Izkovitz returned 800,000 shekels. In addition, their insurance company agreed to pay the bank $92 million to help defray the costs of the penalty, in exchange for ceding all rights to further claims against the bank or its employees in the affair.
As part of the settlement with New York, Leumi agreed to strict financial monitoring to guarantee the bank’s compliance with U.S. regulations.
The period of heightened oversight ended last year, and Bank Leumi now operates without restrictions in the United States.
Bank Hapoalim and Bank Mizrahi Tefahot are under similar investigation by U.S. regulators. Hapoalim is expected to pay a similar fine to that of Leumi, despite its claims that it will pay less.
Hapoalim and other banks are also under investigation by New York and U.S. federal regulators for their alleged role in facilitating bribes paid to the international soccer organization FIFA. The probe, which began two years ago, is looking into money laundering and racketeering by FIFA officials, some of whom had accounts at the bank.