The Bank of Israel is carrying out a money laundering audit at Cal (Israel Credit Cards Ltd.), managed by Boaz Chechik. Cal is Israel's second largest credit card company. It issues Visa and Diners cards, and is owned by Israel Discount Bank (TASE: DSCT) (71.8%) and First International Bank of Israel (TASE: FTIN1;FTIN5) (28.2%).
The audit will examine, among other things, the clearing of electronic commerce of overseas Internet sites by subsidiary Cal Properties,. The overseas activity, which includes clearance for gambling and soft pornography sites, contributed NIS 92 million to the company's revenue, or 12% of the total. Because of the nature of the activity, the profit margin is very high, and the contribution to profit was NIS 40 million, 24% of the total net profit.
Sources in the banking system said that the audit at Cal was designed to send a message to the company from the Bank of Israel, and pointed to the "reputation risk" that arises from this kind of activity. It is believed that the Bank of Israel is unhappy at Cal's involvement in clearing payments at gambling and pornography sites, and would prefer it not to engage in it.
In response, Cal said, "This is a routine audit that will take several months. The audit is examining processes and procedures, and overseas activity. All Cal International's activity has received the Bank of Israel's approval and blessing."
Published by Globes [online], Israel business news - www.globes.co.il - on January 22, 2009
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