A jury at the New York State Supreme Court in Manhattan last week awarded Bank Hapoalim (TASE: POLI) $24 million from Turin-based Banca Intesa Sanpaolo SpA (Milan: ISP) in a dispute over Parmalat Finanziaria SpA notes it sold to Bank Hapoalim prior to Parmalat's bankruptcy in 2003. Hapoalim was awarded $14.6 million, plus interest.
Since Bank Hapoalim has already written off the investment, the award will be included in its profit and loss statement. The bank will reportedly report a NIS 60 million recovery in its financial report for the fourth quarter. Bank Hapoalim head of International Banking Alberto Garfunkel led the legal battle, and Chadbourne & Parke LLP law firm represented the bank.
The jury found that Banca Intesa defrauded Bank Hapoalim and aided and abetted fraud carried out by South America subsidiaries of Parmalat. Bank Hapoalim alleged that Banca Intesa sold it three discounted non-interest bearing promissory notes, each with a face value of $5 million in May 2003 as part of a scheme carried out by Banca Intesa to generate money for Parmalat's South American subsidiaries. Bank Hapoalim also claimed that Banca Intesa was trying to reduce its exposure to Parmalat at Bank Hapoalim's expense. Parmalat collapsed later that year, owing $21 billion in debt.
Bank Hapoalim sought legal remedies when Banca Intesa refused demands to refund the money.
Sources believe that the jury's decision to award Bank Hapoalim its full losses, plus interest, increases the possibility that other claims against Banca Intesa Sanpaolo (created by a merger between Banca Intesa merged with Banca Sanpaolo in 2007) by other financial institutions around the world to which it had sold Parmalat securities.
Published by Globes [online], Israel business news - www.globes-online.com - on October 26, 2009
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