Israel’s Supreme Court has overturned the lower court’s decision, and ruled that Mizrahi Tefahot Bank should not transfer an NIS 8 million donation that Russian-Israeli businessperson Roman Abramovich seeks to make to ZAKA Search and Rescue. Abramovich is subject to sanctions by the EU and the UK government because of his 30% holding in Russian metals company Evraz. Mizrahi Tefahot Bank argues that it is obliged to comply with these sanctions, and claimed in court about the donation that "any attempt to whitewash this or to turn a blind eye because ZAKA really needs the money is doomed to failure."
Today’s ruling is a provisional injunction in Mizrahi Tefahot Bank’s appeal against the lower court ruling. The full hearing is set down for September.
Judge Gila Canfy-Steinitz found that the bank had acted in accordance with the risk management policy that it was obliged adopt by the Supervisor of Banks, and that at this stage the claim that its refusal to transfer the money was unreasonable could not be accepted.
The proceedings turned on the provision of the Banking Services Law that forbids a bank to refuse unreasonably to provide certain services considered vital. The law does not define an "unreasonable refusal." The judge stated that Mizrahi Tefahot Bank had refused to transfer the donation because of Abramovich’s inclusion in a list of financially sanctioned persons published by the UK government and the EU following the Russian invasion of Ukraine. The bank’s refusal was based on its risk management policy. The fear was that the bank would be perceived as helping Abramovich to circumvent the sanctions imposed on him, exposing it to various risks. It was found that the policy was based on the obligation imposed on the banks by the Supervisor of Banks to set policies and procedures on management of money laundering and terror financing risks.
ZAKA was especially active in the wake of the October 7 attack on settlements in southern Israel, collecting body parts of people murdered and mutilated in the attack and assisting in identifying them.
"Without detracting in the least from the importance of ZAKA’s work, the respondents have not demonstrated that not transferring at this stage will irreversibly harm this work," the Supreme Court ruled.
Published by Globes, Israel business news - en.globes.co.il - on April 2, 2024.
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