The case concerning Roman Abramovich's NIS 8 million donation to the ZAKA search and rescue organization has today taken another twist. Attorney General Gali Baharav-Miara, representing Supervisor of Banks Daniel Hahiashvili and Governor of the Bank of Israel Prof. Amir Yaron has sided with the position of Mizrahi Tefahot Bank, which is refusing to transfer the donation by Abramovich.
Abramovich and ZAKA sued Mizrahi Tefahot Bank in the Tel Aviv District Court because of the bank’s refusal to transfer the money, on the grounds that Abramovich’s account was blocked because of sanctions imposed by the EU and the UK, and so no transactions could be carried out.
Abramovich's lawyers filed a request for an urgent injunction allowing the bank to transfer the funds. Three weeks ago at the first hearing on the matter in the Tel Aviv District Court, Judge Yardena Seroussi said that she was inclined to approve Abramovich’s petition for the transfer to take place.
She said, "Is it reasonable for the bank to adopt European sanctions when there is no dispute that they do not apply to Israel? Especially when it is a case of a donation to an organization that it helping Israel in a difficult time? You argue that the bank respects the sanctions regime, but in this case it is possible to make an exception. This is a case of money in a closed box in Israel that stays in Israel, and for a very worthy and important cause, especially now. Why would that spoil the bank’s reputation?" the judge told Mizrahi Tefahot’s counsel.
But now the Attorney General has entered the fray and made clear that the state's position is that the refusal is absolutely reasonable, while adding, "This position in no way downplays the importance of the plaintiff's sacred activity - ZAKA."
Baharav-Miara said, "The position focuses on the question of the consequences and the systemic risk of violating the international sanctions regime, in accordance with the assessment of the professionals at the Bank of Israel and the Supervisor of Banks, and it is also true for the concrete circumstances of this procedure. That is, the transfer of funds in shekels from a bank account managed in a bank in Israel in the name of a declared entity to the account of an NGO that is managed by a bank in Israel for a donation."
All the banks in Israel would be exposed to risk
Baharav-Miara continued that there is no dispute that the sanctions were not imposed by the State of Israel and are not subject to Israeli law. But she said, "Taking advantage of the banking system to circumvent sanctions regimes imposed by foreign countries and international organizations exposes banking corporations to various risks, including compliance risks, money laundering and financing risks, terrorism, legal risks and reputational risks".
Therefore, the position of the Attorney General is that Mizrahi Tefahot's decision to block Abramovich's contribution to ZAKA is consistent with the legal obligation of the instructions of proper banking management, "To establish a risk management policy in connection with the various potential consequences in the event that sanctions imposed on by foreign countries and international organizations, and to implement it. This, even if apparently there is no direct Israeli involvement or a declared Israeli interest in the imposition of the sanctions themselves."
Baharav-Miara insists that if Abramovich's donation to ZAKA is approved, then not only Mizrahi Tefahot will be exposed to risks due to international sanctions, but all banks in Israel.
Abramovich’s counsel Shmuel Cassuto said in response: "We have just now received the stance of the State Attorney’s Office. It’s regrettable that the State Attorney’s Office relies on the opinion of the Supervisor of Banks only, and not on that of government ministers who believe otherwise, and on the stance of the government of Israel, which decided not to participate in the sanctions regimes. It’s regrettable that, in its stance, the State Attorney’s Office returns us to the laws of the British mandate, even if Israeli interests are harmed. If, tomorrow, Britain imposes sanctions on Israeli government ministers or IDF officers, will the State Attorney’s Office rush to block their bank accounts in Israel then too? It must be remembered that we are talking about a philanthropic donation on Israeli territory and a difficult hour for the state in wartime."
Published by Globes, Israel business news - en.globes.co.il - on January 28, 2024.
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