This morning, Israel Discount Bank (TASE: DSCT) reported that it reached a settlement in Australia concerning claims of abetting tax evasion stretching over more than two decades by a wealthy Australian Jewish family that got into financial difficulties.
Discount Bank and its subsidiary Mercantile Discount Bank were suspected not only of turning a blind eye in the affair but of taking a conscious and active part in actions designed to hide funds and reduce tax liabilities of companies owned by the Binetter family. It should be pointed out that the proceedings against the Binetter family's receivers are civil and not criminal.
Under the settlement, Discount Bank and Mercantile Discount Bank will pay NIS 343 million, of which NIS 323 million will be paid by Discount Bank and the remainder by Mercantile Discount Bank. Discount Bank says that its existing provision for the outcome of the case will cover the settlement and that no additional provision will be necessary.
Discount Bank has also reached a settlement with its insurers whereby the insurers will pay it $55 million, of which it will post $47.5 million as revenue.
The alleged tax evasion scheme involved funds placed in bank deposit accounts, which were then rechanneled to the depositor as business loans. The interest on the loans was claimed as a tax expense, but the interest was credit to the deposit account, less a commission.
Discount Bank also states that in accordance with a demand by the Bank of Israel Banking Supervision Department, it will set up an independent committee headed by retired judge Hila Gerstel, to examine its conduct in the affair.
Published by Globes, Israel business news - en.globes.co.il - on January 31, 2021
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