Bank Hapoalim (TASE: POLI) has settled the charges against it by the US authorities on assisting US customers to evade taxes and its involvement in the FIFA soccer bribery affair, by agreeing an overall fine of $904 million. This is just $4.2 million more than the bank has already set aside on the matter. Hapoalim is paying $874.3 million to settle the tax evasion claims and $30 million for the FIFA scandal.
US Attorney for the Southern District of New York Geoffrey S. Berman said, " "Israel’s largest bank, Bank Hapoalim, and its Swiss subsidiary have admitted not only failing to prevent but actively assisting US customers to set up secret accounts, to shelter assets and income, and to evade taxes. The combined payment approaching $1 billion reflects the magnitude of the tax evasion by the Bank’s US customers, the size of the fees the Bank collected to provide this illegal service, and the gravity of the illegal conduct." The affair relates to actions between 2002 and 2014.
The US Justice Department said that Bank Hapoalim had pleaded guilty to "conspiring with US taxpayers and others to hide more than $7.6 billion in more than 5,500 secret Swiss and Israeli bank accounts and the income generated in these accounts from the Internal Revenue Service.
Hapoalim insisted that the detailed arrangements referred to by the US Department of Justice were the actions and responsibility solely of Bank Hapoalim Switzerland.
The affair has cast a shadow over the bank for CEO Dov Kotler who assumed his position last year. Following the instructions of Israel's Supervisor of Banks, Hapoalim's board of directors has appointed former Supreme Court Justice Yoram Danziger to head an independent enquiry into the affair and investigate the processes and auditing procedures that allowed such a thing to happen, "relating to aspects of corporate governance and the conduct of senior management and the board of directors."
The fine imposed on Hapoalim is far higher than penalties paid by Bank Leumi (TASE: LUMI) and Mizrahi Tefahot Bank (TASE:MZTF) for their involvement in similar tax evasion affairs. In addition, Hapoalim has paid an estimated NIS 1.3 billion in legal costs.
Published by Globes, Israel business news - www.globes-online.com - on May 1, 2020
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