Mizrahi Tefahot rejects $322m US tax probe settlement

Mizrahi Tefahot Photo: Eli Yizhar
Mizrahi Tefahot Photo: Eli Yizhar

The Israeli bank has refused an offer by the US authorities to settle an investigation against it on allegations that it helped US customers evade tax.

Mizrahi Tefahot Bank (TASE:MZTF) has refused an offer by the US Department of Justice to settle an investigation against it on allegations that it helped US customers evade tax. The Israeli bank, managed by CEO Eldad Fresher, announced last night that the US Department of Justice had offered to end the probe in exchange for a $342 million fine. However, Mizrahi Tefahot decided, in a rare such decision involving concerns about US regulators, to reject the offer to pay the fine.

The fine proposed by the US regulator seems to be comparatively high. Bank Leumi (TASE: LUMI), which engages in a volume of activities in the US that is considerably higher than Mizrahi Tefahot, agreed a settlement of $180 million with the Department of Justice and an additional fine of $120 million with the New York regulator (to whom Mizrahi Tefahot has no exposure).

Mizrahi Tefahot wrote, "The letter from the representative of the US Department of Justice specified an amount with no details or principles upon which this sum was calculated. The aforementioned letter did come with an attached working draft document that could serve as the basis for a possible settlement, although the draft settlement itself was not approved, it did reflect the existence of negotiations for the purpose of reaching an agreed settlement as soon as possible."

Mizrahi Tefahot also wrote that the bank's board of directors had instructed its US lawyers to tell the Department of Justice that the offer was not acceptable because, "Any reasonable calculation based on the alleged behavior of the bank and its employees as described by the Department of Justice would lead to a very significantly lower sum than that being talked about."

Despite Mizrahi Tefahot's rejection of the offer, in all likelihood the bank will be required to set aside a certain amount in its upcoming financial reports due to these latest developments, and the bank remarked that it is considering this. To date, Mizrahi Tefahot has only set aside $45 million for this matter.

Published by Globes [online], Israel business news - www.globes-online.com - on August 8, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Mizrahi Tefahot Photo: Eli Yizhar
Mizrahi Tefahot Photo: Eli Yizhar
Tel Aviv Stock Exchange credit: PR Pomvom secures NIS 19.7m in private placement

The offering by the Israeli company, which has developed digital experiential documentation in amusement parks was led by the provident and mutual funds of Mor Investment House and the mutual and hedge funds of IBI.

Arbe Robotics CEO Kobi Marenko credit: David Garb Arbe Robotics jumps on Nvidia collaboration

The Israeli auto-tech chip company will work with Nvidia to enhance free space mapping and AI-driven capabilities to further advance the automotive industry.

Bank of Israel Governor Amir Yaron credit: Eyal Izhar, Tali Bogdansky Bank of Israel keeps rate unchanged, raises growth forecast

This is the eighth successive time that the Bank of Israel Monetary Committee has left the interest rate unchanged.

Shuki Nir  credit: SolarEdge SolarEdge lays off another 400 employees

While the previous rounds of layoffs were carried out by the then CEO Zvi Lando, the current round is being led by new CEO Shuki Nir.

Israeli apartments Credit: Shutterstock Apartments sold and rented

A selection of recent real estate deals in Israel in Jerusalem, Givat Shmuel, Yehud-Monosson, Yavne, Kfar Vradim, and Arad.

CyberArk CEO Matt Cohen and founder and executive chairman  Ehud Mokady  credit: PR CyberArk reaches all-time high market cap

Analysts still rate the cybersecurity company, the fourth most valuable Israeli company on Wall Street, as underpriced.

SuperCom  credit: PR SuperCom shares soar 134% in a week

The company reported winning two contracts for its public safety solutions in Kentucky.

Yoav Etzyon, Racheli Guz-Lavi, Eyal Bressler, and Yonatan Altman  credit:  Eyal Marilus Law firms APM and Dr. Eyal Bressler merge

Dr. Eyal Bressler & Co. specializes in intellectual property, and will expand Amit Pollak Matalon's services to include patents registration.

Bank of Jerusalem CEO Yair Kaplan  credit: Rami Zarnegar Bank of Jerusalem renews bid for Isracard

The bank claims that its new offer is better for Isracard shareholders than the agreement just signed with Delek Group.

Ben Gurion Airport arrivals board  credit: Tali Bogdanovsky Airlines not rushing back to Israel despite impending law change

Many foreign airlines made reduced compensation for delayed and canceled flights the condition for their return, but the security situation appears to be weighing more.

Port of Ashdod  credit: Shutterstock Gov't threat ends Ashdod Port strike within hours

The Treasury and the Transport Ministry told the workers that, unless they returned to work immediately, the privately owned ports would be allowed to use additional quays.

PULS Artillery rocket launcher credit: Elbit Systems Greece close to buying Elbit rocket launchers - report

According to Greek newspaper "Kathimerini", the deal will amount  to €500-700 million.

Israel Air Force F15   credit: IDF Spokesperson Biden gov't plans $8b military aid package for Israel

Military aid of this scope will require approval by both houses of Congress.

Port of Ashdod  credit: Shutterstock/ImageBank4u Strike shuts Ashdod Port

The strike is over the hiring of temporary workers. Meanwhile, long queues of ships are building up outside Israel's ports.

Tesla Y credit: PR Tesla only EV in Israel to raise prices after tax hike

Most electric vehicle importers in Israel have not significantly raised prices due to their large inventories.

Pratt & Whitney postpones closure of Israel’s BTL

A source close to the matter has told “Globes” that the BTL plant will not be closed in 2025, keeping 900 employees in jobs for at least another year.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018