Attorney general to examine Bank Leumi tax evasion scandal
Other bodies announce similar probes; bank agreed to pay $400 million to US
he Attorney General’s Office will open an investigation into the Bank Leumi Group, it revealed Thursday, weeks after the bank agreed to pay $400 million to United States and New York authorities for helping American taxpayers hide assets
Attorney General Yehuda Weinstein, in consultation with the Bank of Israel, the Tax Authority, the State Prosecutor, and the Authority for the Prohibition of Money Laundering, began examining the episode after the US Department of Justice announced th
The bank agreed to a deal in which it admitted to wrongdoing without pleading guilty and avoiding prosecution.
Other bodies are also investigating the episode, Israeli business news site Globes reported. State Comptroller Yosef Shapira announced Monday that it would review the Bank of Israel’s banking supervision in light of the Leumi scandal and similar alleged activities by two other Israeli banks.
In addition, Accountant General Michal Abadi-Boiangiu informed Leumi that it might sue former senior bank officials to protect the state, which owns a 6% stake in Leumi, from having to pay any portion of the fine to the US.
Meretz chairwoman Zehava Galon praised Weinstein’s decision, saying that the investigations “let Israel’s financial elite know that the ‘party’ they are accustomed to has come to an end.”
Bank Leumi said it welcomed the investigations into its actions.
From at least 2000 until early 2011, Leumi sent private bankers from Israel and elsewhere to meet with US taxpayers and help them conceal assets at Leumi locations in Israel, Switzerland and Luxembourg, documents revealed.
Leumi, a unit of Bank Leumi le-Israel, also helped US taxpayers prepare and present false tax returns, prosecutors said.
As part of the agreement, Leumi agreed to pay $270 million to the US Department of Justice, $156 million of which is a fine for US taxpayer accounts held at the bank’s Swiss subsidiary, and $130 million to New York’s Department of Financial Services.
The bank will also fire some senior staff as part of the settlement, and agreed to supply information on more than 1,500 US account holders.
“The Bank Leumi Group recognized that the writing is on the wall for offshore banking, and cooperating with the government’s investigation was the only way to proceed,” said US Deputy Attorney General James Cole.
“This deferred prosecution agreement demonstrates both that the Justice Department will hold financial institutions accountable for their crimes, and that we will be fair in recognizing extraordinary cooperation,” said Cole.
The Justice Department said the case marks the first time an Israeli bank has admitted to such criminal conduct.