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Overview: US-Swiss Tax Dispute
Feb 9, 2015 | Multiple Sources
- Leaked files in the so called “Swissleaks affair” show that the Swiss branch of a major British bank HSBC helped numerous well-known international personalities and politicians hide millions of euros from tax authorities -
Tax Evasion Affair: the Battle of the Derivative Claims
Feb 9, 2015 | Calcalist (Hebrew)
By Moshe Gorali
The heated battle of survival over the right to manage the derivative claim against Bank Leumi is being held between the two applicants that applied to file the suit. -
Israelis Held $10 Billion in Secret Swiss Bank Accounts, Report Says
Feb 9, 2015 | Haaretz (English)
By Uri Blau
Some 6,500 Israelis held about $10 billion in secret bank accounts at the Geneva branch of HSBC between 1988 and 2007, according to documents released late Sunday by the International Consortium of Investigative Journalists. -
Tax Authorities Will Not Recognize the Fine as Tax-Deductible
Feb 8, 2015 | The Marker (Hebrew)
By Gad Pnini
The marker previously reported that bank Leumi requested that the tax authority recognize the fine that the bank will pay the US for aiding its US clients evade tax as tax deductible, this will save the bank NIS 300 million. -
"Basic Basket of Goods and Services is not Expensive" Karnit Flug
Feb 7, 2015 | Forbes Israel
By Yehuda Sharoni
A year and three months ago Karnit Flug was appointed to the position of governor of the Bank of Israel, by default after Netanyahu failed in finding a governor after his own heart.
Bank Leumi Media Monitoring 02/09/15
English Language Press - There are no relevant clips to report at this time.
Swiss German Language Press
Israeli Press
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Overview: US-Swiss Tax Dispute
Feb 9, 2015 | Multiple Sources
- Leaked files in the so called “Swissleaks affair” show that the Swiss branch of a major British bank HSBC helped numerous well-known international personalities and politicians hide millions of euros from tax authorities, in addition to benefitting from business with arms dealers, blood diamond smugglers and financers of terror. According to the International Consortium of Investigative Journalists, international clients deposited billions of euros in the bank, much of it untaxed. In 2007, the bank held assets worth over 75 billion euro, belonging to more than 106,000 clients from 200 countries.
The information regarding HSBC Switzerland was made public today by journalists from over 40 countries, who have been investigating HBSC’s client data under the heading of “Swissleaks”. The information constituted part of the data stolen by HSBC computer scientist Hervé Falciani in 2007 and subsequently handed over to the French tax authorities. The French newspaper “Le Monde” got hold of the information and began to analyze the data of 106,000 bank clients last September.
The client files confirm that HSBC actively aided tax evasion in 2007, just like other Swiss banks did Tages-Anzeiger notes. Worldwide tax investigations have since brought in over one billion euro in back payments and fines.
- Former Wegelin banker Roger Keller, charged by US prosecutors with helping wealthy Americans evade taxes, has been arrested in Germany pending extradition to the US, his lawyer said on Saturday. Keller was one of three bankers at the now-defunct Swiss private bank charged in a 2012 indictment in New York federal court for helping US taxpayers hide more than $1.2 billion in assets.
Since 2008, 38 Swiss bankers, lawyers and client advisors have been accused of tax offences in the US. For over half of them, litigations are still pending, among them bankers from three of Switzerland’s largest banks: UBS, Credit Suisse and Julius Baer. Most of the bankers live in Switzerland, beyond the reach of the US justice. They risk being arrested if travelling abroad.
- Stefan Buck, a former employee of the now-defunct Bank Frey, intends to plead not guilty when appearing before a US court to face charges of aiding tax evasion, NZZ am Sonntag reports, quoting Buck’s lawyer. Buck was charged last year of helping wealthy Americans evade taxes.
Last month, while still in Switzerland, Buck was denied the assurances he requested about his bail conditions and now plans to travel to the US and appear in US District Court in New York. While dozens of Swiss bankers have been indicted in the US so far for allegedly aiding tax evasion with accounts shielded by Switzerland's bank-secrecy laws, few opt to leave the safety of Switzerland to defend themselves.
- The US seems to be blocking Zuercher Kantonalbank (ZKB) in the tax dispute. Repeated attempts by the bank to establish contact with the US tax authorities have been rejected and negotiations are on ice. There has been no contact for months, CEO of ZKB, Martin Scholl, said at a conference in Zurich on Friday. ZKB for its part is ready to come to an agreement as soon as the US authorities get in touch, Scholl added.
Swiss media assume that US authorities might be seeking to reach agreements with Swiss banks in category 2 first, before dealing with banks in category 1, to which ZKB belongs (as does Bank Leumi, not mentioned here). Agreements with banks in category 2 would then serve as a blueprint for negotiations with banks in category 1.
http://www.tagesanzeiger.ch/schweiz/swissleaks/Die-kriminellen-Kunden-der-HSBC-Schweiz/story/22008838
http://www.handelszeitung.ch/unternehmen/us-steuerstreit-wegelin-banker-verhaftet-736508
http://www.handelszeitung.ch/unternehmen/usa-blocken-zkb-im-steuerstreit-736373
http://www.nzz.ch/wirtschaft/newsticker/presseschau-vom-wochenende-06-0708-februar-1.18478642
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Tax Evasion Affair: the Battle of the Derivative Claims
Feb 9, 2015 | Calcalist (Hebrew)
By Moshe Gorali
The heated battle of survival over the right to manage the derivative claim against Bank Leumi is being held between the two applicants that applied to file the suit. The battle is not only about honor, but at its gist, it is about a lot of money, fees that may be derived from the loss of NIS 1.7 billion that the bank paid as a fine to the authorities in the US for their involvement in tax evasion.
Increasing the chances with the claim, or at least the willingness of the bank to come to a compromise, is the team of regulators that the attorney general put together to probe the affair. Bank Leumi has two applications for a derivative claim that have been filed at the economic court in Tel Aviv. One belonging to Barry Lanuel, represented by advocates Amit Manor and Yuki Shemesh overseen by Judge Khaled Kabub. The second was filed by Ben Zion Bezalel, represented by advocates Yitzhak Aviram and Shahar Ben Meir overseen by Ruth Ronen.
Who has first rights?
On February 23, Kabub will decide on one of the claims or to remove one of them. Each of the two pairs of lawyers Manor-Shemesh and Aviram-Ben Meir is trying to convince the courts that their claim should survive. The request of Lanuel (Manor-Shemesh) was filed in September 2013, the request of Bezalel (Aviram-Ben Meir) on the 31st of December and the revised request of Lanuel on the 6th of January. Who has first rights?
Bezalel is trying to undermine the first request filed by Lanuel. “Lanuel’s claim was early and without cause and was filed before it was the fine to be levied by the bank was determined” and “the notion that Lanuel filed against only five executives of the bank and no one else. It wasn’t field against the accountants or any other officer”. Bezalel also teases his plaintiff opponent “why and for what reason did he rush to submit the claim in 2013, before the damage had even been created” wondered Aviram and Ben Meir on his behalf.
· Bzalel’s lawyers state that Lanuel’s revised document is not revised but in fact new, with some parts even being a copied from the alternate claim. Lanuel’s revised claim now also includes the accountants. They state that the emphasis should be the quality of the application and not the speed.
· Lanuel’s lawyers are returning the fire, stating that the second claim was filed in bad faith in trying to remove or consolidate Lanuel’s claim. Additionally they point to flaws within the claim.
· Reli Leshem is representing the bank and Ram Caspi and Zvi Agmon are representing the directors. As for the accounting firms Gil Orion is representing Kost Forer and Nir Cohen Somekh Chaikin. They are all in agreement that one of the applicants needs to be removed. They state that the process of consolidating the suits could be uncomfortable.
· Judge Kabub will decide on how to conduct the lawsuits and it is doubtful he will consolidate them in full, he would want to remove one or leave it to one council. The decision will be based on two parameters - the nature of the request and the first right.
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Israelis Held $10 Billion in Secret Swiss Bank Accounts, Report Says
Feb 9, 2015 | Haaretz (English)
By Uri Blau
Some 6,500 Israelis held about $10 billion in secret bank accounts at the Geneva branch of HSBC between 1988 and 2007, according to documents released late Sunday by the International Consortium of Investigative Journalists.
Israeli citizens, as well as people born in Israel and/or listing an Israeli address, had secret Swiss accounts.
The only countries that held more money in the HSBC branch were 11,235 Swiss with $31 billion, 8,844 Britons with $21.7 billion, 1,138 Venezuelans with $14.7 billion, 4,193 Americans with $13.4 billion and 9,187 French with $12.5 billion.
The roster also included 55 people listed as citizens or others affiliated with the Palestinian territories, some in the West Bank and others in Gaza, with $148 million deposited at the bank.
The list was part of a wider exposé of about 81,000 accounts held at HSBC in Geneva by about 106,000 people from 211 countries during those years. In the final year of the period, the accounts held more than $102 billion. As of September 2006, 23,000 of the accounts were active.
The list includes the names of account holders, the amounts they deposited and in some cases notes on meetings and phone calls with bankers. The list was leaked by 43-year-old IT and systems engineer Hervé Falciani in 2007, who said the methods for managing some data would help tax evaders. He said his suggested reforms had been rejected by management.
In response to the report, HSBC said standards in those days were lower both for the bank and the financial-services industry. It said that in recent years it has taken steps to ensure that its clients are not using banking secrecy as a way of evading taxes in their home countries.
Israelis on the list include Beny Steinmetz and his brother Daniel, heirs to a diamond fortune. They were listed as having scores of accounts totaling more than $100 million.
Steinmetz has been in negotiations with Israeli tax authorities about his liability for 2003-2007; about a year ago he was ordered by a court to make available documents detailing the structure of his businesses.
“The Steinmetz family is the beneficiary of a trust controlled by various parties," a spokesman for the family said. "Mr. Steinmetz is making reports and payments to the tax authorities in accordance with the law.”
Rabbi David Pinto, the scion of a well-known rabbinical family who operates a network of nonprofit institutions, had $2.3 million in HSBC accounts as of 2007.
In an investigation by Haaretz in 2012, Pinto was found to have created a web of nonprofit groups, a hekdesh philanthropic collective and a private company that moved money back and forth among one another. This included loans of millions of dollars and reimbursements for travel expenses.
On the HSBC list, Pinto is shown to have several accounts that were opened in the 1990s through 2005. One appears under his name and another under the name of his wife Vivian. The biggest account linked to Pinto, which held $2.2 million, belongs to a company registered in the British Virgin Islands.
Pinto declined to comment on the report.
The name of Zadik Bino, the controlling shareholder of First International Bank of Israel, appears on an account belonging to a Virgin Islands company that held more than $22 million in it. The beneficiaries of the accounts are several of Bino’s children.
The list shows that Bino told HSBC bankers to provide his daughter Daphna with information on the account when she visited the branch in 2005 with the intent of reporting its existence to the Israeli tax authorities.
Avi Shubert, a spokesman for Bino, declined to comment on the specifics of the report. “The Bino family has ensured in the past and today reports entirely and in a timely way under the requirements of the relevant law to all Israeli authorities,” he said. “This includes the tax authorities and the Bank of Israel.”
Of the Israeli accounts on the list, 17 contained more than $100 million. Around 200 had $10 million or more, and 1,350 had at least $1 million. Many of the accounts listed more than one beneficiary, mostly family members but sometimes business partners.
Adi Mantel, an attorney a Calif & Co. specializing in tax matters, said beneficiaries of an account are required to report to the tax authorities, as is anyone with power of attorney over an account.
The list notes about 40 meetings in Israel by HSBC bankers with their clients, which could have put the bank in violation of local regulations.
“As a rule, the representative of a foreign bank that has no branch in Israel who comes here is prohibited from engaging in the activities conducted by a banking corporation, under the Banking Law (Registration),” said a Bank of Israel spokesman, Yoav Soffer. “Nevertheless, from the Banking Law’s perspective, providing information or advice is permissible.”
For additional coverage (Hebrew):
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Tax Authorities Will Not Recognize the Fine as Tax-Deductible
Feb 8, 2015 | The Marker (Hebrew)
By Gad Pnini
The marker previously reported that bank Leumi requested that the tax authority recognize the fine that the bank will pay the US for aiding its US clients evade tax as tax deductible, this will save the bank NIS 300 million.
Tax Law states that the fine is not deductible for tax proposes because this recognition would result in in public participation in the payment of the fine, by reducing the tax liability of the body that was fined. In other words, part of the punishment will be imposed on the public. If the reduced tax liability is recognized, the Bank’s expenses would be reduced and the public would participate in the punishment imposed on the bank.
· There are two issues connected to whether the tax authority should deduct the payments.
· The first is that Crimes were committed abroad which didn’t hurt the state or its citizens, in fact the state benefitted from increased revenues. At present it appears that the tax authorities enjoyed excess profits derived by Bank Leumi as a result of the banks illegal activity, but is not taking part in the payment of the fine imposed. This not right for the bank or the shareholders.
· Is it on the tax authority to return taxes that were generated by an offence? One does not ask a robber to pay taxes on his loot. Moreover, in light of the duty of confidentiality on the tax, the tax authority must not report the robber to the police.
· The tax authority enjoyed the fruits of Bank Leumi’s illegal activities but on the other hand requires that it carry its own criminal burden.
· Bank Leumi has stated that no request was made to recognize the fine as a tax deduction
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"Basic Basket of Goods and Services is not Expensive" Karnit Flug
Feb 7, 2015 | Forbes Israel
By Yehuda Sharoni
A year and three months ago Karnit Flug was appointed to the position of governor of the Bank of Israel, by default after Netanyahu failed in finding a governor after his own heart. She was described as a “weak” governor that would find it difficult to step into the large shoes of Stanley Fisher. They said she would not know how to knock on the table as it was expected by the government’s economic adviser, Lapid as the finance minister ignored her recommendations. But where is she, and where is he today?
It may be that Netanyahu ignored her, but in a month it may be that he too is of the past. If we judge the governor according to the test of net gains, subject to the fact that judgment after such a short period is not perfect, she will be considered a success so far. The numbers speak for themselves.
· It is hard to ignore that the timing of the stepping down of supervisor of banks, Dudu Zaken in light of the Leumi affair. The Governor has kept this interest on a low profile hasn’t acv=ted to stabilize the banks head on, despite the attacks on the banks
· Sources close to the Bank of Israel say that some of the attacks are a result of populism.
· The supervisor was privy to the affair at least the last part of it, and will publish an audit report on the overall provisions long before his resignation in June
· With regards to the wage negotiations and the lowering of the automatic 5% annual increase Flug says that the banks must become more efficient and attaching the agreement to other banks will hurt competition.
· The article continues with an interview of Karnit Flug.
Bank Leumi Media Monitoring 02/09/15
English Language Press - There are no relevant clips to report at this time.
Swiss German Language Press
Israeli Press
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