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Swiss German Language Press

1. Overview: US-Swiss Tax Dispute

   Mar 3, 2015 | Multiple Sources

   The Swiss National Assembly wants to prevent Swiss banks from deducting the fines they have paid in the US for settling the tax dispute from their taxes in Switzerland.

English Language Press - There are no relevant clips to report at this time.

Israeli Press

2. Galia Maor's Network

   Mar 2, 2015 | The Marker (Hebrew)

   By Shuki Sadeh
   
   
   Galia Maor who was CEO of Bank Leumi for 17 years definitely never thought that after her retirement she would have to deal with what is emerging as one of the biggest scandals in Israeli Banking History
3. To the New Finance Ministers: 12 Failures in Israeli Banking System

   Mar 2, 2015 | The Marker (Hebrew)

   By Rotem Starkman
   
   
   For the most part the supervision of the Bank of Israel has achieved its goals over the last decade: since the collapse of the Bank of commerce in 2002, no bank has collapsed
4. Banks Setting Aside NIS 400 Million for Fishman Debt in 4Q

   Mar 2, 2015 | Haaretz (English)

   By Michael Rochvarger
   
   
   Big provisions come as value of tycoon’s Russian real estate assets plummet; Israeli lenders have so far set aside about 60% of the value of his loans - between 2.7 billion and 3 billion shekels.
5. Majority Support Distribution of JCT's Bank Leumi Shares as Dividends in Kind

   Mar 2, 2015 | Calcalist (Hebrew)

   By Racheli Bindman
   
   
   The “ordinary” shareholders of the Jewish Colonial Trust (JCT) held a vote yesterday with regards to the distribution of the company’s key asset (5% of bank Leumi shares) as dividends in kind, despite the companies opposition to the vote.

Swiss German Language Press

1. Overview: US-Swiss Tax Dispute

   Mar 3, 2015 | Multiple Sources

   -        The Swiss National Assembly wants to prevent Swiss banks from deducting the fines they have paid in the US for settling the tax dispute from their taxes in Switzerland.  The National Assembly approved a motion to this effect yesterday with 115 votes against 55. The Swiss government has already adopted the motion.

   The motion states that fines of punitive character imposed in Switzerland or abroad cannot be tax deductible in Switzerland. The motion corresponds to what has already been current practice in Switzerland, but so far this practice has lacked a legal basis. Individual cantons have therefore been able to decide differently in certain cases. The motion allows the deduction of fines paid in order to skim off profits. The matter came up on the political agenda in Switzerland last year in connection with the multi-billion dollar fines paid by Credit Suisse in the US-Swiss tax dispute.

   -        Three months into his posting as Swiss ambassador to Washington, Martin Dahinden says he is “confident” the bank issue between the two countries can be resolved. In an interview with Swiss info mainly focusing on terrorism and trade deals, Dahinden says that the joint statement signed by Switzerland and the US in August 2013 is a clearly defined framework providing an opportunity for Swiss banks to resolve past issues. He is confident he says that the bank issues will eventually be resolved. “Fortunately, it did not compromise the many other relations between the two countries,” he said.

    

   -        Responding to the question whether he felt Swiss banks and Switzerland were bullied by the US in the tax evasion affair involving former UBS number three Raoul Weil, who was acquitted in November of conspiring with wealthy Americans to hide billions of dollars in secret accounts from the Internal Revenue Service, Dahinden says the embassy has taken note of the outcome of the proceedings. “However, the foreign ministry cannot comment on the proceedings or the outcome,” he added.

    

   http://www.blick.ch/news/politik/parlament-schiebt-betruegerfirmen-einen-riegel-keine-bussen-mehr-von-steuern-abziehen-id3533134.html

   http://www.tagesanzeiger.ch/schweiz/standard/Die-zwoelf-heutigen-Themen-der-Nationalratssession/story/12886652

   http://www.swissinfo.ch/eng/ambassador-to-us-on-tax-scandals--terrorism-and-trade-deals/41300202

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English Language Press - There are no relevant clips to report at this time.

Israeli Press

2. Galia Maor's Network

   Mar 2, 2015 | The Marker (Hebrew)

   By Shuki Sadeh

   Galia Maor who was CEO of Bank Leumi for 17 years definitely never thought that after her retirement she would have to deal with what is emerging as one of the biggest scandals in Israeli Banking History. The tax evasion scandal – in which the bank aided its US clients evade tax, which took place during her time as manager of the bank, and resulted in the bank setting aside NIS 1.8 billion. This affair is just at its beginning, a civil suit is already on it way and it wouldn’t be an exaggeration to assume that an in depth investigation will be held against Maor, who was CEO and Eitan Raff who was chairman.

   Maor began her career at the Bank of Israel as a student at the age of 20. She worked at the central bank for over two decades and in her final position she served as the supervisor of banks during the banking shares crisis in 1983. At the Bank of Israel Maor met the person who is considered most close to her, advocate Dalia Tal, a partner in Kantor, Elhanani, Tal. Maor met Tal again when she arrived at Bank Leumi. Over the years Tal was the external legal counsel to the bank and members of the bank’s board of directors. Another connection that Maor made from her time at the bank was Zeev Abeles, who today is chairman of Union Bank and the former supervisor of banks.

   In 1991, Maor moved over to Bank Leumi as Deputy Director General and after 4 years was appointed CEO of the bank. Ties to Somekh Chaikin, which provides services to Bank Leumi, allowed her to handpick a young accounts assistant that had just started working at the prestigious firm- Rakefet Russak Aminoach. Over the years Maor nurtured her though various positions and prepared her to become heiress. Since retiring Maor’s name was mentioned regarding certain positions that were not brought to action. Including the possibility of becoming chairman of Tnuva, an offer she received from Zehavit Cohen, CEO of Apex fund and a partner in the company. Today Maor is a director of Teva and Strauss.

   Maor is also friendly with Yitzhak Tshuva, controlling shareholder of Delek Group. Her husband, a computer man Yehoshua Maor (Who was previously CEO of IBM Israel) was employed in the past by one of the subsidiaries of Delek Group. In this time she disqualified herself from dealing with issues relating to Delek. Maor and her husband were even guests at the wedding of Tshuva’s son Elad, in the Ben Shemen forest in 2011. 

   For a visual of the network please see: http://www.themarker.com/magazine/1.2553851

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3. To the New Finance Ministers: 12 Failures in Israeli Banking System

   Mar 2, 2015 | The Marker (Hebrew)

   By Rotem Starkman

   For the most part the supervision of the Bank of Israel has achieved its goals over the last decade: since the collapse of the Bank of commerce in 2002, no bank has collapsed, there may however, have been a fair amount of luck in this, especially during the financial crisis of 2008-2009. Yet what is important is that the main goal of the supervision, stability of the financial system and each of the banks in particular, is maintained.

   Dudu Zaken is a supervisor of Banks with good intentions. It is not like the Supervisor of Capital Markets, Insurance and Savings, former treasure, Professor Oded Sarig who was in fact the lobbyist of the insurance companies and ministry of finance. As part of his position Zaken lead some new moves such as the decentralization of control of banks Leumi and Discount and it appears that FibI and Mizrahi Tefahot are also separating from controlling shareholder.

   ·        The article lays out 12 failures of the Israeli banking system, with the first failure being the Israeli Banks in the US tax evasion scandal.

   ·        Leumi that already signed a settlement with the US, admitted to the infraction and paid a fine of NIS 1,4 billion. Hapoalim and Mizrahi Tefahot are under investigation and will likely have to pay a fine. In the meantime all managers have remained untouched.

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4. Banks Setting Aside NIS 400 Million for Fishman Debt in 4Q

   Mar 2, 2015 | Haaretz (English)

   By Michael Rochvarger

   Provisions Israel’s banks will be taking against the possibility that entrepreneur and investor Eliezer Fishman becomes overwhelmed by debt may reach 400 million shekels ($100.4 million) in the fourth quarter of 2014 alone, banking sources estimated on Suday.

   The banking industry got a small taste of things to come when Union Bank of Israel, a tiny lender, reported on Sunday that its 2014 net profit plunged by close to to 50 million shekels, or a return on equity of just 2.1%, due to a 130 million-shekel provision it had to take against one particular borrower.

   The bank didn’t say in its financial report that the borrower was Fishman, but banking sources confirm it was.

   Fishman, whose debts to the bank are estimated between 4.5 billion and 5 billion shekels, has run into severe financial problems as the collapse of the ruble and fears Russia is sliding into recession have hit the Russia real estate portfolio of his company MirLand.

   MirLand has asked bondholders to reschedule its debt, and on Sunday its parent company, Jerusalem Economy, said it was writing down assets as a result of MirLand’s problems (see story on this page).

   Banking sources said Israeli lenders have so far set aside about 60% of the value of the loans, meaning somewhere between 2.7 billion and 3 billion shekels, in most cases spread out over the next 10 years, weighing on profits all that time.

   None of the banks nor Fishman’s spokemen agreed to comment on the reported amounts.

   Fishman has repaid a substantial part of his bank debt but the banks’ exposure remains high. Although he has been delinquent in repaying, the banks have refrained from taking any legal action.

   Apart from JEC and MirLand, he controls the real estate companies Industrial Buildings Limited and Darban as well as the energy distributor Ten, the Brazilian cellphone tower owner T4U, the financial daily Globes and the retailer Home Center Israel. He is also a shareholder in the Yedioth Ahronoth group and has a personal portfolio of real estate worth hundreds of millions of shekels.

   The banks with the biggest exposure to Fishman are Hapoalim and Leumi, each of which has loans worth about 1.7 billion shekels outstanding with him.

   Hapoalim has made 1.1 billion shekels of provisions. The loan was mainly used by Fishman 15 years ago to buy a 34% stake in the Yedioth Ahronoth media group, whose value has since declined sharply.

   In the fourth quarter, industry sources said Hapoalim would likely set aside another 70 million shekels against Fishman’s debt after a 62% drop in JEC shares. JEC shares, representing 6% of the total, serve as collateral for the loans.

   The bank also has as collateral shares in Ten as well as in Home Center and some of Fishman’s land assets.

   Leumi has set aside between 1.1 billion and 1.2 billion shekels against Fishman’s debt. The bank has as collateral 40% of JEC shares worth about 500 million shekels as well as hundreds of millions of shekels more in land controlled by Fishman as well as Globes.

   As a result of the drop in JEC’s market capitalization during the last quarter, Leumi will be making provisions of between 100 million and 150 million shekels.Fishman owes another 400 million to 500 million shekels to Israel Discount BankThe bank, it is ebelieve, will set aside as much as 80 million shekels in the quarter on top of the 200 million it has already done.

   Mizrahi Tefahot is owed between 300 million and 400 millions shekels. Mizrahi, banking sources estimate, will make an approximately 50 million-shekel provision for the fourth quarter.

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5. Majority Support Distribution of JCT's Bank Leumi Shares as Dividends in Kind

   Mar 2, 2015 | Calcalist (Hebrew)

   By Racheli Bindman

   The “ordinary” shareholders of the Jewish Colonial Trust (JCT) held a vote yesterday with regards to the distribution of the company’s key asset (5% of bank Leumi shares) as dividends in kind, despite the companies opposition to the vote.

   The world Zionist organization, the founding shareholders, who control the assembly (50%) but only 17% of the capital rights did not take part in the vote. 14 of the 15 board members of the JCT, who are also representatives of the World Zionist Organization, were against the very existence of the vote.

   The board received an opinion from Professor Assaf Hamdani last week that said that a vote could not be held on the distribution of the shares as dividends, since the dividend do not answer the general distributions test of the companies act. The vote was managed by the consulting company Entropy, against the wishes of the company.

   ·        99.96% of the “ordinary” shareholders support the distribution of the shares as dividends an absolute majority

   ·        The ordinary shareholder, headed by the Company for Location and Restitution of Holocaust Victims' Assets and the insurance companies Clal and Harel want to use the result and intend to open a voting procedure against the company in court.

   ·        The Company for Location and Restitution of Holocaust Victims' Assets also requires the JCT to publish the result of the vote with stock market, but this request has not yet been answered.

   ·        The JCT is stating that the general assembly is not authorized to make such a decision. 

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