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Bank Leumi Media Monitoring 03/05/15

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

Swiss German Language Press

1. Overview: US-Swiss Tax Dispute

   Mar 5, 2015 | Neue Zuercher Zeitung

   The amount in fines the Swiss banks will eventually have to pay in the US tax dispute depends largely on how much of the disclosed client funds each bank can subtract from the basis of calculation,

Israeli Press

2. Leumi to Cease Reporting on Israel Corp. from Second Qaurter, Postpones Annual Financial Report

   Mar 4, 2015 | Globes (Hebrew)

   By Irit Avissar
   
   
   Bank Leumi will cease recognizing the results of Israel Corp. in its reports starting from the second quarter of this year
3. Gidi Bar Zakay: "It is an Injustice to Impose Liability on Leumi's Accountants"

   Mar 5, 2015 | Calcalist (Hebrew)

   By Moshe Gorali
   
   
   How is it possible that accountant do not pay attention to things that are unusual and exceptions at banks!?” writes the advocates Yitzhak Aviram and Shahar Ben Meir in their request for approval of a derivative claim against bank Leumi.
4. Israel Military Industries moving ahead with privatization

   Mar 5, 2015 | Jerusalem Post (English)

   By Niv Elis
   
   
   The Finance Ministry will publish a tender for the sale of Israel Military Industries on Thursday, starting the process of its privatization.

Bank Leumi Media Monitoring 03/05/15

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

Swiss German Language Press

1. Overview: US-Swiss Tax Dispute

   Mar 5, 2015 | Neue Zuercher Zeitung

   -        The amount in fines the Swiss banks will eventually have to pay in the US tax dispute depends largely on how much of the disclosed client funds each bank can subtract from the basis of calculation, Neue Zuercher Zeitung notes in an article discussing the current situation of the banks participating in category 2 of the US voluntary disclosure program. Negotiations between these banks and the US were resumed recently after a long pause due to disagreements regarding certain issues in the model contact. Category 2 includes between 80 and 90 Swiss banks, which believe they may have violated US tax legislation. For many of these banks the negotiations have reached the final stages, which boil down to establishing the fines.

   The fines will amount to between 20% and 50% of the assets depending on the period.  A central element in calculating the fines is the deductability of assets the client has voluntarily reported by time the non-prosecution agreement comes into effect.  A significant amount of assets have already been reported, which is expected to bring down the fines. 

   There are, however, some difficulties. Many clients have legalized their assets through “quiet disclosure”, not through the voluntary disclosure program offered by the US. These assets are not deductible when calculating fines. Sometimes the disclosure procedure fails because the banks’ documents do not match the information received by the US authorities, as in the case when a client’s name remains undisclosed.

   The banks have therefore requested that their clients provide them with a copy of the confirmation they received from the US tax authorities proving their registration with the voluntary disclosure program. These copies are then forwarded to the US Justice Department. But even this procedure sometimes fails, since the tax authorities’ confirmations have been slow in coming. Some US lawyers have therefore come up with the idea of selling the confirmations to the banks for a high price. The banks are interested in the names of clients participating in the voluntary disclosure program in order to deduct the sum from upcoming fines.   

   http://www.nzz.ch/wirtschaft/endspiel-im-us-steuerstreit-1.18495380

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Israeli Press

2. Leumi to Cease Reporting on Israel Corp. from Second Qaurter, Postpones Annual Financial Report

   Mar 4, 2015 | Globes (Hebrew)

   By Irit Avissar

   Bank Leumi will cease recognizing the results of Israel Corp. in its reports starting from the second quarter of this year.

   Today (Wednesday) the bank, under the management of Rakefet Russak Aminoach, announced that under the guidelines of the Bank of Israel, Bank Leumi will waive its representation on the board of Israel Corp. and its right to appoint directors. This concessions and the fact that Leumi recently lowered its stake in the company to 11% (previously 18%) after selling part of its holdings, will mean that Israel Corp. will no longer be considered substantial holdings.

   This means that the results for Israel Corp. will not be included in the financial statements of Leumi starting from the second quarter report this coming August. Only in instances where Leumi will exercise the shares it is holding will it be recorded in the statement.

   -        The decision means that the results will no longer affect the banks current yield. In previous year Israel Corp results had dramatic impact on bank Leumi.

    

   Bank Leumi also announced that following instructions from the bank of Israel it is postponing publishing its annual financial report from the 10 March to30 March. The Bank of Israel instructs the banks to publish their annual reports by the 10 of March (where as other public companies can publish at the end of the month)

   In order to meet bank of Israel provisions and to include the results of Israel Corp. the bank was including its last quarter results, with agreement of the Bank of Israel. However, it seems that Bank of Israel went back on its decisions and therefore gave Leumi the option of publishing their results up until the end of the month, so they can include Israel Corps annual report.

   The same scenario will happen in the first quarter reports, banks need to publish by May 15 but Leumi will publish by the end of the month to include Israel Corp. 

   For additional coverage (Hebrew):

   http://www.calcalist.co.il/markets/articles/0,7340,L-3653856,00.html

   http://www.ynet.co.il/articles/0,7340,L-4633401,00.html

   http://www.news1.co.il/Archive/001-D-361403-00.html

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3. Gidi Bar Zakay: "It is an Injustice to Impose Liability on Leumi's Accountants"

   Mar 5, 2015 | Calcalist (Hebrew)

   By Moshe Gorali

   How is it possible that accountant do not pay attention to things that are unusual and exceptions at banks!?” writes the advocates Yitzhak Aviram and Shahar Ben Meir in their request for approval of a derivative claim against bank Leumi. “Criminal activities were carried out at the bank over an entire decade the accountants participated fully with these activities of Bank Leumi, they are there auditors and the questions asked is, where were they , where was the suspicion, where is the investigation, where are the inquiries?

   The derivative claim was filed against Bank Leumi following the settlement that the bank signed with the US legal authorities. The settlement includes a fine of NIS 1.5 billion in exchange for no indictment for the bank aiding it’s us citizen evade paying their US taxes. As part of the agreement the bank admitted to its activities.

   The derivative claim is demanding that 42 senior officers of Bank Leumi compensate the bank for the fine imposed on it. Defendants 43 and 44 are the accountants of the bank, Somkeh Chaikin and Kost Forer Gabbay & Kasierer, two of the largest offices in Israel. In the original claim, filed by advocates Yuki shemesh and Amit manor, the accountants were not mentioned, but when Aviram’s application was submitted it included the accountants. The amended applications of Shemesh and Manor also included the accountants. Is the inclusion justified or did they just fall victim to the competition between the two plaintiffs?

   Inclusion for differentiation

   -        Advocate Nir Cohen speaking on behalf of Somekh Chaikin claims that the inclusion was to create differentiation between the two claims .

   -        Ben Meir’s general claim is that the accountants were a full partner and an active partner to the crime.

   -        Accountant and lawyer Gidi Bar Zakay said that as long as there is no specific suspicion against the bank’s accountants that they were actively involved in the tax evasion, they will likely not be held responsible.

   Not only add and subtract

   -        Judge Dov Levin stated that accountants role is to make sure no mistakes were made in the calculation of numbers, if a legal question is encountered he needs to investigate it and invalidate the action if necessary

   -        Aviram Ben Meir carried on stating that accountants are not policemen but cannot skip and connect numbers, they need to explore anything unusual and illegal and ask questions

   -        Bar Zakay stated that the role of accountants is to audit the financial statements, they cannot examine the decision of corporate executives on a regular bases as this will create an over burden of the auditors. The auditors are responsible only for the correctness of the financial report

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4. Israel Military Industries moving ahead with privatization

   Mar 5, 2015 | Jerusalem Post (English)

   By Niv Elis

   The Finance Ministry will publish a tender for the sale of Israel Military Industries on Thursday, starting the process of its privatization.
   The company will be sold as one entity but, in accordance with cabinet decisions, a new state-owned company to be called Tomer Systems will maintain the secret and classified elements of the firm. IMI will have to move to Ramat Baka in the Negev to free up prime real estate starting in 2020.
   In preparation for the privatization, the state let go some 1,170 employees (with early retirement packages), while another 950 will be let go as part of the privatization, in accordance with collective labor agreements.
   The state expects to complete the sale by the end of 2015.
   The sale will be open to Israeli companies or Israel- based companies, but also to foreigners that hold at least a 90 percent stake in an Israeli company.
   In 2014, investment bank Stifel Nicolaus & Co. and Leumi Partners were selected to assist in the sale
   

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