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$ 875 million for tax violations and $ 30 million for his role in the FIFA World Cup bribery scandal: in the tax dispute with the United States, the Swiss private banking unit of the largest Israeli bank pays for the second-most bus high ever paid.
Hapoalim, the largest bank in Israel, receives a salty invoice.
Two communications from the US Department of Justice. USA They show on Wednesday that the Swiss financial center in the United States is still in the pillory. Israel’s largest bank Hapoalim and its Swiss affiliate Bank Hapoalim (Switzerland) Ltd. will collectively pay a total of $ 875 million in fines to various US authorities for tax violations from 2002 to 2014. In addition, the two institutes together They will pay $ 30 million in fines for their role in the 2010-2015 FIFA money laundering scandal.
In both cases, Bank Hapoalim reaches an agreement with the United States judiciary and can therefore postpone the prosecution. While the tax dispute between the United States and Switzerland is one of the last banks to clean up its past, Hapoalim buses are likely to be followed by new revelations as part of the United States investigation into the FIFA bribery scandal. From a Swiss perspective, Julius Baer Bank is of particular interest, which has recently been criticized by financial market regulator Finma for serious deficiencies in money laundering.
Hapoalim Switzerland announced in September 2017 that it would cease operations. In November 2018, some of its clients in Switzerland and Luxembourg were transferred to the J. Safra Sarasin Bank, based in Basel.
Why these tall buses?
Even if the Hapoalim Bank’s tax crimes go back a long way, the details are interesting. Hapoalim belonged to the so-called Category 1 group, which as such did not participate in the so-called EE program. USA With the help of the Federal Council like Category 2 banks, it negotiated directly with the US authorities. USA From 2002 to 2014, the bank conspired with its employees, American customers, and others to defraud the United States, file false tax returns, and evade taxes, according to United States Justice.
The charges against the bankers are the same as in the other cases in the tax dispute with the United States. Bankers did not ask about tax obligations in the US. They helped clients transfer their funds to offshore companies or special insurance constructions (“insurance wrappers”), which disguised the true owners of these companies or products from the US authorities. This allowed clients to avoid their tax obligations in the United States. Hapoalim is Israel’s largest bank, the Swiss unit, which served as a private bank, served many Israeli and South American clients, who often had close ties to the United States.
The agreement with the United States stated that the bank’s total of $ 7.6 billion in more than 5,500 bank accounts in Switzerland and Israel, plus the income generated by these assets, was not disclosed to US authorities.
The total fine of $ 874 million for Hapoalim is the second highest bus paid by a Swiss bank in the tax dispute with the United States. The highest was known to be that of Credit Suisse, who signed a guilty plea and had to pay a total of $ 2.8 billion in fines. In Hapoalim, the buses consist of a payment from the Israeli parent company of $ 214 million and a payment from Hapoalim Switzerland of $ 403 million to the United States administration. Additionally, the Israeli parent company will pay $ 37 million to the Federal Reserve and $ 220 million to New York State financial regulators.
The comparison documents show that there are two main reasons for the very high fines in the tax dispute. Apparently, the bank did not cooperate with the US authorities for a long time. After the bank changed its lawyers in Switzerland, starting in 2017, Zurich lawyers replaced Baker McKenzie with the Swiss bank, negotiations apparently accelerated.
Second, according to US authorities, several high-ranking Hapoalim bankers were involved in the actions condemned by the United States. For example, a senior banker allowed a client who was launched in another Swiss bank in 2009 to join Hapoalim in Singapore. The bank’s United States Department of Justice (DOJ) particularly attributed these procedures to senior executives.
Mind you, Bank Hapoalim, like most other Swiss banks in the tax dispute, is said not to have violated any Swiss law. By contrast, Swiss private banking, which was common at the time, operated like the other. But: the bank managers realized too late that the wind had changed and they acted very slowly and carelessly.
Last Israeli bank
Bank Hapoalim is the third Israeli bank to reach an agreement with the US authorities for tax crimes. The first was the Bank Leumi Group in December 2014; she paid a $ 400 million fine, with $ 157 million going to the American taxpayer accounts at Leumi Private Bank in Switzerland. The second, Bank Mizrahi-Tefahot, paid a total of around $ 195 million in March 2019.
Miami as center
In the case of the FIFA bribery scandal, Hapoalim Switzerland pays $ 21 million and the parent company $ 9 million to the US authorities. Bank officials have laundered tens of millions of bribes through the US financial system. USA For five years, the US Department of Justice said Wednesday. USA
The money came from sports marketing boards, including the Argentine company Full Play Group S.A., and was used to bribe representatives of the world soccer association Fifa and to receive broadcast rights in return. Full Play arranged the payment of the bribe through Hapoalim’s Miami office. The sports marketing company was sued on March 18, 2020 by US authorities.
Giant scandal in Israel
An expert also points out the situation in Israel. While the topic has only had moderate interest in Switzerland for a long time, it is a major scandal in Israel. A parliamentary committee of inquiry is now investigating the events at the bank, and responsible bank managers can also be sued, the person said.
