Israel filed a motion on late Friday in a US federal court in Washington to block former Israeli agent Uzi Shaya from testifying against the Bank of China in a major terror-financing case.

Shaya’s testimony was planned to be a major part of a case that terror victims and their families have filed against the bank.

The plaintiffs in the case, who include family members of victims of bombings and rocket attacks that Islamic Jihad and Hamas carried out in 2006 and 2007, have claimed that the Bank of China facilitated the attacks by providing wire transfer services to both terrorist groups.

The group lawsuit is known as the “Almaliakh action” after Emil Almaliakh, an Eilat resident whom a suicide bomber killed in 2007.

Those named in the lawsuit say that the bank has aided and abetted Hamas and Islamic Jihad since 2003, by providing wire transfer services to operatives of the two groups via a bank account in China.

Shurat Hadin – Israel Law Center, representing 22 of the victims, accused Prime Minister Binyamin Netanyahu of “turning his back” on the victims of terror by blocking Shaya, who had publicly said he wished to testify, from doing so because of external considerations relating to Israeli-Chinese relations.

Shaya filed a letter in March specifying strict conditions in which he might agree to testify, if permitted by the government.

Also, in 2008, another government agent, Shlomo Matalon, filed an affidavit in a different but related proceeding in New York, describing exact bank account numbers and fund transfer amounts between Hamas and Islamic Jihad and the bank.

The affidavit also states that Matalon was “informed that in April 2005, officials from the Israeli Counter Terrorism Bureau met in China with their counterpart Chinese officials” and told them of the funding transfers for the terror organizations.

The affidavit also says that despite this warning to China and the bank in 2005, the terror- related fund transfers continued until at least 2008.

Shaya’s testimony, which Shurat Hadin says Matalon’s affidavit was at least partially based on, was supposed to be a primary source of evidence that could disprove the bank’s claim that it did not have notice of the terror financing activities until it was sued.

The Prime Minister’s Office responded, “Israel employs available means and methods to fight terrorists and deprive them of support from various parties [in] its efforts to bring terrorists and their sponsors to justice and to prevent future terror attacks, as it did in this matter.”

The statement continued that Israel must at the same time ensure confidentiality and, therefore, “after conducting a comprehensive review of the matter, the State of Israel concluded that it cannot allow the former official to be forced to disclose in foreign legal proceedings any information that came to his knowledge in the course of his official duties. The disclosure of such information would harm Israel’s national security, compromise Israel’s ability to protect those within its borders, and interfere with international cooperative efforts to prevent terrorism.”

Also, the statement said that “compelling a former government official to testify in a court in a matter of this nature outside of Israel infringes upon the sovereign immunity of the State of Israel.

“Israel “stand[s] with victims of terror and their families and sympathize[s] with their profound agony and pain,” the statement said.

A spokesman for the Wultz family, who are pursuing a parallel case against the bank, said that they had not yet been served with the motion and could not comment on it until they receive it at the start of the week.

Shurat Hadin argued that as there was no basis to claim that state security was endangered, since Shaya could have refused to answer certain questions, and as the main substance of his testimony was already made public in Matalon’s affidavit, the real reason for the government to block Shaya was to improve relations with China.

The NGO’s head, Nitsana Darshan-Leitner, said that outgoing National Security Council head Ya’acov Amidror had previously told her that Shaya would be allowed to testify, and later changed the answer after apparent pressure from China.

In June, The Wall Street Journal reported that Beijing pressured Netanyahu to backtrack on a promise to help in the US terror funding lawsuit involving the Chinese bank’s alleged involvement in a 2006 Tel Aviv suicide bombing.

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