A law requiring Israeli financial institutions to divest from companies that do business with Iran, which passed with with great fanfare on April 2, 2008, has never been implemented, The Jerusalem Post learned Sunday.

The law’s sponsor was then opposition leader Binyamin Netanyahu.

Kadima MK Ronnie Bar-On, who was finance minister through March 2009, did nothing to implement the bill. His successor, Yuval Steinitz, did not immediately move to implement it either, but the Post has learned that he has been working to implement it over the past several weeks.

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The bill was intended to prevent Israeli banks, insurance companies, financial institutions and funds from investing in companies that do major business with Iran.

It authorized then-finance minister Bar-On to appoint the chairman of a committee to implement the bill, although he never did so.

The committee was supposed to keep a list of companies doing business with Iran, and set guidelines and punishments.

The law did not set a deadline for forming the committee, which was to include two appointees from the Prime Minister’s Office and one each from the Foreign Ministry, Defense Ministry, Industry, Trade and Labor Ministry, the Securities Authority, and the Anti-Money Laundering Authority.

The law, which was the only bill Netanyahu sponsored during the previous Knesset, passed with overwhelming support after he persuaded the coalition to back it. He also worked successfully to convince state legislatures in the US to divest from Iran during visits to the US and via Ron Dermer, the economic attaché in Washington, whom he had appointed when he was finance minister. Dermer is now his senior adviser.

Netanyahu said at the time that divestment could “stop Iran dead in its tracks.”

“The Islamic Republic of Iran constitutes a danger to world peace and the existence of the State of Israel,” Netanyahu said following the vote. “It has been proven that economic sanctions cause definite changes in the international and political policies of countries worldwide. Avoiding contact with companies and corporations that uphold ties with Iran will put pressure on them to quit these ties. In the approval of this bill Israel has demanded that the countries of the world commit themselves to prohibiting Iran from developing nuclear weapons.”

Knesset Economics Committee chairman Ophir Akunis called for the immediate implementation of the bill. He spoke to Justice Minister Yaakov Neeman on Sunday, following an incorrect report in Maariv that the law had not been implemented due to negligence by a Justice Ministry clerk.

Shai Baaton, an Israeli financial strategist, began an effort on Sunday to persuade Jews around the world to boycott select companies that continue to do business with Iran and avoid buying their stock.

Baaton contacted President Shimon Peres to ask him to serve as honorary chairman of the new effort.

He now intends to write to 52,000 Israeli companies and businessmen, as well as to rabbis and Jewish community leaders around the world.

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