Hapoalim threatens to sever ties with Palestinian banks over legal fears

Recent board meeting concluded that bank is exposed to possible lawsuits if it’s discovered that funds transferred to Palestinian banks ended up funding terrorist activities.

By YEHUDA SHARONI/MAARIV HASHAVUA
Updated: FEBRUARY 18, 2016 21:43
A Bank Hapoalim branch in Tel Aviv (photo credit: REUTERS)
A Bank Hapoalim branch in Tel Aviv
(photo credit: REUTERS)
Bank Hapoalim has in recent days told the Finance Ministry it intends to sever working ties with corresponding Palestinian banks if the state does not provide overarching protection against related criminal and civil lawsuits.
A recent board meeting came to the conclusion that the bank is exposed to possible lawsuits if it is discovered that funds transferred to Palestinian banks ended up funding terrorist activities.
Of special concern is the possibility that the bank will be sued by foreign authorities, particularly in US criminal lawsuits. The bank decided it was preferable to suspend ties unless the Israeli government was willing to provide indemnity against such possible claims.
In addition to Hapoalim, Discount Bank is also vulnerable, as it also transfers funds to the Palestinian Authority.
Many foreign banks refuse to work with the Palestinians directly, preferring instead to use Israeli banks as a go-between.
The bank raised its concerns with the Bank of Israel and Finance Ministry officials, who said there was no risk in continuing to work with Palestinian banks. Security forces raised concerns that unilateral action on the banks’ side would strangle the Palestinian economy.
Finance Minister Moshe Kahlon, who has recently met with the Palestinian finance minister and favors deepening cooperation with the Palestinians, also opposed the move.