New UK law raises BDS threat to new level as EU labels settlement products

A e new law requires greater disclosure of who owns companies by demanding that companies disclose who are the controlling persons of a company.

January 25, 2016 07:08
3 minute read.
European Union and Union flags fly outside a hotel in London, Britain, December 17, 2015.

European Union and Union flags fly outside a hotel in London, Britain. (photo credit: REUTERS)


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As the EU starts labeling Israeli settlement products, the Boycott, Divestment and Sanctions threat has catapulted in England by a separate and newly enacted June law that is just starting to kick in.

On the surface, the law has nothing to do with Israel or Israeli companies.

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The new law requires greater disclosure of who owns companies by demanding that companies make known the controlling entities, regardless of who is listed on a Board of Directors.

Oliver Harris of Asserson Law Offices in Tel Aviv, told The Jerusalem Post, “We think this is a very big issue, of huge sensitivity.”

On one hand, he agreed that it is part of a Europe-wide legal development to remove the curtains that have allowed money laundering, tax evasion and even the financing of terrorism.

Neither that, nor the development of a central registry website that makes all of the disclosed information freely and immediately available, are directed at Israel or Israeli companies.

But Harris said that just the same, “This is a windfall for BDS, this will make their life much easier” to locate and target boycotts at Israeli companies.

Before, it was more difficult for them to know which companies were Israeli-backed.

To do business in parts of the world that do not like Israel, Harris explained, “Many Israeli companies used the UK as key to networking throughout the globe.” He said that some companies have gone to extremes to hide their Israeli character by naming “all directors as UK persons, having a UK face – it could be hard to find anything about a company that is Israeli.”

But with the new law, “It means we have an increasing awareness of Israeli companies, and an ability to boycott them.

The more you have that discussion, the more there is a negative cycle, more awareness, more of an ability to find out – more people potentially will end up doing it [finding out which companies are Israeli],” said Harris.

Further describing the escalating threat, he said, “Until now, people didn’t care enough to take action, even though they might have been anti-Israel. But the more people are talking about boycotts, it has a cumulative effect and will be more difficult for Israeli companies.”

All of this plays into Harris’ description of the different groups that Israeli companies need to worry about.

For committed and organized BDS-ers, the disclosure act will make it easier and quicker to target Israeli companies. However, they were already investing major resources in identifying and targeting Israeli companies.

The bigger threat is the potential increase in the number of people boycotting Israel.

Those not part of the BDS movement and who would not have taken the time to identify Israeli companies, but are anti-Israel, can now end up passively learning about Israeli companies and deciding to boycott them.

A third group likely to boycott Israeli companies due to the law are those with substantial business dealings with Arab countries and who could lose revenues if they do business with Israelis.

Whereas, before, Israeli backers could have hidden behind UK company heads, the new law will remove the shield and expose them to potential losses.

What can Israeli companies do to avoid the new English boycott threat? Harris said there are two alternatives for companies who want to be proactive.

One is to create a longer line of intermediary companies within the UK to try to slow down the discovery of a company’s identity. In this case, even with the new law, only the most devoted diggers would find out.

A second is to redistribute company shares to trustworthy persons in other countries so that the company would appear to be a wide-ranging multinational company that just has some business in Israel.

The risk with this approach is the potential loss of company control to the new shareholders.

A few Israeli companies might even close their operations in England, but Harris said many are taking a “wait and see” approach, hoping that things will not go as bad as they are starting to look.

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