Exclusive: Historic case against Bank of China for millions in terror financing dismissed

Nine-year landmark fight which riled geopolitics between Israel, China, US ends with a whimper.

By
November 8, 2015 13:35
Israel China

Netanyahu gives a speech during a gala dinner in Shanghai May 6, 2013. (photo credit: REUTERS)

 
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Possibly the most significant and contentious terrorism financing case ever filed in New York has been dismissed after a bruising nine-year fight, The Jerusalem Post has learned.

The case against the Bank of China, one of China’s five largest state-owned banks, created diplomatic headaches in relations among Israel, China and the US.

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It was widely reported that the Chinese threatened to cancel Prime Minister Benjamin Netanyahu’s state visit to China in May 2013 if he did not try to help kill the case which the Israeli government originally had pressed forward.

The case, which involved more than 20 families of American victims of terrorist attacks that took place in Israel from 2003-2008, was dismissed on August 27, but the parties have kept that decision under wraps.

Websites for the plaintiffs Shurat Hadin and the Wultz family either reflect the case as ongoing or have no indication it has ended.

The Post initially obtained information about the closure on Friday and officially confirmed it on Sunday.

In 2008-2009, Israel provided what was recognized as information obtained by intelligence to Nitsana Darshan- Leitner of Shurat Hadin and Lee Wolosky, a former top US government anti-terrorism financing official then at Boies Schiller & Flexner so they could sue the Bank of China for allegedly turning a blind eye to millions of dollars Iran was providing in financing for terrorism to Hamas and Islamic Jihad, flowing through its Guangzhou, China branch.

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Along the way, Shurat Hadin and Boies Schiller scored numerous victories and made even more headlines fighting with the Israeli, US and Chinese governments over trying to compel intelligence and other government officials to testify.

In 2009, former Israeli government official Shlomo Matalon filed an affidavit with the court indicating Iran and Syria had funneled millions of dollars for terrorism to Hamas and Islamic Jihad via the bank, from 2003 to 2008.

Court documents from Matalon and former government official Uzi Shaya indicated that the state learned in 2004 that account holder Said al-Shurafa and various members of his family, along with Islamic Jihad and Hamas, were allegedly laundering millions of dollars through the bank.

Court documents indicate that Shaya worked on national security issues from 1984 to 2007. They also indicate that from 2004 to 2007 he worked on the state’s national security task force dealing with financing terrorism.

Shaya and other Israeli officials met with the bank in 2005, providing it with evidence of the money laundering and asking it to close the problematic accounts, but the bank refused to do so, documents say.

According to Darshan-Leitner and Wolosky, the Israeli government had promised to provide Shaya as a smoking gun witness that the bank had been warned in 2005 and had continued to allow the terrorism financing, which could crush the bank’s defense that it had not known.

Between 2010 and 2013, the plaintiffs beat off several motions by the bank to dismiss the case on a variety of jurisdictional grounds, culminating with a September 2013 slam-dunk ruling by the New York Court of Appeals that the case was properly located in New York, not China, and that Israeli law would be applied regarding whether the bank was liable.

Those were the case’s high points.

In mid-2013, the Israeli government let on that it might not allow Shaya to testify, despite Shaya publicly declaring that he wished to do so if the government would waive its hold over him as a former official.

Later, former National Security Advisor Ya’acov Amidror asked the US courts to respect Israel’s right to block former government officials from testifying due to national security.

Prime Minister Benjamin Netanyahu’s spokesman said that past issues had been addressed diplomatically and Chinese cooperation in fighting terrorism had been secured.

Despite a well-funded media blitz to pressure the Israeli government to continue to allow Shaya to testify in the case, the government ultimately reneged and blocked him from testifying.

The plaintiffs tried to keep the case alive.

Shurat Hadin hoped to file for sanctions against China for allegedly threatening Israel to compel it to keep Shaya from testifying.

In September 2014, the NGO announced it had subpoenaed former US House Majority leader Eric Cantor for a September 30 deposition to reveal information from his discussions with Netanyahu and other Israeli officials, such as current and former US Ambassadors Ron Dermer and Michael Oren, about the bank’s alleged obstruction of Shaya testifying.

Cantor allegedly had knowledge about China and the bank’s obstruction based on conversations with Netanyahu and other Israeli officials in the summer of 2013.

But attorney Eleni M. Roumel from the US House of Representatives Office of General Counsel quashed the subpoena on the basis that any information Cantor gleaned was connected to his duties as a government official and was privileged from becoming public.

Still, the NGO said it was confident that it would ultimately prevail on the basis of documents Israel had provided the group before ceasing to cooperate, plus additional documents the NGO might receive in a request pending before the Justice Ministry and the High Court of Justice.

Also, in November 2014, Wolosky announced that a New York federal court had asked Belgium to compel two key witnesses, an alleged terrorist and his wife, to testify. The two were identified as Said al-Shurafa, the alleged former Palestinian terrorist who was at the center of the financing scheme, and his wife, Reem al-Shurafa.

The two, whose knowledge of the Bank of China’s alleged former money- laundering for Palestinian terrorist groups could have allegedly broken open the major case, were in Belgium, according to a report in the La Libre Belgique newspaper.

In January 2015, Wolosky’s firm announced that the bank had been compelled to hand over 1,600 internal documents that it had fought hard to shield.

There was also renewed media pressure on Netanyahu leading up to his March 2015 speech in Congress, including a piece in the New York Times, to question how he could fight the Iran deal because of financing for terrorism while at the same time actively stop the Bank of China case, giving terrorism financing a free pass.

Then the trail largely goes cold, and for months any questions about the case were met with the same response that work on the case was ongoing.

None of the parties involved would comment on the record, but a 12-page court stipulation indicates that the plaintiffs dropped the case because no one from the Israeli, US or Chinese governments would testify.

The stipulation also sasaid the alleged terrorism financing connected to the bank was not connected significantly enough to New York to maintain jurisdiction.

Further, on June 30, 2015, only weeks before the case was dismissed, Wolosky took leave from all private sector work, including the case, when he was appointed the US’s Special Envoy for closing the Guantanamo Bay prison.

The dismissal of the epic legal saga was “with prejudice,” which means it cannot be refiled.

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