White Rock requests Tel Aviv court to freeze all Vesttoo’s Israeli accounts
White Rock requests Tel Aviv court to freeze all Vesttoo’s Israeli accounts
This comes after Vesttoo had all its assets, including bank accounts, in the U.S. frozen by a New York court last week following a request by White Rock
The fraud scandal at Israeli insurtech company Vesttoo continues to expand, with reinsurance broker Aon’s White Rock SAC, a major client of the company, submitting a request to the Tel Aviv District Court on Monday to freeze Vesttoo’s assets in all banks, insurance companies, and investment houses in Israel. If the request is approved, it would lead to a temporary freeze of all the company's assets in Israel up to the amount of NIS 500 million (approximately $135 million).
This comes after Vesttoo had all its assets, including bank accounts, in the U.S. frozen by a New York court last week following a request filed by White Rock.
White Rock demanded the injunction due to what it claimed was an “apparent large-scale fraud scheme surrounding letters of credit provided by Vesttoo to collateralize reinsurance transactions facilitated by White Rock on behalf of its insurer clients.”
The court issued a temporary restraining order that means Vesttoo can’t move assets in its bank accounts, except for funds in the amount of $1,000,000, at least until a court hearing will be held on Tuesday.
“The freezing of the company's assets in New York is only temporary, pending a hearing with both parties in court scheduled for next Tuesday,” the company said in a statement. “According to the assessment of the company’s lawyers, the U.S. court lacks jurisdiction to address procedures related to other territories. Vesttoo intends to utilize all available legal means to eliminate the obstacles that are impeding the company's ongoing efforts for recovery and growth. It's important to note that there is no concern about the company's ability to meet its obligations to employees and suppliers."
In the meantime, interim CEO Ami Barlev, named on Thursday as a replacement for Yaniv Bertele, who was in charge during the fake collateral scandal, announced on Friday that the international law firm engaged by Vesttoo to investigate the scandal has presented initial conclusions and recommendations.
“We have learned that a number of factors, external to the company, led directly to the current crisis, including the involvement of certain foreign banks and financial institutions,” Barlev said. “We will decisively pursue legal actions against all parties who caused harm to the company and its clients, and will take all necessary steps to recover all and any damages, and we will vigilantly protect our partners, customers and our employees.
“At this stage, we can firmly assure that Vesttoo’s remaining core team of professionals, who are of the highest caliber globally in the fields of insurance, capital markets and technology, are free of any suspicion, and our company continues to operate because of these talented individuals. We thank everyone who continues to support us.
“Vesttoo has tightened its KYC procedures and is adopting stringent legal procedures aimed at increasing the level of corporate governance and business integrity at the company.
“We will demonstrate zero tolerance towards any violation of law and pursue legal actions against any party that caused damage to the company in the most assertive manner."
Vesttoo - partly backed by Banco Santander's fintech venture capital arm Mouro Capital - has already laid off about 75% of its staff. Vesttoo provides insurers with access to so-called insurance-linked securities - an alternative form of reinsurance. These securities may be backed by collateral in the form of letters of credit. If the securities turn out not to be valid, insurers will need to find replacement cover, or pay any insurance claims in full, industry sources say.
Reuters contributed to this report
