Bank’s refusal to transfer Roman Abramovich's $2.2 million donation is “reasonable,” says AG
Bank’s refusal to transfer Roman Abramovich's $2.2 million donation is “reasonable,” says AG
Attorney General Gali Baharav-Miara intervened in the ongoing lawsuit filed by Abramovich and ZAKA against Bank Mizrahi Tefahot, supporting the bank in its refusal to transfer Abramovich’s donations to the search and rescue organization due to EU and UK sanctions against him
Attorney General Gali Baharav-Miara has lent her support to Bank Mizrahi Tefahot in its refusal to allow Roman Abramovich to transfer an NIS 8 million ($2.2 million) donation to the ZAKA search and rescue organization. The bank has refused to approve the transfer of funds due to Abramovich’s inclusion on EU and UK sanctions lists. The attorney general sided with the bank in the ongoing court case taking place at Tel Aviv District Court, concluding that the refusal to transfer Abramovich's funds to the ZAKA account is “reasonable."
This decision is partly based on Baharav-Miara’s wish to reinforce the bank’s autonomy and ensure it complies with foreign sanctions. Earlier in the month, a preliminary hearing was held during which Judge Yardena Seroussi stated that the bank's refusal to transfer the donation, specifically in the context of the ongoing war, was not reasonable. At that point, the Attorney General decided to intervene in the proceedings, due to the broad public interest in ensuring the proper management of banks and the potential economic implications that could arise if the lawsuit proved successful.
The Attorney General said that "the proper management and regular activities of banking institutions are a clear public interest. Bypassing sanctions imposed by foreign states and international organizations through an Israeli bank, even if it occurs only locally, exposes banks to significant risks, including compliance risks, money laundering and financing risks, terrorism, legal risks, and reputational risks."
Furthermore, the Attorney General said that, given the public interest and in accordance with their legal obligation, if there is concern regarding activities conflicting with sanctions of an international organization or foreign country which may expose them to risk, banks should apply and adopt the sanctions regime themselves. "Deciding to deviate from the sanctions regime, general or specific, is at the discretion of the sanctioning entity. A deviation not imposed by the relevant sanctions regime, including for donation purposes, is considered to violate the sanction. Activity contrary to the sanctions regime that the bank has adopted as part of its risk management exposes it to various risks, including to the bank’s contracts with foreign financial entities, which may harm its management and clients. Such damages may have economic consequences. It must be emphasized that the chance of these risks materializing does not depend on the purpose of the declared entity's transfer of funds.”
In conclusion, the Attorney General stated that, "the bank’s refusal to act due to international sanctions imposed on Roman Abramovich, which the bank adopted as part of its risk management policy in accordance with its legal obligations, is reasonable. It should be emphasized, that in accordance with the assessment of the Bank of Israel and the Supervisor of Banks, that intervention in the risk management of the banking institution related to its policy on adopting sanctions, including in this case, may lead to the realization of the risks mentioned above,” and that the consequences of such risks could “affect the entire activity of the Israeli economy and may, therefore, harm the broader public interest by exposing the entire banking system to the aforementioned risks and affecting economic activity.”
Roman Abramovich and ZAKA’s legal counsel responded: "It’s regrettable that the State Attorney’s Office relies on the opinion of the Supervisor of Banks only, and not on that of government ministers who believe otherwise, and on the stance of the government of Israel, which decided not to participate in the sanctions regimes. It’s regrettable that, in its stance, the State Attorney’s Office returns us to the laws of the British mandate, even if Israeli interests are harmed. If, tomorrow, Britain imposes sanctions on Israeli government ministers or IDF officers, will the State Attorney’s Office also rush to block their bank accounts in Israel? It must be remembered that we are talking about a philanthropic donation on Israeli territory and at a difficult hour for the state in wartime."
