Bank Hapoalim’s clients have testified against the bank when they asserted that the bankers adopted a proactive role in US tax evasion processes. This testimony blows holes in the bank’s claims that its penalty exposure should be less compared to other Israeli banks.
The clients of the bank recounted on December 17 about the alleged role of Nadav and David Kalai – two tax advisers of the Israeli bank. Both of them were instrumental in steering the clients to Hapoalim.
The New York and US State authorities reached a settlement with Bank Leumi in December, with the latter consenting to a $400 million penalty pay. Hapoalim, however, has told the Israeli regulators that it has not received any communication from American investigators concerning the matter from 2011. It also added that unlike Mizrahi Tefahot Bank and Leumi, there were no particular allegations against it.
This has been belied by Moshe Nativ, a citizen of Israel presently living in California. He testified in court about the time he approached David Kalai for advice. This was regarding the taxes imposed on the money he earned through selling WinNet, his startup company, in 2000. The latter suggested that Nativ deposited a majority of that money into a Luxembourg located Hapoalim account.
Nativ revealed to the court that he was advised by Kalai to deposit approximately $2 million of $2.4 million deposited in Luxembourg. The money was to be kept in a Hapoalim account in a foreign company name to avoid the taxes. He made the allegation that Kalai also made arrangements to meet with one Hapoalim banker who had all the forms prepared to be signed.
It has been alleged by Nativ, that a Hapoalim banker assisted him in setting up the offshore company. The banker also suggested a name. In 2003, the bank even recommended – twice – to change the name and also the domicile of the company. Nativ said that the bank even took care of all applicable arrangements.
Similar claims were made by Alex Yazlovsky, another Hapoalim client. Yazlovsky made the allegation that Nadav Kalai provided him the way to open foreign bank accounts through an offshore company. This step will conceal money from the eyes of the tax authorities. He made the claim that the bank even flew over executives to the US from Israel to assist him opening the account.