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Tuesday, February 06, 2007

Bank Leumi Names Names

A reader sent me a link to this story with the comment "Bank Leumi buckles under pressure and begins naming names of confidential overseas customers that are evading US and European taxes. This is going to have a HUGE and immediate impact on the American frum community, although few dare admit it yet. The US has already established a specific multi-agency task force to deal with "hot spots" in specific frum communities and shuls in the US."

The story is a fascinating read from a professional standpoint. I have worked in internal controls and am a bit shocked that a single employee could have access to a certain subset of accounts for 30 years. I believe that normal industry practice when highly liquid assets are at stake is to rotate employees to different positions. But, then again, there is plenty of fraud in this world and standard operating procedure is often defensive, rather than offensive. I was also unaware that Israel had secret bank accounts, as I associate such with Switzerland only.

The story is also fascinating from an Orthonomic standpoint. My reader has given his take. Anyone else have a take? As I am unaware of the basics of Israeli banking, I'm waiting to hear more.

6 comments:

mother in israel said...

This happened in Israel. The clerk's name was Eti Alon but the name of the bank escapes me. I heard a banker explain how the bank asked the company preparing their software to cut out the internal controls that were supposed to be built into the computer system. The small bank "trusted" their employees. Eti embezzled a huge amount for her criminal brother.

Jerusalem Private Banker said...

The Israeli banks hold a fortune of shvartz gelt for the frum communities like the Five Towns, Teaneck and Beverly Hills. People show up at our doorstep all the time literally with suitcases of cash trying to deposit them in Israel.

Bank Hapoalim and Bank Leumi got caught big time, as did Bank of Jerusalem who dismissed their head of international activities when confronted by the police.

Bank Leumi, however, has now agreed to hand over the lists of clients both to the Israeli authorities as well as the IRS, particularly from their branch for foreigners at the King David Hotel. This will have significant impacts in these communities back in the US.

Odd that few in the American press are willing to write about this yet, despite it now being public press here in Israel.

Anonymous said...

>The Israeli banks hold a fortune of shvartz gelt for the frum communities like the Five Towns, Teaneck and Beverly Hills.


Wow! From reading the Jblogs i got the impression that all genayvishe shtick is limited to Boro Park, Williamsburg, monsey and Monroe (UO communities. Are Mo communities involved in this?

SephardiLady said...

Jerusalem Private Banker-The entire story is sad and fascinating at the same time. I'm going to be watching carefully.

SephardiLady said...

Jerusalem Private Banker-The entire story is sad and fascinating at the same time. I'm going to be watching carefully.

Shmilda said...

Interesting. I just searched through online news sources and couldn't find any other mention of this story. It seems very short on details. It doesn't say how foreign governments became involved - that foreign account holders declined to press charges or testify doesn't require the Israel Police to call the IRS. And the story is written about one embezzling Bank Leumi employee - not about the entire banking industry. Of course, now that Cerberus owns a stake they will likely push for an end to money laundering of any sort, if only because of their close relationship with Citigroup.

And MO communities aren't entirely immune from "genayvishe shtick" unfortunately. The difference is that UO perpetrators are much more obviously frum.