Court petition: Investigate Leumi embezzlement

Customers of Bank Leumi Switzerland are petitioning the High Court of Justice, claiming the bank ignored warning signs.

Two foreign corporate customers of Bank Leumi Switzerland today petitioned the High Court of Justice against Supervisor of Banks Yoav Lehman, Governor of the Bank of Israel David Klein, and Minister of Finance Benjamin Netanyahu. The petitioners are asking the court to order the officials to investigate the circumstances of the huge embezzlement at Bank Leumi Switzerland.

The petition was filed after former Supervisor of Banks Dr. Yitzhak Tal decided not to investigate Bank Leumis (TASE:LUMI) responsibility for the embezzlement in its Swiss branch. The petitioners filed a request for such an investigation in April 2002. Tal answered two months later that procedural considerations prevented him from exercising his authority in the matter.

The petition, filed by Adv. Amir Almagor and Adv. Assaf Halkin of the Moritz-Weissglass-Almagor law firm, asserted, The respondents neglect enabled Bank Leumi to evade its elementary obligation to compensate customers for fraud. The failure to exercise the respondents legal authority is in effect preventing the auditing, supervisory, and enforcement agencies from fulfilling their function in the Israeli banking system.

The petition continues, The State of Israel and the Israeli banking system cannot afford to have a huge embezzlement of money from Jewish customers of an Israeli bank branch in Switzerland, amounting to over $100 million, which continued for a decade, become a forgotten and neglected event.

The international impact of such an embezzlement, particularly on the attitude of Diaspora Jews to Israeli bank branches, risks the stability of the Israeli banking systems overseas activity, and through them, the stability of banks in Israel.

The petition added that the unauthorized banking transactions in customers accounts produced huge commissions for Bank Leumi Switzerland and the entire group.

These profits, the petition claimed, are the real reason that Bank Leumi ignored the many warning signs of questionable, even criminal, as has now been shown, activity by Bank Leumi Switzerland and its private banking manager, over the years when the embezzlement was taking place.

The petitioners

The Meseg Foundation is a family trust fund registered in Lichtenstein, whose beneficiaries are Israeli citizens. A Holocaust survivor founded the fund, and was a beneficiary until his death in 1994 at the age of 82. Westar Investments, registered in Panama, was founded by a Parisian Jew married to an Israeli citizen. The fund invests most of its assets in Israel.

The embezzlement at Bank Leumi Switzerland, which came to light in January 2001, was the largest ever at an Israeli bank. The embezzled funds, estimated to be in excess of $100 million were totally written off by Bank Leumi after the crime was discovered.

Published by Globes [online] - - on April 8, 2003

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