01 May 2020
Bank Hapoalim agreed to pay $874 million to settle U.S. charges that it conspired with American taxpayers to hide more than $7.6 billion in secret Swiss and Israeli accounts, federal prosecutors said, the second-biggest settlement in a decade-long crackdown on offshore tax evasion.
The Swiss unit of the bank, Israel’s largest, pleaded guilty to a fraud conspiracy, U.S. Attorney Geoffrey Berman in Manhattan said in a statement Thursday. The deal takes its place in a string of investigations that have swept up dozens of banks as well as the tax evaders themselves. In 2009, UBS AG paid $780 million to the U.S., admitting it helped thousands of Americans evade taxes. The biggest settlement was with Credit Suisse Group AG, which agreed to pay $2.6 billion in 2014.
From 2002 to 2014, prosecutors said, Bank Hapoalim and its Swiss subsidiary conspired to help thousands of U.S. customers hide assets from the Internal Revenue Service. At least four senior bank executives, including two former directors, were “directly involved in aiding and abetting tax evasion,” the U.S. said, noting that the agreement provides “no protection from criminal or civil prosecution for any individuals.”
Bank Hapoalim will also pay more than $30 million to resolve allegations that it helped fuel an international soccer bribery scheme.
The bank had no comment beyond a filing with the Tel Aviv Stock Exchange confirming the agreements. The bank had set aside at least $870 million for a settlement of the tax evasion probe, which dates back to 2011. Hapoalim’s board decided to shut down the lender’s Swiss operations, which mainly offered private banking services to European and Israeli clients, as part of an effort to mitigate risks of future regulatory infractions.
In 2016, the U.S. reached the last of 80 nonprosecution agreements with banks that said they had committed tax-related criminal offenses. Those banks, which included BSI SA, Union Bancaire Privee and Bank Lombard Odier & Co., held about $50 billion in U.S. assets in 35,096 accounts from 2008 to 2013, according to data compiled by Bloomberg.
The initiative had stalled in recent years. But in December, HSBC Holdings Plc admitted it helped hundreds of American clients hide more than $1 billion in assets from the IRS and agreed to pay $192.4 million to resolve a tax investigation spanning a decade.
As part of the $874 million settlement, Bank Hapoalim agreed to pay $220 million to New York’s Department of Financial Services for its role in helping some of its U.S. clients evade state and federal taxes.
The settlement of more than $30 million was announced by federal prosecutors in Brooklyn, New York, and is to resolve allegations that the bank helped launder more than $20 million in payments to corrupt officials of FIFA, soccer’s governing body. The bank entered into a three-year nonprosecution deal with the U.S. that includes a commitment to improve its money-laundering controls.
By Chris Dolmetsch, Patricia Hurtado and David Voreacos, Bloomberg, 30 April 2020
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