New York – Historic Case Against Bank Of China For Millions In Israeli Terror Financing Dismissed

New York – Possibly the most significant and contentious terror financing case ever filed in New York has been dismissed after a bruising nine year fight, The Jerusalem Post has learned.

The case against the Bank of China, one of China’s five largest state-owned banks, created massive diplomatic headaches in Israel, China and US relations.

The case, which was really two parallel cases, involved over 20 families of American victims of terror attacks which took place in Israel from 2003-2008, including the families of the murdered Daniel Wultz, Emil Almaliakh and others.

It was widely reported that the Chinese threatened to cancel Prime Minister Benjamin Netanyahu’s state visit to China in May 2013 if he did not try to help kill the case which the Israeli government originally pressed forward.

Astoundingly, the case was actually dismissed on August 27, but its dismissal has been kept under wraps by the parties with no reports about its dismissal to date.

Websites for the plaintiffs Shurat Hadin and the Wultz family either reflect that the case is ongoing or have no indication that the case has ended, but the Post started to obtain information about the closure on Friday and officially confirmed the closure on Sunday.

In 2008-2009, Israel provided what was widely recognized as information obtained by intelligence to Nitsana Darshan-Leitner of Shurat Hadin and Lee Wolosky, a former top US government anti-terror financing official then at Boies Schiller & Flexner, in order to go after the Bank of China.

The purpose was to sue the bank for allegedly turning a blind eye to millions of dollars in terror financing from Iran to Hamas and Islamic Jihad flowing through its Guangzhou, China branch.

Although the impact on the ground was a lawsuit, the Israeli government was pushing the private sector groups to go after the bank to achieve the diplomatic objective of cracking down on the terror financing connection between Iran and Hamas and Islamic Jihad generally, and to try to get China out of its alleged even indirect involvement in the business.

Along the way, Shurat Hadin and Boies Schiller had numerous victories and made even more headlines fighting with the Israeli, US and Chinese governments over trying to compel intelligence and other government officials to testify.

In 2009, former Israeli government official Shlomo Matalon filed an affidavit with the court indicating that Iran and Syria had funneled millions of dollars in terror financing to Hamas and Islamic Jihad via the bank during the years 2003-2008.

Court documents from Matalon and former government official Uzi Shaya indicated that the state learned in 2004 that account-holder Said al-Shurafa and some members of his family, along with Islamic Jihad and Hamas, were allegedly laundering millions of dollars through the bank.

Court documents indicate that Shaya worked on national security issues from 1984-2007. They also indicate that from 2004-2007, he worked on the state’s national security task force dealing with terror financing.

Shaya and other Israeli officials met with the bank in 2005, providing them with evidence of the laundering and asking the bank to close the problematic accounts, but the bank refused to do so, the documents say.

According to Darshan-Leitner and Wolosky, the Israeli government had promised to provide Shaya as a smoking gun witness that the bank had been warned in 2005 and had continued to allow the terror financing, which could crush the bank’s defense that it had not known.

Between 2010 and 2013, the plaintiffs beat off several motions by the bank to dismiss the case on a variety of jurisdictional grounds, culminating with a September 2013 slam-dunk ruling by the New York Court of Appeals that the case was properly in New York, not China, and that Israeli law would be applied regarding whether the bank was liable.

But those were the cases high points.

In mid-2013, the Israeli government let on that it might not allow Shaya to testify despite Shaya publicly declaring that he wished to if the government would waive its hold over him as a former government official.

Later, former National Security Advisor Ya’acov Amidror formally asked the US courts to respect Israel’s right to block former government officials from testifying due to national security.

Prime Minister Benjamin Netanyahu’s spokesman put out an extended explanation which referred to the past issues having been addressed diplomatically, various geopolitical interests and maintaining Chinese cooperation in fighting terror going forward.

Despite a well-funded media blitz to pressure the Israeli government to continue to allow Shaya to testify in the case, the government ultimately reneged and successfully blocked him from testifying with a final New York ruling from Judge Shira Scheindlin in July 2014.

That ruling was a shocking surprise-ending to that piece of the case as the plaintiffs had won a battle with the Israeli government to move the decision about whether Shaya would be forced to testify from Washington, DC to New York, where Scheindlin’s earlier statements had hinted she might ignore Israel’s wish to block the testimony.

The plaintiffs tried a number of other tactics to keep the case alive.

Shurat Hadin hoped to file for sanctions against China for allegedly threatening Israel in order to compel it to keep Shaya from testifying.

The NGO hoped the sanctions motion could lead to a jury instruction preventing the bank from denying the information that Shurat Hadin says Shaya would have given had the bank not allegedly interfered with his testimony.

In September 2014, the NGO announced that it had subpoenaed former US House Majority leader Eric Cantor for a September 30 deposition to reveal his possible discussions with Netanyahu and other Israeli officials, such as current and former US Ambassadors Ron Dermer and Michael Oren, about the bank’s alleged obstruction of Shaya testifying.

Cantor allegedly had knowledge about China and the bank’s obstruction based on conversations with Netanyahu and other Israeli officials in the summer of 2013.

But Attorney Eleni M. Roumel from the US House of Representatives Office of General Counsel successfully quashed the subpoena on the basis that any information Cantor gleaned was part of his duties as a government official and was privileged from becoming public.

Still, the NGO said it was confident that it would ultimately prevail on the basis of documents Israel had provided the group before ceasing to cooperate, plus additional documents the NGO might receive in a request pending before the Justice Ministry and the High Court of Justice.

Also, in November 2014, Wolosky announced that a New York federal court had asked Belgium to compel two key witnesses, an alleged terrorist and his wife, to testify.

The two, whose knowledge of the Bank of China’s alleged former money-laundering for Palestinian terrorist groups could have allegedly broken open the major case, were recently located in Belgium, according to a report in the La Libre Belgique newspaper.

The two were identified as Said al-Shurafa, the alleged former Palestinian terrorist who was at the center of the financing scheme, and his wife, Reem al-Shurafa.

In January 2015, Wolosky’s firm announced that the bank had been compelled to hand over 1,600 internal documents that it had fought hard to shield.

There was also renewed media pressure on Netanyahu leading up to his March 2015 speech in Congress, including a piece in The New York Times, to question how he could fight the Iran deal because of terror financing while at the same time actively stop the Bank of China case, giving terror financing a free pass.

Then the trail largely goes cold and for months any questions about the case were met with the same response that there was ongoing discovery.

None of the parties involved would comment on the record, but a 12 page court stipulation indicates that the plaintiffs dropped the case because their case could not continue as long as no one from the Israeli, US or Chinese governments would testify.

There was no reference to legal principles which could allow affidavits such as Matalon’s into evidence even without testimony like Shaya’s if no witness is available.

Bizarrely and despite earlier court rulings that New York was an appropriate venue, the stipulation also says that the alleged terror financing connected to the bank was not significantly connected enough to New York to maintain jurisdiction.

Further, on June 30, 2015, only weeks before the case was dismissed, Wolosky took leave from all private sector work, including the case, when he was appointed the US’s Special Envoy for closing the Guantanamo Bay prison.

The dismissal of the epic legal saga was “with prejudice,” which means it cannot be refiled.