Israeli prime minister Netanyahu gets flak for yielding to China

John Reed Benjamin Netanyahu faces a domestic political scandal with possible international repercussions after news emerged that his government withdrew a witness in a US lawsuit brought on behalf of terrorism victims after facing pressure from China. On Monday an Israeli government official and a lawyer representing the victims confirmed a newspaper report this weekend that the Chinese government threatened to cancel a visit by the Israeli prime minister to China in May if he allowed a former intelligence official to testify against Bank of China in a New York court. Mr Netanyahu called Michael Oren, his ambassador, back to Jerusalem for a meeting on Sunday after Yedioth Ahronoth, an Israeli newspaper, broke the story, which will be embarrassing for a politician who has made the fight against Islamist terror groups a hallmark of his three terms in office. The Israeli prime minister’s office declined to comment on the affair. Lawyers representing families of 22 terror victims are bringing suit in federal and state court in New York in relation to a 2007 suicide bombing at a bakery in the southern Israeli city of Eilat, a 2008 shooting attack at a rabbinical seminary in Jerusalem and rocket attacks from the Gaza Strip on the southern city of Sderot. They allege that Bank of China, through its US branch, laundered funds intended for Hamas and Islamic Jihad, the militant groups active in Gaza, which both Israel and the US describe as terrorist groups. Nitsana Darshan-Leitner, an attorney representing the victims, told the Financial Times that prosecutors had identified, with the help of Israeli security officials, an account held by a Palestinian living in Guangzhou whom they allege sent $2m to $3m to Hamas and Islamic Jihad via Jordan. The money was sent in dollars and so was routed through Bank of China’s New York branch. Prosecutors allege the money was used for supplies such as school beds and student uniforms sent to Hamas and Islamic Jihad in Gaza, which were later sold to fund their organisations. Ms Darshan-Leitner said the antiterrorism division of Israel’s government met with Chinese officials and asked them to close down the account, but were refused. She said the security services had approached her, asking her to file suit against Bank of China. The Shurat HaDin Israeli Law Center, for which Ms Darshan-Laitner works, brings litigation on behalf of victims killed by suicide bombings, rocket attacks and other terrorist incidents. The group agreed, she said, on condition that a former intelligence official with knowledge of the alleged financial transactions would testify in court. “The deposition was supposed to take place around April, until Netanyahu was supposed to go to China,” Ms Darshan-Leitner said. “Because of pressure that was put on the Israeli government by the Chinese government before Netanyahu’s visit to China, the Israeli government decided not to allow the witness to testify.” Bank of China, the country’s main institution for handling foreign exchange transactions, was not immediately available for comment on Monday. Bank of China recently halted some dealings with North Korea after pressure from the US. Last year, when the lawsuit was filed, the bank denied it was providing banking services to terrorist groups, and said it had always complied with UN regulations and Chinese international law on money laundering and the financing of terrorism. An Israeli government official, who asked not to be quoted by name, confirmed details of the affair. “When the China trip was on the table, the Chinese pressed very hard and said that something should be done to prevent this expert witness from testifying,” the official said. “The promise was made to safeguard the whole China-Israel relationship.” Israel is seeking to promote trading and political relations with China at a time of slowing growth and cooling political relations with the EU, its biggest trading partner. Mr Netanyahu earlier this month dispatched Naftali Bennett, his economy minister, on a trip to China with a delegation of businessmen from the high-tech, banking and other sectors in tow. Bilateral trade between the two countries reached nearly $10bn in 2012.

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