Yediot Acharanot

The Chinese Conundrum
Yediot Achranot, July 12, 2013



In the beginning of May, Netanyahu went to China.  His wife and his two sons joined him.  The pictures were pastoral: the Netanyahu family visiting Shanghai; the Netanyahu family claiming the Chinese wall.  The pictures did not hint anything about the pressure associated with the visit and the crisis that was developed in the triangle Israel-China-USA, a secret crisis that reached its boiling point in the last days.

This story involves senior advisors to the Prime Minister, national security arms, the ministry of justice, the government of China, a huge bank, the top members of the house of representatives in Washington, the NY federal court, law firms in the US and Israel and the way Israel is fighting the funding of Arab terrorist organizations.

The lawyers involved in the case blame the Prime Minister office for a series of wrong moves that complicated the State of Israel and hurt its values, its representatives and its fundamental interests.  In the background is a touching story of one family from Florida that lost its son in a terror attack in Israel, was drafted to the Israeli service of interestsand after it did its part, was abandoned.

In the beginning of the past decade, the Israeli intelligence sources were preparing to fight the transfer of funds connected to the Iranian nuclear project and the terror activity of Arab organizations.  This effort involved the special staff for the fight against terror and the intelligence branch GHQ.  A unit was formed whose nickname was “Gilgal”.

In the beginning of 2005, a route for transferring money from the headquarters of the Hamas and the Islamic Jihad in Syria to the Guangdong region in China and from there to the Hamas and Jihad terrorists in Gaza was exposed.  A group of Palestinian business people, family members, got money from Syria, used it to buy toys and clothes made in China, shifted them in containers through Israel to Gaza seemingly for kindergartens, but actually for sale in public sales and stores.  The money was divided between the two organizational and designated for military purposes. In legal terms, this pattern is called “money laundering through commerce”.  During two-three years approximately 6 million was transferred via this route, a big sum when talking about terror.

Seventeen bank accounts were opened with Bank of China for the purpose of transferring terrorism money.  The accounts were under the names of two young Palestinians – Zayd Zbaih Rabah Shurafa, a student in his twenties and his 18 year old wife.  Bank of China is one of the biggest banks in the world.  It is a commercial bank, which back then was wholly owned by the government of China (later 20%-30% of its stock were issued and sold on a stock exchange). 

In 2005 Dani Arditi, the head of the special staff for the fight against terror, had a series of meeting in Beijing.  The Chinese warmly welcomed him and his accompaniers.  At that time, just before the Olympic Games in Beijing, when everywhere in the world people were protesting against them, the Chinese were very sensitive to their foreign relationships.  After Arditi’s visit, additional eight or nine visits took place of Israeli representatives in China, during which the Israelis gave, with permission and authority, all relevant information to the Chinese authorities. The warm welcome continued but sodid the money transfers.  The basic claim of the Chinese was that Hamas was not considered by them as a terrorist organization and as such they do not intend to touch the money.

The Blood Bank

The Israeli understood that peacefully this would not work.  The decision was to try another way – act towards bringing a lawsuit in the US against Bank of China claiming that the bank is a channel for terrorism funding. The Chinese bank transacts with the world in Dollars.  Its clearing house is in NY.  It has branches in NY, Chicago and LA and it is seeking to expand as a retail bank in other cities. The assumption was that if a lawsuit was brought in NY, the Chinese will get scarred, settle quickly with the plaintiffs, and most importantly, close the bank accounts.

Israel had a convenient contact to reach out to – a nonprofit called “Shurat Hadin”, headed by the lawyer Nitza Darshan Leitner.  This nonprofit is focusing on bringing lawsuits of terrorism victims to courts abroad.  The defendant is usually Iran, Syria and the Palestinian authority.  Bank of China was raised as a target for the first time.

American citizens that were terrorism victims have priority in the US courts. Darshan Leitner found a suitable American citizen.  Daniel Wultz, 16, from Weston, Florida, was visiting his family in Israeli in 2006, on April 17, he was killed at a terrorist attack at the “Shwarma Rosh Hair” restaurant in Tel Aviv.  Unfortunately, he was standing next to the suicide bomber.  He fell into the arms of his dad, Yekutiel (Tuly) who was seriously injured.  For 27 days he was fighting for his life.  His dad survived.  The money for funding the attack came from, according to the followers, a bank account with Bank of China.

Victims’ mom, Sheryl Cantor Wultz, is the cousin of the house majority leader in the Congress, Eric Cantor.  Eric is a notable conservative politician in the Congress, warm Jew, passionate about Israel and everything it is supposed to represent and a close friend of Benjamin Netanyahu and Ron Dermer, an advisor to the Prime Minister.

In her discussions with the intelligence agents, Darshan Leitner insisted that she receivesmassive assistance from the government.  She demanded convicting information on the bank activities, affidavits from authorized people and a commitment to provide for the trial an authorized witness that will say that the Chinese knew about the nature of the accounts and refused to close them.  The consent was given – orally.  In 2009, a lawsuit was filed to the NY Federal court.  The Chinese raised 30 top lawyers.  They sought war,not settlement: first, they demanded to dismiss the lawsuit.  The answer was given through an affidavit signed by Shlomo Matalon, a retiree of the Prime Minister office.  The judge, Shira Scheindlin, reviewed the affidavit and was convinced that this is a real lawsuit.  She decided to continue with the proceedings.

There was one positive result to the lawsuit: the Palestinians in Guangzhou got scared and closed the channel by themselves.

Permitted Witness, Forbidden Witness

In order to continue with the case, the lawyer needed a witness.  She approached Uzi Shaya, former national security agent.  Like any national security agent, Shaya is prohibited from disclosing information he was exposed to during his services unless he is authorized to do so.  He approached the decision making authorities.  He was instructed to refuse.  At some later point, Shaya was called to the Prime Minister office.  He was instructed to go and testify. 

A source in the Prime Minister office claims that the change occurred after the family contacted Rep. Cantor, who called Demer and yelled at him until he agreed to allow Shaya to testify. This was not the last flip flop from Netanyahu’s office in this case.

On April 1, 2012, Yekutiel Wultz received a phone call from Ron Dermer’s assistant.  Following the call, he sent her this email: “we are grateful for your words that confirm that there is no problem with respect to the said subject” and that “you are working now on the final details”.  We hope to hear from you in the next few weeks with respect to the testimony regarding the bank”.  

On May 14, Wultz talked with the embassy in Washington.  The embassy notified himthat “the government of Israel authorized the relevant bodies to allow the deposition”.

On March 20 this year Shaya sent a signed letter to the lawyers from both sides in the case.  In that letter, Shaya agreed to testify in the deposition subject to a few conditions,including that the deposition will be held in Israel, that he will not be allowed to disclose privileged materials, that his picture will not be published, etc.  The judge in New Yorkagreed to all these conditions.  What she did not know is that no final decision is really final in Israel.  The very authority that gave permission to testify could then prohibit the testimony.

This story has been reported in two articles, one in Ha’aretz, by Amos Harel and Ruti Zuta, and another in the Wall Street Journal. But since publication of these stories, the drama did not end—it has continued and grown even more complicated.

The Chinese read Shaya’s letter and contacted the Israeli embassy in Beijing.  If the witness testified, they threatened, the Israeli Prime Minister will not be permitted to visitChina.  As they put it, we will not allow you to bury China in a court in New York.

China is a world superpower that is used to dictating to the rest of the world its conditions.  The Israeli ambassador in China, Matan Vinai, relayed the threat to the Prime Minister in Jerusalem.  Netanyahu realized he got himself into a quagmire.  First, there was the upcoming visit to China, which he was especially interested in because the Chinese did not invite him during his last term in office.  He believed that the visit was critical to ushering in a strategic change in Israel’s relationship with China.

Second, there was the war of Israel again terrorism and its financiers, which is based on uncompromising moral values and Israel’s alliance with its friends in the United States.  Third, there was the promise he had given to the lawyer in the case.  (Darshan Leitnerwas replaced by Boies Schiller, one of the largest law offices in the United States. Darshan Leitner filed separate lawsuits against the bank on the behalf of the Kasamvictims in Sderot).  Fourth, there was the bereaved family and its relative, a very important political figure to Israel in Washington.

Netanyahu chose to side with the Chinese.  The Chinese were given, immediately prior to the visit, a commitment that the witness will not testify.  No one notified the Wultzes or their lawyers about this agreement.  Personnel in the Prime Minister’s office and the Ministry of Justice realized that they had created quite a conundrum.  Netanyahu orderedthe Chair of the National Security Committee, Jacob Amidror, to untie this knot.  Amidror, who is on his way out from the Prime Minster’s office, did not untie the knot.  The Prime Minister office and the Ministry of Justice held highly confidential marathondiscussions.  The lawyers representing those who are suing Bank of China stayed in Israel.  When they pressured their sources in the Israeli government for answers, they got embarrassing, evasive responses.

In the meantime, Israel did not say anything to the Court.  The Chinese did that for them: during the month of June, they notified Judge Scheindlin that Israel agreed that the witness will not testify.

The Judge was furious.  On July 2, she wrote a letter to Gil Avriel, the legal advisor of the National Security Committee.  She asked to have a phone call with Avriel regarding the deposition of Uzi Shaya.  “The bank’s lawyers”, she wrote, “assume that the State of Israel will not allow the witness to testify.  In order to save a trip to Israel for everybody, I want to clarify with you whether the testimony will take place”.

Credibility on the Line

On Sunday last week, a meeting was held in the ministry of justice in Jerusalem with several participants.  The deputy legal advisor to the government, Shai Nitzan, who is incharge of the national security field, run the meeting, in which participated multiple legal advisors of different security bodies and Orit Son, Roee Shindoff and Naomi Zameretfrom the state prosecution and Darshan Leitner.  The subject was the testimony of UziShaya in the trial in NY.  Darshan Leitner demanded to honor the commitment that was given to her.  “We had a deal”, she said. “We agreed that I will file the lawsuit and you will bring the evidence”. The participants said over and over again that they were sorry.  “What are you talking about”, said Darshan Leitner.  “What, you did not know who is China? You did not know what this could do to the relationship with it? You did not know who is Bank of China? For the sake of Netanyahu’s visit to China, you are sacrificing of the terrorism victims? This morning I got a copy of the letter of Bank of China’s lawyers.  How do the Chinese know about this decision before us, the lawyers in this case?”

The prosecutors were not willing to say what will the future hold for Shaya’s testimony. “For now”, they replied to the lawyer, “He is not getting a permission to testify”. Darshan Leitner is now threatening to sue the government in the Israeli Supreme Court.  “We have here a breach of a governmental commitment”, she told her colleagues the prosecutors.

She had another reason to be upset.  During the last 5 years, she is receiving threats from Bank of China’s lawyers.  In 2008, for example, they wrote her a 9-page letter in two languages, in Chinese and English.  In this letter, they threatened her with criminal lawsuits and defamation lawsuits seeking millions.  Threats were also sent to the law firm Boies Schiller in NY.  David Boies, the head of the office, is the lawyer who recently convinced the majority of the US Supreme Court to permit same sex marriage.  The law firm is also handling commercial cases and public interest cases.  In the firm’s view, the lawsuit of the Wultz family is first of all a moral, public and ethical matter.  To handle this case, Boies designated Lee Wolosky, who during the Clinton and Bush administrations dealt with the flow of funds to terrorist organizations.  He came to Israel this week, for another visit, and met with senior people in the Israeli government. “What is on the line here”, he told them, “is the credibility of the Israeli government. Make up your mind, either you are fighting terrorism or you are not fighting terrorism”.

They were not able to give him a binding answer.  They did not offer anything to the family, did not even imply anything.  One would expect that they would make some offerto the family by offering to form a joint foundation, that the Prime Minister might invite them for a meeting to explain his decision and take responsibility for it.  We are talking about a family that has deep connections with Israel—the father was born here, speaksfluent Hebrew and has a big family in Jerusalem.  If there is some intention to appease the family, it has not been shown to date.  The only communications that have been made are done through lawyers.

The Israeli government’s attorneys are not afraid to fight with presidents and Prime Ministers, but they are apparently fearful of taking responsibility for another internationalquagmire. Wolosky decided to wait in Israel for an answer until he leaves on Sunday.

Like in many other cases, no decision is a final decision.  The tactic was to drag the deliberation until the moment that the judge decides she had enough and give up on the deposition of the witness.  They are not allowing the witness to testify but they are not providing him with a letter that prohibits him from testifying.  The result is that a person like Uzi Shaya (and Shlomo Matalon, who is also mentioned in the letter written by the judge) could be subpoenaed the second they land, if they land, in the United States.  A big part of the world is closed for them: they are better off not going to China, for obvious reasons, and they must now think twice before they go to America.  They alsopay the price for the state’s indecisiveness.  

Beijing Is In Our Hands

The target date that was put in place by the judge is August 31 – practically speaking,almost tomorrow morning because we are taking about a deposition that is supposed to be held in Israel, with the presence of a large group of expensive and busy lawyers from both sides.  What will happen if until the target date, the witness does not show up to testify? Wultz family’s lawyers estimate that the judge will take action.  Israel adoptedthe Hague treaty that obligates it to disclose information to other countries in civil cases.  If Israel refuses to provide information in these cases, a demand will be brought to remove it from the treaty.  The judge may issue subpoenas to Israelis involved in the case.  If the Judge does not act, the lawyers will act.  They are talking about a war.

The war will come, if it comes, via legal and political channels.  The legal channels include serving summons on all Israelis that were involved in the case.  That includes the departing Israeli ambassador in Washington, Michael Oren; the next designated ambassador, Ron Dermer; Dani Arditi, who was the chair of the special staff for the war against terrorism; the chair of the national security committee, Jacob Amidror; UziShaya; Shlomo Matalon and others.  Bank of China could sue the lawyers who filed these lawsuits for millions of dollars for bringing a frivolous lawsuit.  If that happens, they will sue the Israeli government.

The political pressure is also of serious consequence, perhaps even more so the legal pressure.  The conservative wing of the Republican Party dislikes China more than it likes Israel.  Congress is concerned because of Chinese commercial practices, because of China’s growing influence in Africa and South America, and because of China’s militaryand commercial spying in the United States.  Israel’s supporters and opponents united inanger when they heard about a news item, according to which, a Chinese company is supposed to build a city in Israel near Latrun.  The same Bank of China that is accused of assisting terrorism is invited to participate in the project initiated by the Israeligovernment.

Eric Cantor cannot openly act because of he is related to the victim of the terrorist attack.  He is pressuring his colleagues, among them, Ileana Ros-Lehtinen the former chairman of the House foreign affairs committee, and Debbie Wasserman-Schultz, a member ofCongress from Florida and the chair of the Democratic National Committee. One of the people involved in the case claims that when Cantor’s name was raised in one of the discussions, Netanyahu said “I will be fine with Cantor”.  Netanyahu is an optimistic man: according to the Wultzes, it will not be easy.

Netanyahu is also optimistic about the future of the relationship between Israel and China.  Some governmental sources claim that following the refusal to allow the testimony, a new, very promising chapter in the relationship between Jerusalem and Beijing began.  A trust has been created between the two counties’ intelligence systems, security systems—there is willingness for investments and foreign trade. China is in our hands.

Israel has been in such a position before.  In the past decade, when Barak and Sharon were Prime Ministers, Israel was trying to sell China a falcon plane and drones. The American government reacted brutally.  The deals were cancelled and Israel paid the Chinese substantial damages.

For better or for worse (mainly for better), Israel is an American ally.  All attempts to have an affair, outside of this marriage, with another superpower, have failed.  This was the case with Putin’s Russia and the communist China. The desire is huge but, in the end,there is nothing left other than a taste of unfaithfulness – and a bereaved family that issad, disappointed and angry.

The Parents: “You Are Turning a Blind Eye To A Murder”  

On Wednesday night we talked to Sheryl and Yekutiel Wultz on the phone.  They were upset.  If the Israeli government will not allow this testimony by August 31, how will you feel?

“I will be very sad, embarrassed and disappointed”, said Sheryl.   

“All these things and more”, added her husband. “It does not look good, just a year ago the Israeli government gave us and our friends in the Congress a clear promise”.

“It will look bad”, said Sheryl, “because the impression is that Israel is not willing to fight the terrorism.  The closeness in time with Netanyahu’s visit to China has to be looked into. Suddenly you are willing to cross the lines”.

“You are willing to turn a blind eye to a murder in order to get a financial benefit and who knows what else”, she said.  “I am concerned about all of us, about Israel, Americaand the world – what message is passed here.  The message is – banks continue with whatever you are doing.  You can be a channel for terrorism.  No one will punish you”.

“You had a unique opportunity to deal with terrorism like it was never dealt with before”, she said.  “You could have punished one of the largest banks in the world and show the world what a real war against terrorism is”. 

We asked what they learned from their meetings with American politicians.

The father said: “they are angry, disappointed, worried.  I will not mention names.  Howcan it be, they ask, how can Israel pressure us not to do business with Iran, when Israel is ignoring Bank of China’s crime against American laws.  They say, Israel is spitting in our face”.

What can Netanyahu do, we said, when the Chinese subjected his visit to the cancellation of the testimony?

“If our case was the main obstacle to Netanyahu’s visit”, he said, “You know what? Goodbye Israel.  This is stupid.  What the Chinese said to Netanyahu, practically speaking, was that the Chinese are not willing to pay the price for their crimes.  They demanded him to help them to escape from liability”.

Even if Israel gives up, we are not willing to give up”, said Sheryl.  “What would Israel say if we win without its help? One thing is sure – if Israel does not honor its commitment, the relationship between it and the United States will be damaged.