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Israeli Newspaper Ha´aretz, Internet Edition, February 23rd, 2001:

Israel rejects French criticism of failure to extradite in money laundering case 

By Yossi Melman

Ha'aretz Correspondent


Israeli officials are denying French allegations that Israel has refused to extradite fugitives allegedly involved in the largest embezzlement scheme perpetrated in France in recent years and has even allowed them to invest the illegal spoils in Israeli banks.

A Justice Ministry spokesman termed the allegations by French prosecution and legal investigation sources "an unprecedented attack on Israel." He added, "The [Israeli] state attorney has [taken] and continues to take every possible action it can to help the French in the affair. It has been a year since the French promised to pass on to Israel material that would make it possible to move forward in dealing with the issue but they have not done so yet. They have no one to blame but themselves."

This week saw the start of the trial in France of 124 defendants charged in the largest fraud affair in France for years. They are accused of having embezzled $77 million from 33 banks and insurance companies in the late 1990s using a "pyramid method."

They have been charged with setting up a slew of bogus businesses, which issued fake orders to each other, with the invoices then used to obtain bank loans. The fake businesses would transfer an order between one another, creating accounting chaos. The last business in line would then declare bankruptcy.

Many of the accused are Jews, originally from North Africa, and many of them holding the title "Rav" (rabbi). They worked in the textile district of Paris known as Le Sentier.

At the center of the affair are 13 defendants who hold dual French and Israeli nationality, seven of whom have fled to Israel. They include a former Israeli army Engineering Corps staff sergeant, Chaim Weizman, who goes by the nickname Albert and is considered "the brain" behind the sting operation. The prosecution alleges that Weizman escaped to Israel with $33 million of the embezzled funds and deposited them in Israel.

French legal authorities filed an international extradition request a year and a half ago and asked Israel to return him to France. They allege that Israel has refrained from acceding to their request and claim that Israeli financial institutions, particularly the First International Bank of Israel (FIBI), were used to launder the embezzled money.

French prosecutors allege that agents of the group would fly to Israel to deposit the fund at FIBI branches. A FIBI spokesman said the bank "is not involved and is not a suspect of any action connected with laundering. The bank abides by all the rules and regulations concerning the receiving of deposits from customers in order to prevent possible money laundering." But it is possible that some of the embezzled funds were laundered through money changers operating in Israel who may not have known the source of the cash. It is also possible that bounced checks from the fake companies that declared bankruptcy were sold to Israeli agents for a commission.

Media reports in France have suggested that some of the suspects contributed part of the funds to right-wing Israeli parties, including the Likud and Shas.

Weizman gave an interview to the French newspaper Le Parisien from his hideout in Israel, wishing "success" to his associates who are standing trial. The interview further outraged French prosecutors. Israeli legal sources said that after France filed an extradition request for Weizman, a team of French investigators visited Israel and met with representatives of the Israeli State Prosecutor's Office. An Israeli legal source said: "We told them that the extradition request and the evidence that accompanied it would not stand up in an Israeli court because of differences between French and Israel law." The source added: "We told them we would be happy to help them in their investigation and even gave them some guidance on how a revised extradition order and the evidence should be presented." The source said that the French never took the advice.

While contending that the blame for failure to take the proper action lies with the French, Israeli legal sources acknowledged that the affair has damaged Israel by giving it the image of a country which provides refuge for Jewish criminals and as a place for laundering criminally obtained funds.

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