BANK OF PALESTINE DENIES PASSING CASH TO PALESTINE

C O N F I D E N T I A L JERUSALEM 002206 SIPDIS SIPDIS NEA FOR FRONT OFFICE; NEA/IPA FOR GOLDBERGER/SHAMPAINE/BELGRADE; NSC FOR ABRAMS/WATERS; TREASURY FOR SZUBIN/GRANT/HARRIS/NUGENT/HIRSON E.O. 12958: DECL: 10/23/2017 TAGS: ECON EFIN KFTN KWBG IS SUBJECT: BANK OF PALESTINE DENIES PASSING CASH TO PALESTINE ISLAMIC BANK AND HAMAS REF: JERUSALEM 2200 Classified By: Consul General Jake Walles, Reasons 1.4 (b) and (d). ¶1. (C) Bank of Palestine (BoP) General Manager Hashim Shawa vehemently denied allegations contained in a September 27 Reuters report that BoP branches in Gaza transferred cash to the Palestine Islamic Bank (PIB),which in turn deposited the funds into accounts held by Hamas Executive Force members. Shawa told Econoff October 23 that cash distributions among banks are rare and are always coordinated with the Palestine Monetary Authority (PMA). Given public knowledge of PIB "problems," Shawa continued, BoP "would be shooting ourselves in the foot," by engaging in the alleged activity. Shawa reiterated that BoP did not distribute any portion of cash it received to PIB. ¶2. (C) Shawa stated that the Reuters report contained numerous factual errors, including the assertion that BoP received the suspect cash shipment from the Israeli Discount Bank, when Bank Hapoalim is the sole source of BoP cash shipments originating in Israel. He also denied claims that Hamas's Executive Force provides protection for cash shipments after they enter Gaza. Shawa said the report's author apologized to him for not discussing the allegations with BoP prior to running the story. Shawa said he is considering legal action against the reporter. ¶3. (C) Shawa touted BoP's long-standing adherence to CIF/AML procedures and ongoing relationships with highly reputable foreign banks, including JP Morgan, Citibank Group, and Israel's Bank Hapoalim. Although Bank Hapoalim announced that it would sever ties with banks operating in Gaza, Shawa said Bamk Hapoalim continues to work with BoP, and recently facilitated a cash transfer to Gaza (reftel). ¶4. (C) Note: BoP has recently completed the transfer of its headquarters from Gaza City to Ramallah, a move recommended by PMA to thicken the firewall between bank management and Hamas. BoP maintains that the move was always intended as part of its "long-term business plan". End Note. WALLES