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Israeli fintech to wire $500m out of country over judicial overhaul

REUTERS/Amir Cohen
A man plays music as Israeli military reservists block the main highway from Jerusalem to Tel Aviv as they demonstrate against proposed judicial reforms by Israel's new right-wing government in Shoresh near Jerusalem, on February 9, 2023

Israeli financial technology firm Riskified is transferring $500 million out of the country, joining private sector opposition to the government’s planned overhaul of the judicial system.

CEO Eido Gal shared the decision with employees in a letter and voiced concerns that the proposed changes to the court system, if ratified, could lead to a “prolonged economic downturn in Israel”.

“Our concern is that as the financial situation continues to deteriorate, and in order to maintain financial stability, the government will limit transfers and withdrawals of large amounts,” Gal said in the letter seen by Reuters.

Riskified provides a fraud management platform for online merchants. It has offices in Israel and New York.

The company, he said, would be transferring $500 million in cash and equivalents out of Israel. It will also expand hiring for its R&D site in Lisbon, Portugal.

The judicial overhaul plan, which has already received initial parliamentary approval, would give the government greater sway on selecting judges and limit the power of the Supreme Court to strike down legislation.

“The laws being passed can lead to the dismantling of our independent judicial system,” Gal wrote. “More importantly, this will result in Israel changing from a democracy with liberal values into a more authoritarian state.”

Moody’s Investor Service warned on Tuesday that the plan could weaken institutions and negatively impact Israel’s sovereign credit profile.

A number of other high-profile companies in Israel have already said they would be transferring large sums of money abroad due to the political uncertainty.

Critics of the proposed changes say Netanyahu – on trial on graft charges that he denies – is pursuing steps that will hurt Israel’s democratic checks and balances, enable corruption and bring diplomatic isolation.

Proponents say the changes are needed to curb what they deem an activist judiciary that interferes in politics.