Published On: Tue, Sep 23rd, 2014

Jury Says Arab Bank Supported Terrorists, Must Compensate Victims

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A federal jury on Monday decided Arab Bank had been supporting terrorists who carried out dozens of attacks, and must compensate the victims of those attacks. It is the first time a bank has been found liable in a civil suit under the antiterrorism statute.

The Middle Eastern Arab Bank, with $46 billion in assets, was found guilty of knowingly supporting specific terrorist acts in and around Israel in the early 2000s.

The verdict will no doubt influence current and future legal efforts to pin responsibility on financial institutions for stuff their clients are doing, never mind that said institutions obey U.S. banking laws. It could mean that many banks and investment groups would think twice about conducting business with bad people if it means those bad people would flee the scene and they, the nice men and women in elegant suits, would be literally left holding the bag.

The plaintiffs in this case have been 297 victims, either directly injured, or whose loved ones were killed or injured in 24 terrorist attacks carried out by Hamas. They pointed a finger at Arab Bank, which handled transfers and payments for individuals associated with Hamas.

Damages will be decided in another, not yet scheduled trial. So far, plaintiffs have not put a dollar amount on their suit. How’s about $46 billion?

The plaintiffs managed to prove that Hamas was responsible for the terrorist attacks, and that the bank’s rendering its services to Hamas constituted the proximate cause of those attacks.

A proximate cause is an event sufficiently related to a legally recognizable injury to be considered the cause of that injury.

Plaintiffs also had to show that Arab Bank could reasonably foresee a connection between its providing financial services to Hamas and the eventual injuries inflicted.

According to the NY Times, there are several similar lawsuits pending, including a case filed by victims of terrorist attacks against the National Westminster Bank, which was reinstated on Monday by a federal appeals court.

“What this has done is it’s made the effects of American law felt in far-off places, and that is significant, ” Jonathan Schanzer, vice president for research at the Foundation for Defense of Democracies and a former terrorism finance analyst for the Treasury Department, told the NY Times, adding: “I don’t think any country, any bank, would want to be cut off from the U.S. financial sector, and they’re going to start thinking very carefully about whether they accept financial transactions” from bad people.

Attorney for Arab Bank Shand S. Stephens said he was confident the Second Circuit Court of Appeals was “going to reverse” the jury’s decision. He insisted that “evidence this thin would never have resulted in a verdict unless there were errors in the admission of evidence, errors in the instructions, and errors in imposing a sanction that the United States has already told the Supreme Court was improper.”

Arab Bank release a statement saying that “any proceeding conducted under the district court’s improper sanctions” would be “nothing more than a show trial.”

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