Cyber tech company Wiz intends to move its money from Israel to foreign bank accounts due to the government’s efforts to weaken the judiciary, Channel 12 reported Monday.
According to the report, the company is believed to have tens of millions of dollars in cash that will be taken out of the country. A relatively small amount will be left behind to cover ongoing expenses and salaries of local employees.
In recent weeks, senior executives from Israel’s business and tech community have publicly voiced their concern over the judicial overhaul advanced by Justice Minister Yariv Levin, which would severely limit the High Court’s ability to strike down laws and allow the Knesset to re-enact legislation that the court has struck down. It would also give Prime Minister Netanyahu’s coalition government control over judges’ appointments and allow ministers to appoint their own legal advisers.
Channel 12 said Wiz, which was co-founded by CEO Assaf Rappaport, the past head of Microsoft’s development center in Israel, made the move after investors pressured its management to take precautions amid uncertainty over the planned legislation and what they viewed as the growing danger to Israel’s economy.
Rappaport has spoken out against the overhaul, warning in recent weeks of its potential economic impact.
Wiz is valued at $6 billion and is considered one of the country’s most successful high-tech companies. There is now concern that other businesses will join those that have already made similar moves.
Two weeks ago Papaya Global, a Tel Aviv-based global payroll and payment management platform unicorn, declared that it plans to withdraw all of its funds from Israel in protest of the government’s plans.
The Globes business daily noted that the immediate economic impact of a move such as Wiz’s is limited, as Israel-incorporated companies, including those with offices in other countries, must pay the Israel Tax Authority for their funds, including those abroad. However, if such a movement grows and other businesses follow, banks could see capital pulled out.
Globes said market estimates are that other companies are also moving money out of the country without announcing the process.
The Wiz pullout came as a report by banking giant HSBC joined a chorus of warnings from the financial world that the government’s proposed legal reforms could harm the economy.
The report, which looked at the strength of the shekel, continues to recommend that customers invest in the Israeli currency, but cautions that if the overhaul goes ahead, it will likely see the value of the shekel drop.
“We can’t ignore the political developments,” the bank wrote in its report.
Last week leading US financial institute JPMorgan warned of a growing risk of investing in Israel due to the new government’s far-reaching plans.
JPMorgan flagged the possibility that the judicial shakeup could put negative pressure on Israel’s credit rating, which it said currently “stands comfortably in the investment grade bucket,” potentially slowing the flow of international investment.
The bank stressed, however, that it expects “the market impact of that to be limited.”
In January, bank chiefs warned Netanyahu that they have started to see an outflow of funds, with savings accounts being moved from Israel abroad.
Financial experts, companies, and business organizations have been stepping up their warnings over the government’s plans, which they say threaten democracy and will harm the economy, particularly the thriving local tech industry.
Many fear that a weakening of the judiciary system will create uncertainty and reduce the likelihood that foreign investors will inject funds into local companies. This in turn could force local and international businesses to leave and set up shop elsewhere.
Netanyahu, who is technically blocked from weighing in on legislation that could affect the outcome of his ongoing corruption trial, has pushed back against the mounting criticism, claiming that the current level of judicial oversight is actually hampering economic growth.
Last week, Netanyahu accused his political rivals of trying to harm the economy with their predictions of investors fleeing and the shekel weakening as a result of his hardline coalition’s proposals.
Meanwhile, the coalition plans to begin voting on the legislation in committee as soon as next week.
Although opposition members of the Knesset Constitution, Law and Justice Committee, where the legislation is being prepared, could delay the advancement of the legislation by several days by submitting reservations, it will likely be brought for an initial vote in the plenum in the next two weeks.