On Monday, a report revealed that cyber tech firm Wiz is planning to move its cash to foreign bank accounts from Israel because of the government’s judicial overhaul plans.
The report said that the company intends to move out cash worth tens of millions of dollars from Israel and will leave a relatively small amount behind for covering salaries of local workers and ongoing expenses.
Recent weeks have seen senior executives from the tech and business community of Israel voice their concerns publicly about the proposals put forward by the Justice Minister Yariv Levin.
The proposals are meant to overhaul the justice system, which would weaken the ability of the High Court of Justice to strike down laws.
They would also give Knesset the capability of overriding the court’s decisions via a majority and give politicians the power to appoint judges and also their own legal advisers.
Chief executive Assaf Rappaport co-founded Wiz. He had previously served as the head of the development center of Microsoft Corp. in Israel.
The report said that Wiz had decided to move out its cash after the management was pressurized by investors to take precautions due to the uncertainly associated with the planned legislation.
The investors are also concerned about the risks to the economy in Israel in light of the weakening of the judiciary.
Wiz’s CEO has already spoken out against the judicial overhaul and has warned about its potential economic impact.
With a valuation of $6 billion, Wiz is regarded as one of Israel’s most successful high-tech firms. There are now concerns that companies will also join those who have already made these moves.
Tel Aviv-based Papaya Global had also announced two weeks earlier that it was going to withdraw all its funds from Israel in light of the plans of the new government.
There would not be immediate economic impact of companies like Wiz pulling out their funds. This is because these companies are incorporated in Israel, even if they have offices in other countries.
Therefore, they have to pay the Israel Tax Authority. But, if this movement grows and other businesses do the same, then banks may also have their capital pulled out.
There are already expectations that other companies have also begun to pull out their funds without making official announcements.
The Wiz announcement came after banking giant HSBC published a report that warned of the economic impact of the government’s judicial reforms.
There have already been similar warnings from the financial world. The HSBC report considered the strength of the shekel.
While it recommended customers to invest in the Israeli currency, it cautioned that the value would drop, should the overhaul move forward.
The bank said in its report that political developments have to be considered. JPMorgan had also issued a warning last week about the increasing risk of investing in Israel due to the government’s plans.
In fact, the financial institute also warned that Israel’s credit rating could suffer because of the judicial shakeup.