The Israeli-founded marketing tech firm Skai will pull funding from Israel due to the government’s plans to implement sweeping changes to the judiciary, according to a Tuesday report, as concerns grow about the financial impact of the contentious proposals.
Skai (formerly Kenshoo) will withdraw all funds from Israel aside from what is needed to cover basic tax expenses, Channel 12 reported. Skai did not immediately respond to a request for comment.
The online marketing company employs around 600 people, including 300 in Israel. It works with leading corporations including Google, Amazon, Meta, Walmart, TikTok, and Microsoft.
The company is believed to be worth around $1 billion, according to Hebrew media reports.
Also Tuesday, senior officials from the Finance Ministry warned the coalition that uncertainty in the market about the judicial overhaul was a risk factor for the country’s expected revenue, according to Channel 12.
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The discussion got heated, with the director of the prime minister’s office telling the economists, “I actually think this will lead to more market certainty, I can bring in other economists that will make a different prediction than you.”
The meeting marked the first time the Finance Ministry has gotten involved with the judicial plans, the network reported.
The government is preparing to submit its budget at the end of the month.
Workers from the high-tech sector protest against the proposed changes to the legal system, in Tel Aviv, on February 7, 2023. (Tomer Neuberg/Flash90)
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.
A Monday report said the tech company Wiz intends to move its money from Israel to foreign bank accounts due to the government’s plans.
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.
Wiz is valued at $6 billion and is considered one of the country’s most successful high-tech companies in recent years.
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 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, continued to recommend that customers invest in the Israeli currency, but cautioned that if the overhaul goes ahead, it will likely see the value of the shekel drop.
Last week, leading US financial institute JPMorgan warned of a growing risk of investing in Israel due to the government’s far-reaching plans.
Prime Minister Benjamin Netanyahu at the Knesset in Jerusalem, on February 6, 2023. (Yonatan Sindel/Flash90)
In January, bank chiefs warned Netanyahu that they have started to see an outflow of funds, with savings accounts being moved from Israel abroad.
Leaders of the anti-government protest movement have called for worker strikes next Monday, and tech workers have carried out small, mostly symbolic strikes in recent weeks.
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.
The coalition plans to begin committee voting on the legislation as soon as this week.
