Eynat Guez, CEO and Co-Founder of Papaya Global, a billion-dollar Israeli software company that developed a cloud-based system for employee management, and calculations of salaries, benefits, and payments for global companies and corporations, is a dedicated leftist. She is a regular feature in anti-Netanyahu demonstrations and a declared enemy of Justice Minister Yariv Levin’s reform of the justice system in Israel.
On Thursday, Guez announced that Papaya Global is withdrawing all its funds from Israeli banks in response to the reform, explaining: “This is a painful but necessary business step.”
The berserk campaign of Israel’s left involving everyone who stands to lose control over the country as a result of the proposed reform included a massive talking-points attack by economists who say the reform is bound to damage Israel’s robust economy because it would turn the country un-democratic and investors prefer to put their money in democracies. When asked why dictatorships like Singapore and Hong Kong have been a magnet for investments, the economists––a few hundred of them, who signed a petition––argue that the reform would make Israel unstable, and investors don’t like to put their money in unstable countries (such as Hong Kong, which is plagued by anti-government demonstrations).
When Prime Minister Benjamin Netanyahu and Foreign Minister Eli Cohen testified at a recent press conference that in all their discussions with investors and government officials worldwide, the issue of the reform had never come up and that Israel continues to be a haven for investments that yield high returns, several rich Israeli leftists decided they had to erode the economy, because it wasn’t going to collapse on its own.
Guez tweeted on Thursday: “Following Prime Minister Netanyahu’s statements that he is determined to pass reforms that will harm democracy and the economy, we made a business decision at Papaya Global to withdraw all of the company’s funds from Israel. In the emerging reform, there is no certainty that we can conduct international economic activity from Israel. This is a painful but necessary business step.”
There’s a major moral flaw inherent in Guez’s decision: much of the money invested in her company comes from Israeli hedge funds, which draw from Israeli pension funds and other local sources. Is it ethical for a CEO to move those funds out of the country? Some investors have already voiced their objection to a political move carried out by the company without their consent. It remains to be seen whether the other co-founders, Ruben Drong and Ofer Herman, supported the move.
Globes pointed out that in addition to causing harm to the Israeli economy (Papaya Global is valued at more than $3 billion), the move, should it actually take place, would damage the company as well. It is more profitable for Israeli unicorns to hold their deposits in Israel. The interest rate differentials tend to favor Israel and have already led many entrepreneurs to transfer their money from American to Israeli banks over the past few months, to profit from the local high-interest rates.
It’s not clear how such a move, which will burden the company with more expenses in an era of cutbacks and economic crisis, will be viewed by the board of directors.
But wait, there’s more: Papaya Global has 280 employees in Israel, and according to Israeli law, it must deposit their salaries in shekels in an Israeli bank. If the company’s money is moved to foreign banks, it would have to pay all the additional costs of transferring the salaries back to an Israeli account. It’s a classic case of cutting off your nose to spite your face.
Meanwhile, Calcalist Tech reported that Israeli venture capital funds Disruptive and Disruptive AI, founded by Tal Barnoach and Yorai Fainmesser, also announced on Thursday that they were transferring their money, $250 million all told, out of Israeli banks. Barnoach told Calcalist: “Economy is built on stability. I’m currently in London and I met my investors who are very worried. They tell me that if the reform will go ahead, it is unclear to them if they will continue to invest in Israel.”
Hillel Fuld, a friend of the Jewish Press, posted on Facebook Thursday night: “Huge update. The VC who the press reported is pulling his money from Israel? Fake news! Just spoke to him. He is doing no such thing. It’s unbelievable the length the left will go to bring this government down! Blatant lies!”
Netanyahu told a press conference on Wednesday: “Unnecessary legal proceedings have delayed important infrastructure projects. Can you imagine the State of Israel without [toll fast freeway] Route 6? The high-speed train between Tel Aviv and Jerusalem? These were delayed because of judicial obstructions. Excess judicial intervention is like sand in the wheels of the Israeli economy. The legal reform is intended to return Israel to the world’s family of democracies. It will strengthen the branches of government. We are committed to the independence of the court.”
Netanyahu recalled the Corona pandemic, when “I had to go to the Knesset to bypass the Attorney General who opposed the introduction of vaccines. I say to the opposition – behave responsibly. Stop harming Israel’s economy. I say to investors: keep investing in Israel’s economy. It will pay off for you.”