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Lloyds TSB forces closure of Interpal's bank account 9

Finance | Tania Mason | 19 Nov 2008

Interpal, the controversial UK-based Palestinian charity, is facing closure after Lloyds TSB instructed the Islamic Bank of Britain to shut its bank account.

Interpal which is on a list of banned organisations in the US because of suspected links with terrorists, is also under investigation by the UK Charity Commission for the third time.

The first two investigations by the Commission, which concluded in 1996 and 2003, found no evidence of any wrongdoing by the charity. The latest one, which opened in December 2006, is examining fresh concerns about the potential for inappropriate links between the charity and terrorist supporters of Hamas, the government of Gaza.

Yet the suspicions of US intelligence services appear to have proved enough of a warning bell for Lloyds, which has told the Islamic Bank of Britain (IBB) to close Interpal's account on 8 December. Lloyds has the power to do this because it is a clearing bank and clears all the IBB's cheques.

In light of the news, Interpal's chair Ibrahim Hewitt issued a statement to supporters warning that the situation "has the potential to force us to cease operations early next month". Early December is also the start of the Muslim festival Eid, traditionally a time of prolific charitable giving.

Potential to damage community cohesion

"This has the potential to not only damage Interpal but also to affect community relations and cohesion in Britain," he said.

"It is, at the very least, an example of the utter lack of respect faced by the Muslim community from some hostile quarters in this country."

Hewitt added that IBB had offered its total support but is "apparently powerless, throwing into question the autonomy of Britan's burgeoing Islamic finance sector".

In a further statement on the charity's website this week, Interpal said the Islamic Bank "remains threatened by Lloyds' demands and thus faces closure itself".

It accused Lloyds TSB of treating IBB in a discriminatory fashion and called it "an Islamophobic attack on the rights of all British Muslims".

‘Dangerous precedent'

"Other Muslim charities now face the same discrimination and their accounts can be closed down without adequate warning or explanation. At a time when ties amongst communities need to be strengthened, this sets a dangerous precedent for discrimination on all British citizens and account-holders."

Interpal blamed "pressures from foreign groups" for Lloyds TSB's action. It has asked its supporters to write to Lloyds and the IBB demanding they rescind the "outrageous, unfair and arbitrary" decision.

If the account is closed, it will be the second time Interpal has had to find a new bank - NatWest "reluctantly" closed its account in April 2007 after a group of families of Israeli suicide bomb victims launched a claim against the bank in the US.

Supporters of the charity say it is only prudent for Interpal to have some dealings with Hamas. One supporter wrote on the Muslimmatters website: "How is a charity meant to avoid interacting with members of a country's democratically-elected government? Especially in a place as chaotic as Palestine, where one needs to have good contacts at every level in order to get anything done."

Lloyds TSB and the Islamic Bank of Britain both refused to comment.

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