Contents

Zara Economic Audit

1. Executive Intelligence Summary

1.1. Audit Scope and Objectives

This forensic audit report was commissioned to map, quantify, and analyze the economic footprint of Zara—the flagship brand of the Spanish multinational Inditex S.A.—within the State of Israel and the Occupied Palestinian Territories (OPT). The primary objective is to determine the entity’s “Economic Complicity,” defined for this engagement as the extent to which the target’s leadership, ownership structures, supply chain logistics, or retail operations materially or ideologically support the Israeli occupation, the settlement enterprise, or associated systems of surveillance and militarization.

The investigation operates under the rubric of “Forensic Accounting and Supply Chain Auditing,” requiring a deep-dive analysis into corporate governance documents, customs valuations, real estate holdings, upstream supplier relationships, and downstream retail positioning. The analysis seeks to move beyond superficial brand association to uncover the structural financial flows that bind Inditex S.A. to the Israeli economy and its geopolitical objectives.

1.2. The Verdict: Tier 1 Economic Complicity

Based on the exhaustive synthesis of available intelligence, Zara (Inditex Israel) is classified as a Tier 1 Target for Economic Complicity. This classification is not derived from a single isolated incident but from a multi-layered ecosystem of support that permeates the brand’s governance, physical presence, and supply chain.

The audit identifies a “Hybrid Complicity Model” characterized by:

  1. Direct Settlement Normalization: The operation of retail storefronts within illegal West Bank settlements (Ma’ale Adumim) and the “Seam Zone” of occupied East Jerusalem (Mamilla), directly funding settlement developers and normalizing the occupation infrastructure.1
  2. Ideological Weaponization: The active political engagement of the Israeli franchisee’s leadership (Trimera Brands/Gottex Fashion Ltd) in supporting extreme right-wing Kahanist factions (Otzma Yehudit), effectively converting brand equity into political capital for the settler movement.4
  3. Upstream Supply Chain Integration: A strategic reliance on Israeli manufacturers (Delta Galil Industries) and material scientists (Nilit) who operate within or benefit from the settlement industrial complex, creating a risk of “settlement laundering” where goods produced in occupied territories enter the global market under the Zara label.6
  4. Surveillance Capital Integration: The integration of dual-use technologies from Israeli cybersecurity firms (Check Point, Torq) into Inditex’s global digital infrastructure, indirectly subsidizing the Israeli military-industrial complex’s R&D pipeline.9

The following report details the forensic evidence supporting these findings, structured to satisfy the core intelligence requirements regarding aggregator nexuses, importer status, settlement laundering, and investment flows.

2. Corporate Governance: The Importer Nexus and Franchise Ideology

To understand the economic footprint of Zara in Israel, one must first deconstruct the legal and financial architecture that binds the Spanish parent company, Inditex S.A., to the Israeli market. Unlike markets where Inditex operates through wholly-owned subsidiaries, the Israeli market operates under a franchise model. This structure often acts as a liability shield, allowing the parent company to profit while distancing itself from local political entanglements. However, forensic analysis of the beneficial ownership reveals a tight, inextricable nexus between the brand and the Israeli political right.

2.1. The Franchise Architecture: Trimera Brands and Gottex Fashion Ltd

The operational entity controlling Zara’s retail footprint in Israel is not Inditex directly, but Trimera Brands, a fashion distribution giant. The specific legal entity serving as the “Importer of Record” and the face of the brand is Gottex Fashion Ltd. It is critical to distinguish this entity from the swimwear brand “Gottex Models,” although historical ownership overlaps exist.

2.1.1. Beneficial Ownership and Control

The controlling interest in Trimera Brands and the Zara franchise is held by Joey Schwebel (Chairman) and Hanan Elituv. Schwebel is a Canadian-Israeli national who exerts significant influence over the strategic direction of the brand in the region.4 The acquisition history of this franchise is notable; the group purchased the franchise rights from Africa Israel, a holding company controlled by Lev Leviev, a tycoon heavily sanctioned and criticized for his direct construction of settlements in the West Bank.11 This lineage suggests that the franchise has historically passed through hands comfortable with, and supportive of, the settlement enterprise.

2.1.2. Importer Status and Liability

Forensic review of Zara Israel’s terms and conditions and corporate filings confirms that Gottex Fashion Ltd (Company ID: 513367912) is the registered importer.12 This distinction is critical for the audit. While Inditex S.A. designs and manufactures the goods, the title of the goods transfers to the Israeli entity, which then pays royalties back to Spain.

The importer status is not merely administrative; it is the mechanism of profit extraction. Legal precedents involving Gottex Fashion Ltd reveal that the franchisee pays significant royalties to Inditex for the right to use the brand and its “concept.” A deficit notice dispute with the Israel Customs Authority highlighted that these royalties are considered part of the customs value of imported goods.14 The court ruled that the “services” provided by Inditex—marketing guidelines, store design, and management protocols—are so integral to the goods that the royalties paid by Gottex are taxable as part of the import value.

Forensic Insight: This establishes a continuous, high-volume financial flow from the Israeli consumer, through the franchisee, back to Inditex in Arteixo, Spain. The “Franchise Shield” is porous; Inditex extracts value directly proportional to the success of the Israeli operation, making them financially indifferent to the political behavior of the franchisee as long as the royalties flow.

2.2. The Ideological Nexus: “Schwebel’s Salon”

In corporate complicity auditing, the political activities of leadership are typically separated from operations unless they materially affect the brand’s standing or signal institutional alignment. In the case of Zara Israel, this separation has collapsed, revealing an ideological alignment with the most extreme elements of the Israeli political spectrum.

In October 2022, shortly before the Israeli legislative elections, Joey Schwebel hosted a “parlor meeting” (a campaign event) at his private residence in Ra’anana for Itamar Ben-Gvir, the leader of the Otzma Yehudit (Jewish Power) party.4

2.2.1. The Nature of the Support

Itamar Ben-Gvir is not a standard conservative politician. He is a disciple of Meir Kahane, whose Kach party was designated as a terrorist organization by the United States and Israel. Ben-Gvir has been convicted of inciting racism and supporting a terrorist organization. His platform advocates for the annexation of the West Bank, the expulsion of “disloyal” Arab citizens, and the loosening of open-fire regulations for security forces.

By hosting Ben-Gvir, Schwebel did not merely attend a speech; he provided:

  1. Platform and Legitimacy: Granting the Kahanist leader access to the business elite of Ra’anana, normalizing his extremism within the mainstream economy.
  2. Implicit Brand Endorsement: The meeting was widely publicized, and Ben-Gvir subsequently tweeted, “Zara, beautiful clothes, beautiful Israelis,” effectively weaponizing the global fashion brand as a symbol of nationalist identity.5

2.2.2. Corporate Silence as Complicity

The event triggered a massive backlash within the Palestinian community inside Israel (1948 territories) and the occupied territories. Videos circulated of Palestinians burning Zara clothing, and municipal leaders (such as the Mayor of Rahat) called for boycotts, labeling the brand “fascist”.4

Crucially, Inditex S.A. issued no public condemnation, no revocation of the franchise agreement, and no statement distancing the brand from Schwebel’s actions. In the world of corporate governance, silence in the face of such a material breach of reputational safety is interpreted as tacit acceptance. This inaction implies that Inditex accepts the politicization of its brand in support of the settlement movement as the “cost of doing business” in Israel.

2.3. Financial Performance and Market Dominance

The franchise is not a marginal operation. Reports indicate that the Gottex/Trimera group (often referred to as “Zara Israel Group”) generates annual turnover estimated in the billions of shekels.

  • Market Share: Zara is a dominant player in the Israeli fashion market. Financial reporting from Inditex indicates that Israel is a key market for online expansion, with Israel being among the priority cohorts for new platform rollouts.16
  • Revenue Flows: While specific granular data for the Israeli franchise is privately held, Inditex’s global reporting consistently highlights the strength of the “Asia & Rest of the World” segment. The franchisee pays for inventory, royalties, and store design fees, ensuring Inditex receives its profit margin regardless of local political volatility.14

The economic relationship is robust. Inditex relies on Trimera to navigate the complex Israeli regulatory and real estate landscape, while Trimera relies on Inditex for product. This mutual dependency creates a lock-in effect where ethical considerations regarding the occupation are deprioritized to preserve the revenue stream.

3. The Downstream Footprint: Retail Real Estate and Settlement Laundering

A critical vector of economic complicity is the physical location of retail operations. When a global brand leases space in a shopping mall built on occupied land, it provides rent (financial support) and legitimacy (reputational support) to the settlement enterprise. The audit has confirmed that Zara’s retail footprint extends beyond the internationally recognized borders of Israel (the Green Line) and into illegal settlements.

3.1. The Ma’ale Adumim Nexus: Direct Settlement Operations

The audit has confirmed the presence of active Zara operations in Ma’ale Adumim, one of the largest Israeli settlement blocs in the occupied West Bank, located east of Jerusalem.

3.1.1. Location and Evidence

The store is located in the Ofer Adumim Mall (also known as Adumim Canyon).

  • Verification: Multiple directory listings, user location data, and mall directories place a Zara store within this complex.1
  • Landlord Connection: The mall is owned by Melisron (Ofer Malls), a major Israeli real estate conglomerate. Zara’s lease payments flow directly to Melisron, which in turn pays municipal taxes to the Ma’ale Adumim settlement municipality.

3.1.2. Legal and Geopolitical Context

Ma’ale Adumim is illegal under Article 49 of the Fourth Geneva Convention, which prohibits an occupying power from transferring its civilian population into occupied territory. The settlement is strategically situated to bisect the West Bank, separating the north (Ramallah/Nablus) from the south (Bethlehem/Hebron) and effectively severing East Jerusalem from its Palestinian hinterland.

By operating a store here, Zara is:

  1. Funding Expansion: Providing tax revenue that supports the infrastructure, security, and expansion of the settlement.
  2. Normalizing illegality: Integrating the settlement location into its global store locator 1 without distinction, effectively treating the occupied territory as sovereign Israeli land. This contributes to the “erasure” of the occupation in the eyes of the consumer.
  3. Servicing the Settler Population: The store primarily serves the settler population of Ma’ale Adumim and the surrounding blocs, providing them with the same consumer comforts available in Tel Aviv, thereby incentivizing and sustaining the settler lifestyle.

3.2. The “Seam Zone”: Mamilla Mall and the Erasure of the Green Line

Zara maintains a flagship store in the Mamilla Mall (Alrov Mamilla Avenue).3 While technically just west of the Green Line, the context of this location is deeply political.

  • The “United Jerusalem” Project: Mamilla is located in the former “No Man’s Land” between the 1948 and 1967 borders, adjacent to the Jaffa Gate of the Old City. The development was built atop the historic Mamilla cemetery and commercial district, a sensitive site in Palestinian heritage.
  • Architectural Annexation: The mall serves as a luxury bridge connecting West Jerusalem to the Old City, facilitating the tourist and commercial flow into occupied East Jerusalem while bypassing Palestinian commercial centers. Zara’s presence here acts as an anchor tenant for this project of “architectural annexation,” which seeks to make the unification of Jerusalem a fait accompli through high-end retail.

3.3. Flagship Expansion During Conflict: The Glilot Investment

In early 2025, amid the ongoing bombardment of Gaza (referenced in BDS reports and ICJ proceedings regarding genocide), Zara opened its largest-ever flagship store in Israel at the Big Fashion Glilot complex near Tel Aviv.15

  • Timing Analysis: The decision to expand investment and physical footprint during a period of intense military violence and international scrutiny demonstrates a high risk tolerance and a prioritization of the Israeli market over global human rights concerns.
  • The Partner – BIG Shopping Centers: The Glilot complex is part of the BIG Shopping Centers group. This group also operates Big Fashion Ariel in the Ariel settlement.20 While a specific Zara store in Ariel requires further on-site verification (directories show other brands like “Impress”), the partnership with the landlord (BIG) creates a secondary complicity link. Inditex’s rent payments to BIG Group contribute to the overall balance sheet of a company actively developing retail infrastructure in West Bank settlements.

4. The Aggregator Nexus: Upstream Sourcing and “Made in Israel”

Beyond where Zara sells, the audit must analyze where it buys. The “Aggregator Nexus” investigates the integration of Israeli manufacturers into Inditex’s global supply chain. The audit identifies two primary vectors: Delta Galil (finished goods) and Nilit (raw materials).

4.1. Delta Galil Industries: The Settlement Manufacturer

Delta Galil Industries is a global textile giant headquartered in Caesarea, Israel. It is a known supplier to major global brands, including Inditex/Zara, as confirmed by Inditex’s supplier lists and Delta Galil’s own client disclosures.6

4.1.1. The Complicity Mechanism: Settlement Production

Delta Galil has been extensively documented by “Who Profits” and the UN Database of businesses operating in settlements as having operations in settlement industrial zones.

  • Barkan Industrial Zone: A major settlement industrial park in the West Bank. Delta Galil has historically operated warehouses and manufacturing facilities here.7 Factories in Barkan benefit from lower rents, tax incentives, and lax environmental enforcement compared to facilities inside the Green Line.
  • Ma’ale Adumim: Delta Galil has also maintained facilities in the Ma’ale Adumim industrial zone.7

4.1.2. Settlement Laundering and “Rules of Origin”

The risk of “Settlement Laundering” is acute with Delta Galil. Products manufactured in Barkan are often labeled “Made in Israel” rather than “Made in West Bank” or “Made in Settlement.” While the EU has technically mandated differentiation for customs purposes, enforcement is difficult without rigorous factory-level auditing.

  • Fungibility of Production: Delta Galil operates factories in Israel (Carmiel), Egypt, Turkey, and the West Bank. An order placed by Zara for 100,000 units of underwear might be fulfilled by a mix of these facilities. Even if the specific Zara batch is made in Egypt, the contract supports the corporate entity (Delta Galil) that sustains the Barkan facility.
  • Evidence of Goods: Secondary market analysis (eBay/Poshmark) reveals Zara clothing items with “Made in Israel” labels.23 Given Delta Galil’s dominance in the intimates and basics market, it is highly probable these items originated from their supply lines.

4.2. Nilit: The Fiber of Complicity

Nilit is an Israeli manufacturer specializing in Nylon 6.6 fibers. It is a key partner in Inditex’s “sustainability” narrative.25

  • Strategic Partnership: Inditex’s “Sustainability Innovation Hub” has explicitly collaborated with Nilit. Specifically, Zara Woman and Zara Athleticz collections have utilized Nilit’s fibers (likely the Sensil brand or recycled variants).26
  • Material Significance: This is not a generic commodity purchase. Nylon 6.6 is a high-performance polymer used in premium activewear. By integrating Nilit into its supply chain, Zara becomes dependent on Israeli R&D and manufacturing capacity.
  • Deepening Ties: The relationship extends beyond simple purchasing. Inditex and Nilit collaborate on developing new recycled fibers, creating a technological lock-in. While Nilit is headquartered in Migdal HaEmek (within the Green Line), it is a strategic exporter that bolsters the Israeli state economy and pays taxes that fund the state apparatus.

4.3. Seasonality and Supply Chain Agility

The “Fast Fashion” model relies on proximity sourcing to Europe (Spain, Portugal, Morocco, Turkey) for trend items, and Asia for staples. Israel occupies a unique middle ground in this “Seasonality Analysis.”

  • High-Tech Sourcing: Israel is not a source for cheap seasonal cotton (like Bangladesh). It is a source for high-tech textiles (Nilit) and complex intimates (Delta Galil).
  • Non-Seasonal Stability: The products sourced from Israel—technical fabrics and underwear—are less “seasonal” in the fashion sense (changing every 2 weeks) and more “staple” driven. This implies a stable, year-round purchasing relationship rather than a fluctuating seasonal one. This stability indicates a deeply entrenched supply chain link that is resilient to seasonal fashion shifts.
  • Resilience During Conflict: During the 2023-2025 conflict periods, Inditex’s reliance on these suppliers does not appear to have waned. Snippet 29 (Delta Galil Report) notes the “unstable security situation” but affirms that they are a “sought-after partner.” This suggests that Inditex prioritizes the technical capability of Israeli suppliers over the geopolitical risk of sourcing from a conflict zone.

5. Digital Complicity: Technology, Surveillance, and Investment Flows

In the modern economy, complicity is often digital. Zara’s operational efficiency relies on advanced software for logistics, security, and inventory management. The audit reveals deep integration with the Israeli tech sector, often referred to as “Silicon Wadi.”

5.1. The “Unit 8200” Pipeline: Cybersecurity Partners

Inditex has integrated Israeli cybersecurity solutions to protect its global digital infrastructure. This constitutes a direct investment flow into the Israeli high-tech sector, which is inextricably linked to the Israeli military’s intelligence units (specifically Unit 8200).

  • Check Point Software: A cornerstone of Israel’s tech sector, founded by Unit 8200 alumni. Reports list Inditex as a customer of Check Point.10 Check Point provides the firewalls and security architecture that guard Zara’s corporate secrets and customer data.
    • Implication: By purchasing licenses and services from Check Point, Inditex is funding a company whose intellectual property and human capital overlap significantly with the state surveillance apparatus used to monitor Palestinians in the occupied territories.
  • Torq: An Israeli “hyperautomation” security startup. Inditex is explicitly cited as a major enterprise customer.9
    • Function: Torq automates security workflows. By contracting Torq, Inditex is directly validating and funding the Israeli startup ecosystem. Torq’s press releases boast of their relationship with Inditex (Zara, Bershka, Pull&Bear), using the brand to attract further investment.
  • CyberArk: Specializing in identity security, CyberArk is another Israeli firm listed in broader databases regarding Inditex’s tech stack.28

5.2. Investment Flows: The Innovation Nexus

Inditex’s Sustainability Innovation Hub and investment arms actively scout Israeli technology.

  • General Strategy: While Inditex invests globally, the Israeli tech sector is a priority target for retail-tech (RFID, inventory tracking, automation).
  • Complicity Risk: Investments in Israeli tech startups differ from standard procurement. They often involve equity stakes, R&D centers, and knowledge transfer. This creates a “sticky” relationship where the brand becomes invested in the economic success of the “Start-up Nation.”
  • The “Washing” of Military Tech: Much of Israel’s retail tech (e.g., camera analytics, tracking software) is derived from military surveillance technologies re-purposed for civilian use. When Zara invests in or buys these technologies, it is effectively financing the commercialization of military R&D.

6. Ideological and Marketing Complicity

Beyond the balance sheet, Zara has faced accusations of ideological warfare through marketing and design. These incidents serve as forensic evidence of a corporate culture that is, at best, culturally insensitive and, at worst, ideologically aligned with anti-Palestinian sentiment.

6.1. The “Gaza Destruction” Ad Campaign (December 2023)

In December 2023, during the height of the bombardment of Gaza, Zara released a campaign titled “The Jacket,” featuring statues wrapped in white cloth (resembling Islamic kafan shrouds used for the dead) and rubble-like backgrounds.8

  • Forensic Analysis of Imagery: The visual language of the campaign bore a striking resemblance to the images of devastation coming out of Gaza.
  • Public Reaction: The campaign triggered a global boycott movement. It was widely interpreted as mocking Palestinian suffering or “fashion-washing” the imagery of genocide.
  • Corporate Defense: Zara pulled the campaign but claimed it was conceived before the war. However, the lack of due diligence to stop the release—given the obvious visual parallels—demonstrates a severe lack of sensitivity. In forensic terms, this is a failure of “Social Risk Management.”

6.2. The Designer Controversy (June 2021)

In June 2021, Vanessa Perilman, a head designer for Zara Woman, sent racist messages to a Palestinian model, Qaher Harhash, via Instagram. She stated: “Maybe if your people were educated then they wouldn’t blow up the hospitals and schools that Israel helped to pay for in Gaza”.15

  • Systemic Implication: Inditex did not fire Perilman. The company issued a generic statement about “misunderstanding.” The retention of personnel who express overt anti-Palestinian racism—especially in high-level creative roles—suggests a corporate culture that tolerates such views. This aligns with the lack of action regarding the Schwebel/Ben-Gvir incident, painting a picture of systemic bias.

7. Legal and Regulatory Risk Assessment

The audit identifies several areas where Zara’s operations may expose Inditex to legal and regulatory risks.

7.1. International Law Violations

The operation of the Ma’ale Adumim store places Zara in violation of the international consensus on the illegality of settlements.

  • Geneva Convention: Article 49 prohibits the transfer of civilians into occupied territory. By servicing the settler population, Zara facilitates this transfer.
  • UN Guiding Principles: The UN Guiding Principles on Business and Human Rights require companies to identify and mitigate human rights impacts. Zara has failed to mitigate the impact of its settlement operations; instead, it has expanded them.

7.2. Import/Export and Customs Risk

The “Settlement Laundering” issue with Delta Galil poses a customs risk.

  • EU Association Agreement: Products from settlements are not entitled to preferential tariff treatment under the EU-Israel Association Agreement. If Inditex is importing goods from Delta Galil’s settlement factories into the EU (Spain) and claiming the preferential tariff, it may be committing customs fraud.
  • US Guidelines: The US has historically required differentiation (though policy fluctuates). Mislabeling West Bank goods as “Israel” can be a violation of consumer protection laws in various jurisdictions.

8. Comprehensive Forensic Conclusion

8.1. The Complicity Matrix

Domain Indicator Forensic Evidence Complicity Score (1-10)
Retail Store in Ma’ale Adumim (Settlement) 1 10/10 (Direct Violation)
Governance Franchisee hosting Itamar Ben-Gvir 4 9/10 (Ideological Support)
Sourcing Partner: Delta Galil (Settlement mfg) 6 8/10 (Supply Chain Contamination)
Sourcing Partner: Nilit (Strategic Material) 25 5/10 (Economic Integration)
Technology Vendor: Check Point / Torq (Unit 8200 ties) 9 6/10 (Dual-Use Economy)
Real Estate Store in Mamilla (Seam Zone) 3 7/10 (Geopolitical Erasure)
Marketing “The Jacket” Campaign (Gaza Imagery) 8 8/10 (Cultural Insensitivity)

8.2. Final Ranking and Recommendations

Rank: HIGH – TIER 1 COMPLICIT

Zara’s complicity is structural, ideological, and material. It is not an accidental bystander but an active participant in the Israeli economy, including its illegal components.

Recommendations for the Auditor:

  1. Immediate Flag: The Ma’ale Adumim store must be flagged as a “Hard Violation” in any ESG audit. It is a direct contravention of international law.
  2. Royalty Tracing: Initiate a deeper financial investigation to quantify the exact royalty amounts flowing from the Ma’ale Adumim branch to Inditex Spain. This establishes the “proceeds of crime” (in the context of international law violations).
  3. Supply Chain Demand: Require Inditex to provide factory-specific certificates of origin for all Delta Galil products to prove they are not manufactured in Barkan. Without this proof, all Delta Galil sourcing should be considered “contaminated.”
  4. Tech Stack Review: Review the integration of Torq and Check Point for potential data privacy risks regarding Palestinian customer data, given the vendors’ proximity to Israeli state intelligence.

This report concludes that Zara’s economic footprint in Israel serves to normalize the occupation, fund the settlement enterprise through taxes and rent, and provide ideological cover for extreme right-wing politics through its local franchise leadership.

Works cited

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