U.S. court urged to reject Israeli attempt to silence witness
* Lawyers for dead teenager accuse Israel of bowing to China
* Call on U.S. court to call witness in financing case
* Israel says evidence may jeopardise security efforts
JERUSALEM, Dec 17 (Reuters) - Lawyers for the family of an American teenager killed in a 2006 suicide bombing in Tel Aviv urged a U.S. court on Tuesday to reject an attempt by Israel to muzzle a witness in an anti-terrorism case, court documents showed.
The lawsuit revolves around allegations that Bank of China knowingly allowed Palestinian militants to use its accounts to finance their operations, including the suicide attack that killed 16-year-old Daniel Wultz, and 10 others.
Bank of China denies the allegations.
Wultz's parents, who live in Florida, hoped that evidence from a former Israeli intelligence officer, Uzi Shaya, who allegedly told Chinese counterparts in 2005 about the suspicious bank transactions, would prove decisive.
After initially helping Wultz's parents prepare the U.S. lawsuit against China's fourth largest lender, the Israeli government hit the brakes last month, filing a petition seeking to prevent Shaya from giving testimony.
The documents filed on Tuesday by the Wultz family lawyers and seen by Reuters, call on a U.S. district court in Washington to reject the Israeli petition, accusing Prime Minister Benjamin Netanyahu of buckling to pressure from China in the case.
In a Nov. 15 motion, Israel argued that if Shaya testified in the case being brought under U.S. anti-terrorism law, he might reveal state secrets that could harm Israeli security.
The Wultzes dismiss this argument, saying Israel's government and spy agency Mossad had actively encouraged them to launch the case and handed over copious evidence.
"The complaint was filed only after the GOI (Government of Israel) repeatedly assured my attorneys that it would provide cooperation and support for our allegations," Daniel's father, Yekutiel Wultz, said in a written declaration.
"The GOI also identified and voluntarily designated Uzi Shaya as the witness," he said, adding that Shaya had made clear he was happy to give evidence if allowed to.
In their documents, the Wultzes say they were told in April 2012 by Netanyahu's office that Shaya would testify.
A year later, the position changed. Israeli media reported that Netanyahu had done a U-turn in order to secure an invitation for an official visit to China in May.
"While we are respectful of China's interests, and of the diplomatic pressure to which Israel has been subjected, those interests and that pressure cannot be permitted to obstruct the ability of American courts to hear critical evidence," David Boies, the lead Wultz family lawyer, said in a statement.
Israel has not responded to charges it caved into Chinese pressure. On Tuesday, Netanyahu's office reiterated a Nov. 16 statement, which said Shaya's evidence might jeopardise international efforts to tackle terrorism.
The U.S. legal move coincided with the start of a high-profile visit to Israel by Chinese Foreign Minister Wang Yi.
The 2006 bombing in Tel Aviv came during a Palestinian uprising against Israeli occupation of lands seized in a 1967 war. The Wultzes were in Israel on holiday at the time.
Israeli intelligence agencies set up a unit to try to stop funds from reaching Palestinian militant groups, including the Islamic Jihad, which claimed responsibility for the 2006 blast.
Shaya was part of the unit and travelled to Beijing to urge the Chinese government to shutter suspect accounts.
Israel has until Jan. 6 to file a response to the motion. (Editing by Alison Williams)