According to Rabbi Yaakov Shapiro:
Maran Rav Schach, the saintly gadol hador, explained to his Talmidim who would constantly ask about the accursed Zionist flag. It was a concession of the Ponivicher Rav in order to solicit money from the government. Read Rav Schach’s Michtavim UMaamarim about Zionism, religious or otherwise – he berates it. He was the Rosh Yeshiva of Ponovich while that flag was hanging there and he was clearly extremely anti-zionist. Clearly, you cannot judge the Hashkofos of the Rabbonom in that building by the flag that was on the roof – they said so many times themselves. That flag was a political expedience, not a political statement.