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 Posted: Sat Nov 15, 2008 3:05 am Post subject: [ot] Battle for Holocaust Assets Roils Israel |
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http://online.wsj.com/article/SB122645046262819241.html
* NOVEMBER 12, 2008
Battle for Holocaust Assets Roils Israel
By CAM SIMPSON
RAMAT GAN, Israel -- The global quest to ferret out money and property left
behind by Jews killed in the Holocaust is now targeting Israel, and
investigators say it's proving at least as difficult in the Jewish state as
it did in Europe.
Many big banks and the government itself have resisted efforts to claim
hundreds of millions of dollars in compensation for bank deposits, land,
corporate shares, art and other assets that investigators say once belonged
to Jews killed by the Nazis and their allies.
"I cannot say that the Israeli establishment has been, or is, happy about
the return of properties," says Avraham Roet, the recently retired chairman
of the Company for Location & Restitution of Holocaust Victims Assets Ltd.
The private firm, often referred to simply as the Company, was created by
the Israeli parliament after its investigators identified up to 9,000 bank
accounts suspected of belonging to Holocaust victims.
Thousands of European Jews deposited or invested tidy sums here during the
decades before World War II, often without visiting what was then British-
controlled Palestine. After many were killed in the Holocaust, their
substantial assets went unclaimed, passing into the hands of the government
of the newly created nation of Israel and some of its largest banks.
While some Israeli institutions have challenged the validity of the
Company's claims, they are generally loath to say much about any of this in
public. Mr. Roet and others say the institutions privately argue they should
be treated more gently than their European counterparts because they are in
a different position than banks and governments that actively assisted the
Nazis. They also say any assets once owned by Holocaust victims that were
subsumed over the years served a public good because they went toward
building a Jewish homeland.
"They said, 'We are not really cheating the survivors. It's all within the
Jewish community, within Israel. It's not the same as it being held by the
Swiss,'" Michael Bazyler, an expert on Holocaust assets from the Chapman
University School of Law in California, says Israeli bankers told him in
2006. "That was sort of their excuse. And I'm saying, 'Wait a second. It's
not your money.'"
Mr. Roet, whose two sisters died in a concentration camp near Auschwitz,
Poland, started investigating and targeting some of Israel's most powerful
institutions after his firm opened last year. The 80-year-old stepped down
from the Company's top job in August but remained a director and its most
public face.
Earlier this year, he went after Bank Leumi Le-Israel B.M., Israel's second-
largest financial institution, claiming it owed more than $34 million, a
figure derived from a government-approved formula for fixing the value of
roughly 1,300 accounts once held at the bank.
Last year, on the same day Bank Leumi, the Company's biggest private target
so far, announced that it had hired a retired Israeli Supreme Court justice
to scrutinize each of those accounts, the bank's directors said they would
give about $4.79 million to the Company. Although insistent that it owed
nothing, the bank said the payment was being made "out of public sentiment
and as a gesture of goodwill." The bank disputes many of Mr. Roet's claims
and says it owes little.
While most of the Company's focus has been on bank accounts, it says it has
also located about $86.7 million worth of real estate that had belonged to
Holocaust victims and more than 1,000 stolen works of art in the Israeli
Museum that had been recovered by the Allies from the Nazis. Museum
officials have published a complete catalog on their Web site and the
Company's Web site. They also sponsored a special exhibition earlier this
year titled, "Orphaned Art: Looted Art from the Holocaust in the Israel
Museum."
The Company has sweeping powers allowing it access to government and
business records to find lost assets and lay claim to them. It then tries to
locate heirs -- whose names it is forbidden by law to publicly disclose --
for any money it recovers. When it can't find heirs, it transfers the money
to needy Holocaust survivors living in Israel. Recovered proceeds also fund
the company's operations.
Run out of a suite of offices in a glass-and-steel tower four stories above
a hardwood-flooring store in this suburb of Tel Aviv, the Company has so far
recovered assets valued at just over $183.9 million. That includes about
$44.7 million from the government.
Mr. Roet estimates conservatively that there's $500 million of victim's
assets in Israel. That's based on those already recovered and claims either
already made or being prepared. He believes that figure could reach as much
as $1 billion when the quest is over, especially if land values continue to
rise in Israel's urban centers. [Avraham Roet]
Avraham Roet
By comparison, a 2001 settlement between Jewish groups and Austria's
government and private sector totaled about $360 million. A 1998 settlement
between Jewish groups and a collection of Swiss banks reached $1.25 billion.
As in Europe, it's impossible to know how much was really lost in Israel.
The Nazis and their surrogates tried to hide their genocide. There is no
reliable registry of the dead nor of their international assets. Those who
survived didn't typically hold onto the sort of records that can buttress a
claim.
In the 1990s and earlier this decade, Jewish groups threatened or took legal
action against European governments and businesses. The U.S. got involved,
threatening reluctant European companies with sanctions.
Under intense international pressure, deals were reached across the
Continent. Settlements were often based on fragmentary evidence and
statistical estimates of what banks and institutions owed. After hammering
out a total price tag, the targeted institutions funded settlement pools or
agreed to specific procedures for paying claims. Heirs with verified
accounts or other documented assets typically got top priority. The
remaining cash was designated for other victims of Nazi persecution,
including refugees and slave laborers.
The European cases led Israeli scholars in 2000 to publish research showing
heirs had been having difficulty recovering assets in the Jewish state. The
revelations led to a parliamentary investigation, and, in 2006, the law
creating the Company.
The Israeli law sets up a process similar to the one in Europe. Verified
heirs are supposed to get paid first, with needy Holocaust survivors getting
the rest. But there's a crucial difference from earlier settlements: The
Company must target each institution over each asset that it allegedly held.
As with Bank Leumi, this gives the targeted institutions a chance to fight
claims case-by-case, then shekel-by-shekel within each case.
Company investigators have traveled to Poland, Latvia and Lithuania to dig
up school report cards, birth records and marriage documents to try to make
their cases. They also check Holocaust archives in Israel, Germany and
elsewhere to try to prove account holders died in the tragedy.
Making matters more complex, many of the dormant bank accounts the Company
has tried to recover have been transferred from one institution to another
or from a bank to the government, and, in some cases, back again.
Some of the contested accounts have even been paid out to heirs. These cases
get at a particularly contentious issue between the Company and the banks.
The heirs may have gotten the face value of the accounts, but the law
provides a formula to calculate what the account should be worth when
factors such as inflation, currency revaluations and accrued interest are
taken into account.
For example, suppose a European Jew who would later perish in the Holocaust
opened a bank account in 1936 with the equivalent of $1,000. If heirs
eventually identified the account and recovered the money this year from the
bank or government custodians, Mr. Roet says they most likely got only the
face value of the original investment, or minimal interest on top of it. But
the legally mandated formula the Company uses calculates the "lost value" in
that account over the years. Under that formula, the $1,000 deposit in 1936
would be valued today at the equivalent of about $23,000.
And Mr. Roet says the banks -- even those that have already paid out at face
value -- still owe the difference for that legally defined lost value.
Without any of the international pressure that European firms faced,
however, many Israeli institutions are offering stiff resistance.
Of the $34 million from 1,300 disputed accounts Mr. Roet says Bank Leumi
owes, the bank accepts responsibility for only three of those accounts. They
are worth just about $2,200, at face value.
Aviram Cohen, a Bank Leumi spokesman, says the bank's own investigation
shows 600 accounts identified by Mr. Roet belonged to people who couldn't be
Holocaust victims, since there was activity in the accounts after the war.
Bank Leumi says it doesn't owe anything for almost all of the remainder of
the accounts, because they've been transferred out of the bank over the
years. The bank dismisses the idea that it must pay for the lost value of an
account for the years it held one.
In earlier public statements, bank officials have rejected the idea of lost
value enshrined in the law, calling the basis for claims an "alleged
liability" stemming "from a conceptual revaluation" of deposits.
The Company's lawyer, Nadav Haetzni, acknowledged that about 100 of the
1,300 cases were submitted to the bank by mistake. They involved Holocaust
survivors, rather than confirmed victims, he says. However, Mr. Haetzni also
says the error was quickly corrected, that the accounts in question had
little value and that the sum of the claims against Bank Leumi won't be
materially diminished.
In addition, he says the Company recently slapped a second round of claims
against Bank Leumi seeking an additional $31.5 million.
On the issue of lost value, Mr. Haetzni said the law is clear. It appears
the dispute is headed for the Israeli courts.
From the beginning, Israeli banks have had an uneasy relationship with those
campaigning to recover dormant accounts. After a nearly five-year
parliamentary investigation, lawmakers identified up to 9,000 bank accounts
investigators suspected belonged to victims.
Banks implicated in the report rejected 2005 findings as speculative. So
lawmakers established the Company in 2006.
A $3.15 million claim the Company has prepared against Mizrahi Tafahot Bank
Ltd. grew out of a faded banker's memo that drew attention during the
Knesset hearings. Dated Oct. 29, 1939, eight weeks after the Nazis blitzed
Poland, the document pledges deposits held by European Jews, mostly in
Poland, as collateral on a loan from another bank.
"The depositors cannot claim their deposits now because they are abroad or
we foresee that they won't claim the money for other reasons," the memo
reads in Hebrew. A representative of Mizrahi Bank declined to comment.
Mr. Roet has proved to be a dogged adversary. He was chosen as the Company's
chairman because he had led a group that helped secure a series of Holocaust
settlements in the Netherlands valued at more than $300 million.
After the arrest of his two sisters in 1943 and their deportation to
Auschwitz, he shuttled among more than a dozen Christian homes, finishing
out the war pretending to be the son of a Catholic couple on a dairy farm in
southern Holland. "I learned to milk cows," he says.
He came to Israel alone in 1946 at age 17, then went on to build successful
businesses, including one importing raw materials for Israel's booming
pharmaceutical industry. But he has dedicated his retirement to Holocaust
victims.
Last year, Mr. Roet began assembling his team. Accountants, archivists and
self-styled gumshoes occupy workspaces that offer few hints about the task
at hand. Holocaust-related records are hidden behind the covers of blue and
red binders shelved near a Homer Simpson poster.
Although the parliamentary findings made banks natural targets when the
Company opened, there were few clues about land in Israel purchased by those
who were later killed in the Holocaust. Jewish academics documented a more
than threefold increase in Jewish land purchases in British Palestine from
1914 to 1940. Parcels were sold in Europe by traveling Zionist salesman.
Across Israel, the Company so far has title to about 480 individual parcels,
300 of which were handed over by the government. They are in some of
Israel's hottest areas, including trendy Tel Aviv. The Company values the
lands it holds so far at about $86.7 million.
Laying claim to land is also proving difficult. Company staff identified the
land of one victim in a fertile plain near the edge of a northern Israeli
town called Kiryat Atta. But when they arrived to survey it, they found a
cemetery had been built there.
Investigators discovered another lot in one of Israel's most affluent
enclaves, a hilltop neighborhood of Haifa overlooking the sea. A 10-room
home in the neighborhood can list for more than $4 million. The owner of a
villa adjacent to the plot simply expanded onto the unused property.
"He has a Jacuzzi in there," says Noa Blecher, who is the Company's top
real-estate sleuth. Mr. Roet says the Company is taking the hot-tub owner to
court.
Based on evidence uncovered thus far, Mr. Roet believes there are scores of
still-hidden parcels across the nation.
While the quest for assets is under way, so is the hunt for heirs. While
trying to piece together records in Europe and listing recovered assets on
its Web site, the Company has reached into the country's Holocaust legacy to
seek out victims' families.
The Company's Elinor Kritoru appears regularly on an Israeli radio show
called Hipoos Krovim, which means "searching for relatives" in Hebrew. It
first aired in 1945, broadcasting the pleas of Holocaust survivors looking
for lost loved ones. It later went off the air, but returned in 2000 as a
more generic reunion show.
Ms. Kritoru's appearances echo bygone broadcasts, as she calls out the names
of the dead.
"We're looking for the heirs of Yitzhak Meir Abeliov, from Bialystock,
Poland," she said earlier this year. "We'd be very happy to find the
descendents of David Tishanski....We're also looking for heirs of Lazar
Abeleff from Kononov, Ukraine."
Write to Cam Simpson at cam.simpson@wsj.com
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