WSJ.com 14 Novembre 2008

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.

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."

By CAM SIMPSON

Source >  The Wall Street Journal | nov 12