Israel Blasted in Report On Survivors

By Nathaniel Popper

Published January 21, 2005, issue of January 21, 2005.
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JERUSALEM — Many European Holocaust victims looked to Israeli banks to serve as a refuge for their assets during World War II, but a new report suggests that it was an imperfect refuge at best.

A Knesset committee issued a report Tuesday detailing thousands of accounts in Israeli banks that were never returned to Holocaust victims and their heirs after World War II. In a situation with unpleasant echoes of the Swiss banks case of the late 1990s, the report says that Israeli banks obstructed efforts of survivors to reclaim bank accounts.

The presence of the accounts has been known for some time, but the report was unexpected in the amount of blame it laid on Israeli government, which took control of most accounts after the war and did not return most.

“The government acted even worse than the banks,” Collette Avital, chairwoman of the committee that produced the report, told the Forward after the Tuesday press conference.

The report appears years after most European governments took their own steps to deal with improperly handled Holocaust-era assets, and four years after the investigation was initiated in the Knesset. Numerous delays were caused by public disputes between the banks and Avital’s committee, some of which spilled over at the Tuesday press conference.

The report has no binding power, but Avital recommended that the Knesset immediately approve it and form a body to help return the money. The state could owe survivors as much as $135 million, according to the maximum calculations of the committee; the banks could owe $74 million. From the five banks included in the investigation, Bank Leumi is responsible for 2,541 of the 3,595 accounts that were found to have significant deposits — primarily because Leumi’s predecessor, the Anglo-Palestine Bank, was the biggest at the time.

Simultaneous with the publication of the report, the Knesset posted on its Web site the names of more than 9,000 Holocaust victims whose accounts were traced. Any money not claimed by survivors will be put in a survivors’ foundation according to the plans of Avital’s committee.

In the 1920s and ’30s, European Jews who wanted to get their money out of Europe and to help invest in the Jewish settlement in Palestine deposited the funds in question. Because these Jews were citizens of Nazi-conquered countries, the British government seized all accounts as enemy property. After the war, the accounts were handed over to the newly formed Israeli government, which eventually put them in the custody of the country’s administrator general. Some accounts also stayed in the possession of the banks.

The report said that in the postwar years, many accounts were not returned at full value, and unhelpful bank officials often stymied inquiries by survivors who had lost their documents during the war.

Representatives of Israeli survivors said they were happy that the full story was finally being made public, but they were quick to point out the differences from European cases of Holocaust restitution.

“I think that the money that wasn’t given back was used for good things,” said Moshe Nativ, a leader in the Israeli survivor community. “The country was built. The survivors were absorbed. Nobody took this money and robbed anybody.”

Avital also noted the difference from the European situation, saying that there was no malice on the part of the banks, just a “state of confusion.” But she said the Israeli case was also unusual because of the extent of the state’s involvement in holding on to the assets in question after the war.

Since the investigation began, Avital said that the government has been cooperative but the banks “have always dragged their feet.” One of the advisers to the committee, professor Nahum Gross of the Hebrew University said that at the sessions with the banks, “they brought lawyers who really raised your blood pressure.”

The banks, particularly Bank Leumi, have criticized Avital’s committee publicly, but Tuesday they struck a more conciliatory note.

“We will fully cooperate with the conclusions and the recommendations,” said Yano Fogel, executive vice president of Bank Leumi.

One main bone of contention with the banks was the amount of interest that should be paid on the accounts. The committee chose the figure of 4% interest per year for accounts with heirs and 3% for accounts without heirs. Bank Leumi has held that it should be no higher than 1% per year, the interest rate in 1939.

“The committee used a mechanism that has no economic or judicial basis,” Fogel said. “Still, we won’t pursue this argument in the court or other arenas.”

The process leading to the report began in the mid 1990s, when the first media reports about the bank accounts surfaced. Avital writes in the report that at the time, “regrettably, the government of Israel and other public bodies did nothing to investigate the truth.”

Yossi Katz, a professor at Bar Ilan University performed the most notable investigative work. Katz was at Tuesday’s conference, and he expressed pride in having helped open a chapter of Israeli history. But he noted that in addition to the work that still needed to be done on bank accounts, Israel barely has touched the equally pressing issue of Israeli land that was owned by European Jews before the war and taken by the British Custodian General.

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