Israeli Firms Accused of Profiting Off Holocaust

Analysts said the bank’s role is only the tip of an iceberg in which Israeli companies and state bodies could be found to have withheld billions of dollars invested by Holocaust victims in the country -- dwarfing the high-profile reparations payouts from such European countries as Switzerland, notes Jonathan Cook.

Families Battle for Assets in Court

Israel’s second largest bank will be forced to defend itself in court in the coming weeks over claims it is withholding tens of millions of dollars in “lost” accounts belonging to Jews who died in the Nazi death camps.

Bank Leumi has denied it holds any such funds despite a parliamentary committee revealing in 2004 that the bank owes at least $75 million to the families of several thousand Holocaust victims.

Analysts said the bank’s role is only the tip of an iceberg in which Israeli companies and state bodies could be found to have withheld billions of dollars invested by Holocaust victims in the country -- dwarfing the high-profile reparations payouts from such European countries as Switzerland.

“All I want is justice,” said David Hillinger, 73, whose grandfather, Aaron, died in Auschwitz, a Nazi camp in Poland. Lawyers are demanding reparations of $100,000 for Bank Leumi accounts held by his father and grandfather.

The allegations against Bank Leumi surfaced more than a decade ago following research by Yossi Katz, an Israeli historian.

He uncovered bank correspondence in the immediate wake of the Second World War in which it cited “commercial secrecy” as grounds for refusing to divulge the names of account holders who had been killed in the Holocaust.

“I was shocked,” said Dr Katz, from Bar Ilan University near Tel Aviv. “My first reaction was: ‘My God, this isn’t Switzerland!’ ”

In 1998, following widespread censure, Swiss banks agreed to pay $1.25 billion in reparations after they there were accused of having profited from the dormant accounts of Holocaust victims.

Dr Katz’s revelations led to the establishment of a parliamentary committee in 2000 to investigate the behaviour of Israel’s banks. Its report came to light belatedly in 2004 after Bank Leumi put pressure on the government to prevent publication.

Investigators found thousands of dormant accounts belonging to Holocaust victims in several banks, though the lion’s share were located at Bank Leumi. Obstructions from Leumi meant many other account holders had probably not been identified, the investigators warned.

The parliamentary committee originally estimated the accounts it had located to be worth more than $160m, using the valuation formula applied to the Swiss banks. But under pressure from Leumi and the government, it later reduced the figure by more than half.

A restitution company was created in 2006 to search for account holders and return the assets to their families.

Meital Noy, a spokeswoman for the company, said it had been forced to begin legal proceedings this week after Bank Leumi had continued to claim that its findings were “baseless”.

The bank paid $5m two years ago in what it says was a “goodwill gesture”. Ms Noy called the payment “a joke”. She said 3,500 families, most of them in Israel, were seeking reparations from Bank Leumi.

The bank was further embarrassed by revelations in 2007 that one per cent of its shares -- worth about $80 million -- belonged to tens of thousands of Jews killed during the Holocaust.

Mr Hillinger, who was born in Belgium in 1936 and spent the Second Wold War hiding in southern France, today lives in Petah Tikva in central Israel.

He said before the outbreak of war his father and grandfather had invested money in the Anglo-Palestine Bank, the forerunner of Leumi, in the hope it would gain them a visa to what was then British-ruled Palestine.

Although his parents escaped the death camps, his grandparents were sent to Auschwitz and died in the gas chambers shortly after arrival.

Mr Hillinger said he had only learnt of the outstanding debt from Bank Leumi after his father, Moses, died in 1996. Papers showed the bank had paid his father “a pittance” in 1952 when he closed his account and that it had never returned his grandfather’s money.

When he wrote to Bank Leumi in 1998, it denied his grandfather had ever opened an account.

“My grandfather died because he was a Jew, and it is shameful that other Jews are exploiting his death,” he said. “We need to wake people up about this.”

A quarter of a million Holocaust survivors are reported to be in Israel, with one-third of them living in poverty, according to welfare organisations.

Shraga Elam, an Israeli investigative financial journalist based in Zurich, said after the war many Israelis showed little sympathy for the European Jewish refugees who arrived in Israel.

“David Ben Gurion [Israel’s first prime minister] notoriously called them ‘human dust’, and I remember as children we referred to them as sabonim, the Hebrew word for soap,” he said, in reference to the rumoured Nazi practice of making soap from Jewish corpses.

“In fact, I can’t think of any place in the world where [Holocaust] survivors are as badly treated as they are in Israel,” Mr Elam said.

He said Bank Leumi’s “lost” accounts were only a small fraction of Holocaust assets held by Israeli companies and the Israeli state that should have been returned. The total could be as much as $20bn.

He said European Jews had invested heavily in Palestine in the pre-war years, buying land, shares and insurance policies and opening bank accounts. During the Second World War Britain seized most of these assets as enemy property because the owners were living in Nazi-occupied lands.

In 1950 Britain repaid some $1.4 million to the new state of Israel, which was supposed to make reparations to the original owners.

However, little effort was made to trace them or, in the case of those who died in the Holocaust, their heirs. Instead the Israeli government is believed to have used the funds to settle new immigrants in Israel.

“These are huge assets, including real estate in some of the most desirable parts of Israel,” Mr Elam said.

Last year the Israeli media reported an investigation showing that the finance ministry destroyed its real estate files in the 1950s, apparently to conceal the extent of the state’s holding of Holocaust assets.

The case against Bank Leumi may end the generally muted criticism inside Israel of the banks’ role. Officials and even the families themselves have been concerned about the damage the case might do to Israel’s image as the guardian of Jewish interests.

In 2003 Ram Caspi, Bank Leumi’s lawyer, used such an argument before the parliamentary committee, warning its members that the US media “will say the Israeli banks also hide money, not just the Swiss”.

Organisations that led the campaign for reparations from European banks, such as the Jewish Claims Conference and the World Jewish Restitution Organisation, have also downplayed the role of the Israeli banks.

Jonathan Cook is a writer and journalist based in Nazareth, Israel. His latest books are “Israel and the Clash of Civilisations: Iraq, Iran and the Plan to Remake the Middle East” (Pluto Press) and “Disappearing Palestine: Israel's Experiments in Human Despair” (Zed Books). His website is www.jkcook.net.

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