This Thursday, Bank Leumi will register another victory in its battle over the return of Holocaust victims' assets: A report that is to be made to the parliamentary committee of inquiry on the subject will assess Leumi's obligations at only a few tens of millions of shekels - rather than the NIS 500-million estimate made 15 months ago. The June 2003 assessment listed assets worth a combined NIS 1 billion at the five major banks, of which Leumi's share was 50 to 70 percent. Leumi then managed to get the computational method changed, thereby significantly reducing its obligations. But it still has a long list of additional demands - and unless they are met, it does not intend to let the committee publish its report.
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As far back as October 2003, Colette Avital (Labor), the chairperson of the parliamentary committee dealing with the assets, declared the banks' behavior unacceptable and said that Holocaust victims could not keep "waiting and waiting" for their money. She also threatened repeatedly to publish the report without the banks' consent. However, she never made good on these threats.
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"We're in a bind," agreed Avital. "The banks can keep delaying, again and again and again."
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Leumi is still not satisfied: It is upset by the bottom-line conclusion that it profited from the assets of Holocaust victims. In closed meetings, bank officials warned committee members and Knesset Speaker Reuven Rivlin that such a finding would damage Israel's international image. After the way the international Jewish community blasted Swiss banks and European insurers for benefiting from Holocaust victims' assets, the news that a state-owned Israeli bank has been doing the same would paint the Jewish people as hypocrites, Fogel argued. Rivlin and the committee members said that they have trouble countering this objection.
Some committee members also admitted to another problem - a personal interest in the bank. MK Avraham Ravitz (United Torah Judaism), for instance, has an account at Leumi. "It's very hard," he said at one committee meeting, "because in a case like this, I must ask myself whether it could also affect me."
Echoed Rivlin at another meeting: "Bank Leumi is all of us."
In the mid-1990s, after it became clear that Swiss banks had earned hundreds of millions of dollars from the accounts of Jewish Holocaust victims, an international public campaign began that resulted in the banks in question signing a settlement in 2000. Under that settlement, they agreed to pay $800 million to the heirs of the dormant accounts and hundreds of millions more to Holocaust survivors worldwide.
Europe's five largest insurance companies have also transferred more than $500 million since 1998 to Holocaust victims' heirs. Also, Germany, France, Britain and other European countries have recently allowed the heirs to claim compensation for their relatives' properties in those countries.
Holocaust victims also owned many assets in pre-state Israel: thousands of lots and buildings and thousands of bank accounts. Leumi, then called the Anglo-Palestine Bank, played a major role in helping European Jews transfer their money out of Europe. After these Jews were killed in the Holocaust, their accounts became dormant.
Until February 2000, when the Knesset set up its inquiry committee, almost nothing was done to locate the heirs to these accounts. The committee's work was supposed to take six months, and the banks promised to cooperate. The reality, however, was different.
The Swiss banks did not contest accountants' valuations of their dormant accounts, nor did they contest the enormous fee - an estimated $400 million - that the accountants charged them. "The banks were willing to pay billions of dollars to the accountants - anything to get the issue off the agenda," said Daniel Ganzfried, a Swiss journalist who covered the affair.
The Israeli banks, however, behaved differently. First, they demanded that their own accountants conduct the valuations, but the committee insisted on independent accountants. Then, the banks agreed to pay the accountants for only 42,000 hours of work, some $3 million, rather than the 100,000 hours that the committee wanted. Thus only in mid-2001 were five accounting firms finally chosen for the five major banks.
At first, the banks said that they had no Holocaust assets: When World War II began, Britain, which ruled the area, claimed all of the accounts owned by residents of Nazi-occupied Europe, and the banks complied. But it soon emerged that the banks had deceived the British.
"Bank Leumi acted as a Zionist bank," said accountant Yehuda Barlev, who investigated the bank. "It tried to hide money from the British; it set up fictitious accounts; it lowered interest."
Barlev also discovered that the bank deceived its own customers: When Britain refunded some of the money after the war, Leumi did not return funds to its clients.
Similar phenomena, though on a smaller scale, were discovered at the other banks. Mizrahi, for instance, used its dormant accounts as collateral for a loan from Leumi in the 1940s.
When the accountants finally submitted their valuations, the real war began. The banks did not accept the findings, and submitted numerous objections. The committee's accountants then had to invest huge quantities of time in checking their objections. But the banks refused to finance this work.
Zvi Barak, who headed the professional task force conducting the valuations, told the accountants not to start work until payment was assured, but the accountants did so anyway. Some of the accountants also received veiled threats. "I reserve the right to interfere with the accountants," one bank executive wrote to Avital.
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