HAARETZ:

By Amiram Barkat

Martin Stern, a British-Israeli businessman who resides in Jerusalem, was surprised earlier this week to receive an announcement that he had been awarded $5,000. He was even more surprised to discover that the announcement came from the New York court handling claims for dormant Swiss bank accounts from the Holocaust era.

Stern’s mother, Celia, filed claims six years ago for two bank accounts held by Stern’s father and uncle. Celia died three years ago. Four months ago, Stern was informed that the claim had been rejected because the bank accounts had not been located.

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But this week’s announcement informed Stern that he would receive $5,000. The court ruled that the accounts probably existed, but the Swiss had destroyed the documents. Stern, an activist known for seeking restitution of Jewish property, discovered that in February of this year, the court decided to grant awards to 13,000 Jews in his position.

“I don’t understand anything anymore,” Stern said yesterday. “If they decided in February to compensate us, why did they hear my mother’s case in June and reject it? Why did they wait six years, and why is distribution of the awards shrouded in secrecy?”

Professor Burt Neuborne, who represents the plaintiffs, said that a proposal to pay these awards was accepted five years ago. “The awards constitute symbolic recognition that these people had a just claim, but cannot prove it because the Swiss destroyed documents relating to 2.7 million accounts,” he said.

The court’s surprising generosity does not stop at handing out checks to plaintiffs whose cases were rejected. Claimants whose accounts were located, most of whom have received compensation, are slated to receive additional hundreds of millions of dollars soon. An internal report submitted to the court several months ago, a copy of which was obtained by Haaretz, suggests reevaluating the compensation sums retroactively.

The unpublished report submitted to U.S. District Court Judge Edward Korman recommends distributing at least another $250 million. But Neuborne told Haaretz yesterday that the new evaluation could raise the sums paid to plaintiffs by as much as $400 million. This would allow the New York court to elegantly dispose of the hundreds of millions left in its coffers.

In 1998, Swiss banks transferred $1.25 billion to pay the heirs of dormant Holocaust-era account holders. With the process drawing to a close, it is now clear that this sum is nearly three times higher than the sum paid account holders.

With an astronomical $500 million still in those coffers as of June 2006, infighting over the money had already begun among the state of Israel, the Welfare Fund for Holocaust Survivors and world Jewish organizations. But attorney Helen Junz, who is in charge of handling claims for the court, had a different idea: Apparently, the monetary value of only 400 to 500 accounts was known. The remaining 3,000 accounts were “empty,” and compensation was based on formulas devised by accountants.

Junz discovered that the holders of “empty” accounts received sums that were dozens of percent lower than the holders of accounts whose value was known, and she recommended that the court close the gap retroactively. Weeks ago, lawyers representing the state of Israel were told of this recommendation and hastened to file objections.

Attorney Kent Yalowitz of the Arnold and Porter law firm, who represents Israel, said the money the state is seeking is not slated for government ministries but for private organizations that help Holocaust survivors, first and foremost the Welfare Fund. “Recalculating the compensation will have ramifications for 100,000 needy survivors,” he said.

Daniel Ganzfried, a Swiss journalist who has followed the affair from the outset, told Haaretz that these developments were to be expected. “The sum paid by the Swiss banks wasn’t realistic and stemmed from political pressure. It is now clear that this was a bad deal morally.”
Neuborne told Haaretz that he vehemently rejects any criticism of the efficiency of the Swiss banks arrangement. “The Swiss banks destroyed almost all documentation, and despite working like the blind, we managed to distribute $400 million to account holders. With the new evaluation, that sum will increase to $600, $700 or even $800 million. We have also distributed money to needy Holocaust survivors. A total of 400,000 people have received almost $1 billion from us.”

Neuborne, who once said that he worked pro bono on the case, was recently the center of public outcry when he petitioned the court for $4.7 million in fees. The New York Times revealed that his work reports included inaccuracies such as 30 hours of work on a single day. Neuborne told Haaretz that the $6 million retainer he and other attorneys seek is less than one percent of the total sums awarded, far lower than the norm in similar cases.