Templars’ land to survivors

Where will Israel get NIS 100 million to pay the heirs of Holocaust survivors?

Where will Israel get NIS 100 million to pay the heirs of Holocaust survivors? Yehuda Bar-Lev CPA has discovered a small fortune that could almost completely cover the state’s obligations. He says that Bank Leumi (TASE: LUMI) has the treasure, but the bank says its does not have the money.

According to a report published two weeks ago by the Knesset Parliamentary Inquiry Committee for the Location and Restitution of Property of Holocaust Victims, Israel’s obligations to pay compensation for accounts belonging to Holocaust victims, and transferred by Bank Leumi to the Custodian General, total NIS 95.8 million, assuming that no heirs are found. This sum accounts for almost all of the state’s total obligation of NIS 102 million.

To say the least, the Ministry of Finance did not like this finding, which added one more burden to its budget division. On the other hand, ignoring the conclusions of an independent inquiry committee about property belonging to Holocaust victims would give the Israeli government a black eye.

Bar-Lev has counseled Ministry of Finance budget director Kobi Haber and Accountant General Dr. Yaron Zalika to take an interest in pages 74-75 of the report, and has offered more clarifications and documents from his office. The section involves an event over 50 years ago, before WWII; the UK; and the Israeli government.

With the outbreak of WWII, the British Mandatory Government in Palestine confiscated the Sharona neighborhood in Tel Aviv today’s south Ministry of Defense headquarters (kirya) compound. The residents of the neighborhood were German Templars. These were not ordinary enemy nationals; at a minimum, they were suspected, with good reason, of collaborating with the Nazi regime.

After WWII, the neighborhood remained in the hands of the British Mandate Custodian of Enemy Property. The Jewish authorities were very interested in the property, which was located in a very strategic area. The British, however, did not want to sell it to the Jewish Agency, out of fear of deviating from their neutral status in the Arab-Jewish conflict. The solution found was for the Tel Aviv municipality to purchase the neighborhood. The deal was signed in April 1948, a few weeks before the end of the British mandate.

The Tel Aviv municipality transferred the money to the Mandatory Government’s account at the Anglo-Palestine Bank (which later became Bank Leumi) in Jerusalem. After the state of Israel was declared, however, someone at Bank Leumi said, “Why should we pay the British? They’re not here anymore, so they’ll get along without a payment from us.” The British government thought otherwise, and repeatedly demanded its money from the Anglo-Palestine Bank. After losing patience, the British government filed suit for 1.79 million Israeli pounds (lira) against Bank Leumi in the Jerusalem District Court. At the time, one Israeli pound was worth £1.

It was clear that Bank Leumi would have to pay, but the bank, which at the time was functioning as Israel’s central bank, asked the Israeli government for help in the matter. Legal experts thought deeply about the problem, and found a clever solution the state filed a lawsuit for the identical sum against Bank Leumi, claiming that the Israeli government had supplanted the Mandatory government, and the Israeli Custodian General, who was in charge of enemy property, was entitled to the money.

The claims were never resolved. The Israeli and British governments soon began high-speed negotiations over the financial aspects of the end of the British Mandate, and in 1950, reached an agreement that included the withdrawal of the British claim against Bank Leumi. At the same time, the state withdrew its claim against the bank.

What happened to the money? Opinions differ. In his report, Barlev wrote, “We do not know if the bank transferred the sum to the state, or to the Custodian General. Owing to time limitations and our priorities, we were unable to continue investigating the matter.” Informally, however, Bar-Lev’s office says that Bank Leumi kept the money, which is equal to NIS 75 million in current value. In that case, all the state has to do is demand that Bank Leumi hand it over.

Bank Leumi insists, “The matter is not connected with the property of Holocaust victims. It concerns accounts between the governments of the UK and Israel, to which the bank is not a party. A document was furnished to the committee proving that the Bank does not have the money.”

Published by Globes [online] - www.globes.co.il - on January 30, 2005

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