Israeli Banks Accused of Holocaust Profiteering -- Jonathan Cook

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

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 rumored 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," 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," 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."

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