Funds Run Out for 11,000 Needy Holocaust Survivors in Israel

Finance Ministry to step in after dispute led company charged with paying survivors to withhold funds since 2015; Knesset to discuss bill ensuring gov't transfer of money.

Demonstration by Holocaust survivors in Tel Aviv, across from Defense Ministry headquarters, in 2012.
Nir Kafri

Some 11,000 needy Holocaust survivors in Israel will not receive their monthly allowances at the beginning of July. For nearly a year – from July 2015 through April 2016 – this money had not been paid to the survivors because of a legal dispute between two companies.

On the eve of Passover this year, after months had passed without transfer of the allowances, the Finance Ministry decided to provide the funds to the needy survivors as a one-time solution. After Haaretz reported on the situation, Finance Minister Moshe Kahlon promised that the money would be paid every quarter to them by the treasury until the dispute was settled.

The survivors were supposed to receive a 2,750-shekel ($708) grant for the coming three-month period, amounting to less than 917 shekels a month, but now Haaretz has learned that they will not receive the money.

The funding budgeted for the survivors, about 30 million shekels, has been waiting to be transferred since May, said a senior official in the Finance Ministry. The reason for the delay is the refusal of the Company for Location and Restitution of Holocaust Victims’ Assets (known in Hebrew as Hashava) to sign a document obligating it to pay the money back to the government.

Hashava was established by law in Israel in 2005 to locate and return unclaimed assets to Holocaust victims and their heirs.

The Finance Ministry says it is unable to loan the company the money, because it has no budgetary resources for doing so – and in particular because it needs a commitment that Hashava will reimburse the funds before the company is due to cease operating next year, or perhaps beforehand when the legal dispute between it and the Jewish Colonial Trust is settled.

The JCT is a financial institution founded in 1899 in London and entrusted by the Zionist Organization at the Second Zionist Congress with the responsibility for supporting and financing efforts to establish the Jewish national home in Palestine. About half of the still-outstanding shares of JCT were owned by people who perished in the Holocaust,

JCT owns almost 5 percent of the shares of Bank Leumi today, and refuses to sell them and transfer the money to Hashava. The value of the Leumi shares has fallen and the company fears it will lose tens of millions of shekels if it has to sell the shares now. For months, the two companies have promised to reach a legal understanding within a short time, but have been unable to do so.

A Finance Ministry official said the ministry “does not intervene in the internal disputes between companies. In an unprecedented manner, we transferred money to the survivors and we intend on continuing to transfer until the dispute between the companies is solved, with the understanding that the dispute cannot be [carried out] at the expense of the survivors.

"However, for almost two months, the company [Hashava] has simply been unwilling to sign a simple document that will allow the transfer. The order has been given and the money is ready, and they are give us all manner of excuses and requests for changes [some of which were agreed to by the treasury] – but are still not signing,” the official added.

This week, Deputy Finance Minister Yitzhak Cohen will hold a meeting with the heads of Hashava and JCT in an attempt to reach an understanding to end the dispute. If the companies cannot reach an agreement, the ministry will ask Attorney General Avichai Mendelblit to immediately liquidate Hashava, and not wait until 2017 when the company was originally scheduled to end its mission of returning assets to heirs and be dissolved.

In addition, in the next few weeks, the Knesset's Ministerial Committee for Legislation will discuss legislation that would solve the problem, according to which in such a case where Hashava does not transfer the funds to the needy survivors, the government will guarantee the payment until it receives the funds from Hashava.

The bill is sponsored by MK Merav Michaeli (Zionist Union), along with chairman of the Knesset Finance Committee MK Moshe Gafni (United Torah Judaism) and coalition whip MK David Bitan (Likud).

Hashava and JCT have yet to respond to questions from Haaretz on the matter.