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Focus on Issues: Holocaust Insurance Panel Faces Allegations of Improper Spending

May 21, 2001
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An international commission charged with settling Holocaust-era insurance disputes has reportedly spent 10 times as much on administrative expenses than on payments to survivors and their heirs.

Since its founding in October 1998, the International Commission on Holocaust Era Insurance Claims, known as ICHEIC, allegedly paid out more than $30 million for salaries, hotel bills and newspaper ads, while the five European companies that fund the commission have distributed only $3 million to claimants.

The allegations are based on information from internal ICHEIC documents cited in a class-action lawsuit and in a Los Angeles Times report.

One internal memo, written in January by Geoffrey Fitchew, the commission’s vice chairman, warns that “ICHEIC is at risk of facing increasing criticism, focusing on the low proportion of our claimants who have received offers” and “on the unfavorable ratio between the costs of administrating the ICHEIC claims process and the value of offers.”

These offers have been as low as $500 for multiple prewar policies – and more than half have been rejected by claimants, according to the class-action lawsuit, filed May 16 in Los Angeles Superior Court.

Former U.S. Secretary of State Lawrence Eagleburger, who heads the commission, acknowledged some of its shortcomings in an interview with the Los Angeles Times.

He conceded “the point that we have spent more money getting ready than we should have.”

According to ICHEIC’s documents, the commission has had at least 18 meetings, including seven in London, one in Jerusalem, one in Rome, eight in Washington and one in New York. As many as 100 participants attended the meetings, some at luxury hotels.

In the commission’s defense, Eagleburger said ICHEIC had to spend nearly $9 million in newspaper ads to inform potential claimants and additional sums for searches of Holocaust-era archives.

ICHEIC was created following survivors’ claims that European insurers refused payments on policies taken out by Jews who perished in the Holocaust.

It was founded by American and European insurance regulators, Jewish organizations and European insurance companies with the goal of resolving insurance disputes quickly and fairly, in the hope of avoiding lengthy battles in U.S. courts.

The five participating insurers are Allianz of Germany, Italy’s Assicurazioni Generali, AXA Group of France, and Switzerland’s Winterthur and Zurich.

These companies wrote about 35 percent of European life, homeowner and dowry policies between 1930 and 1945.

The commission is a private organization not regulated by any governmental agency, and it makes its own budget decisions.

Some U.S. states have taken their own steps to speed up the claims process. In April 2000, Minnesota joined California, Florida, New York and Washington state, which have all enacted laws restricting the ability of European insurers to practice in their states without first settling Holocaust-era claims.

The class-action lawsuit was filed by attorney William Shernoff on behalf of 89-year-old Felicia Spirer Haberfeld. She is the widow of Alfons Haberfeld, who ran a profitable distillery in the Polish town of Oswiecim, and served as the last president of the town’s Jewish community. Oswiecim is better known by its German name, Auschwitz.

In the fall of 1939, the couple left on a trip to attend the New York World’s Fair, where the distillery had a display. They left their 2-year old daughter, Franciszka, in Poland with her grandmother.

Caught on the high seas by the outbreak of war, the Haberfelds could not return to their home in Poland. Their daughter and the grandmother perished in the Holocaust.

In the mid-1930s, Alfons Haberfeld took out a number of insurance policies with Generali, including one on his own life and one to provide a dowry for his daughter. Generali was one of the largest insurers of Jews in prewar Eastern Europe.

Since 1957, when the policies matured, Alfons Haberfeld tried unsuccessfully to collect on the policies – and after his death in 1970, his widow continued the effort.

In a recent development, Felicia Spirer Haberfeld received a letter from Generali offering to settle all her claims for $500, a figure Shernoff considers ridiculously low.

In addition, the lawsuit claims, other survivors have received similar form letters, whose language implies that the memos were being sent at the direction of the Eagleburger commission.

Haberfeld’s lawsuit seeks an injunction prohibiting Generali from trying to persuade other Holocaust survivors and their heirs in California “into settling their claims against Generali for a fraction” of their true value.

The class-action lawsuit also seeks to nullify already existing insurance settlements induced by the Generali form letter, and to stop any future mailings of the letter. A first hearing on the injunction request has been set for June 19.

Peter Simshauer, Generali’s attorney in California, said in a phone interview that he was still evaluating the Haberfeld lawsuit, but believed that it had no merit.

He said Generali had established a $12 million trust fund for survivors in Israel some years ago, and had pledged more than $100 million for future worldwide claims through the international commission.

Also coming to the commission’s defense was the World Jewish Congress, which is represented on ICHEIC by the WJC’s executive director, Elan Steinberg.

Speaking from his office in New York, Steinberg acknowledged that the commission’s “up front” expenses of $30 million could have been handled more efficiently.

That said, Steinberg was highly critical of the Los Angeles lawsuit.

“At the end of the five-year process, I expect that $650 to $700 million will have been paid out for settlements, with administrative expenses totaling $90 million,” he said.

The intention of the Haberfeld lawsuit “would appear to be that lawyers will be able to inject themselves in a process from which they are excluded at the moment,” Steinberg said.

The remark drew a heated response from attorney Shernoff.

“Mr. Steinberg’s comment shows a complete lack of understanding of what is really happening,” Shernoff said. “He is trying to substitute the commission’s secret process for the survivors’ constitutional rights in court and additional rights under specific California legislation..”

In a related development, the House of Representatives last week approved an amendment that calls on the U.S. State Department to review ICHEIC’s procedures.

Supporting the amendment, Rep. Henry Waxman (D-Calif.) said, “ICHEIC is not doing the job Congress expected it to do, and I intend to ensure that it has fair procedures and is accountable to Holocaust survivors.”

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