Spending by Holocaust Claims Panel Criticized

An international commission created to resolve Holocaust-era insurance disputes has spent 10 times more on administrative costs, including salaries, hotel bills and newspaper ads, than the insurers have paid out to survivors, according to internal commission documents.

The documents state that the International Commission on Holocaust Era Insurance Claims (ICHEIC) has spent more than $30 million on expenses since it was formed in October 1998, while the five companies that are underwriting the organization have distributed only $3 million to claimants.

Moreover, survivors have not accepted at least half of the offers made by insurers, maintaining that the proposed payments--some allegedly as low as $500--are clearly inadequate.

The stark disparity thus far between payouts and administrative costs has generated concern inside the commission, which is headed by former U.S. Secretary of State Lawrence S. Eagleburger.

An internal memo written in January by Geoffrey E. Fitchew, the commission’s vice chairman, acknowledged 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 administering the ICHEIC claims process and the value of offers.”

Such criticism came into bold relief Wednesday when a Los Angeles woman referred to the 10-to-1 ratio in a lawsuit she filed against Italian insurer Assicurazioni Generali in Los Angeles County Superior Court.

Eagleburger acknowledged the disparity in a telephone interview from the commission’s Washington headquarters.

“I will be the first to admit that given the amount we have spent so far, the result in claims paid out is by no means as high as it should be,” Eagleburger said.

“It has taken much longer to get this institution established in terms of methods of paying claims and establishing valuations” for the claims, said Eagleburger, who is paid $350,000 a year to head the commission. ICHEIC is a private organization not regulated by any governmental agency and makes its own decision on spending.

Eagleburger said that Generali agreed late last year to pay out $100 million in Holocaust compensation, using the commission and an Israeli organization to distribute the money. Thus far, the company has turned over $5 million, but Eagleburger said it was not clear when the money would be distributed or to whom. Most Holocaust survivors are now in their 70s and 80s and are dying at a rate of about 10 a month.

Insurers Seeking to Resolve Controversy

The claims commission was created in the fall of 1998 by U.S. and European insurance regulators, Jewish organizations and European insurers under fire from a barrage of lawsuits in the United States for allegedly failing to pay valid claims lodged by Holocaust survivors or the heirs of victims who perished. The insurers were seeking a means to resolve the controversy outside the U.S. legal system. For representatives of the victims, the hope was to resolve claims swiftly and fairly.

However, since the commission was founded, a number of Jewish organizations, particularly the Simon Wiesenthal Center in Los Angeles, have blasted the insurers for alleged bad faith, though taking care not to criticize Eagleburger himself.

Eagleburger, 70, said Wednesday that he would “concede to a point that we have spent more money getting ready than we should have.”

On the other hand, he said that the commission had to spend nearly $9 million on outreach efforts, primarily newspaper advertisements around the world, to inform prospective claimants of their right to seek compensation and that the money was well spent. He said “a fair amount” was spent searching archives for information on potential claimants “so we are not simply dependent on the companies.”

Additionally, he said that the commission had experienced “horrendous” problems with the British firm it hired to process claims.

Internal records show that 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. Most of the sessions, which have had as many as 100 participants, have been held at Hilton and Westin hotels, though some were in fancier spots such as the Willard Intercontinental in Washington and the St. Regis Grand in Rome. “I don’t think they were fancy,” Eagleburger said.

The suit filed Wednesday by Felicia Spirer Haberfeld, 89, alleges that Generali is engaged in a deceptive scheme to entice Holocaust survivors into giving up their legal rights to settle claims in court on policies purchased before World War II.

Haberfeld’s attorney, William Shernoff, is seeking an injunction prohibiting Generali from enticing several hundred Holocaust survivors and their heirs who live in California “into settling their claims against Generali for a fraction” of their true value. The suit, which seeks class action status, was assigned to Judge Anthony J. Mohr and the first hearing was scheduled for June 19.

Generali lawyers in Los Angeles and New York declined comment.

Haberfeld, a native of Auschwitz, Poland, came to California in 1948. The suit states that Generali offered her “a meager $500 for claims on her husband and daughter’s life insurance policies that are decades overdue and are of substantial value.”

Haberfeld’s husband, Alfons, who ran a profitable distillery in Poland before World War II, purchased the policies at issue in 1936 and 1938. The family home was turned into a German army headquarters during the war, according to court records.

The couple managed to miss the Nazi occupation of Poland because they were in New York for the World’s Fair. But their 2-year-old daughter Franciszka, who was left at home in the care of a relative, eventually was discovered in a Nazi raid and died in the Belzec death camp, according to the suit. Alfons Haberfeld died in 1970 in Los Angeles.

The lawsuit states that the Haberfelds made numerous attempts to collect on the policies but that Generali resisted, offering a variety of excuses for not paying. According to the suit, Generali’s form letters to Felicia Haberfeld and others implies that the company is acting at the direction of the claims commission. But Haberfeld’s attorney, Shernoff, said Wednesday that “ICHEIC is a private consortium funded by five major European insurers--Generali among them--that has no official standing and has no power to do anything Generali does not want to do.”

To buttress this point, the suit cites an April 9, 2001 letter from Giovanni Perissinotto, to Eagleburger that states that participation in the commission is voluntary “and none of its members, certainly not Generali, at any rate, has relinquished the right to acquiesce to, or dissent from, the views and positions taken by others, including a majority.”

Eagleburger said Wednesday that it is true that that he cannot force Generali or any of the other companies to do anything, “other than through the force of publicity or my personality.”

However, he said that during the past year Generali had been “the most cooperative” of the group’s five member companies.

Shernoff, however, said he is particularly disturbed that “Generali is trying to supplant the public judicial process with ICHEIC’s secret process that is answerable to no one.” Until now, the commission has had no formal appeals process, but it is instituting one that is supposed to take effect this year.

Friction Over Financing

Internal commission documents reveal that there has been considerable friction between Eagleburger and several member companies about how to fund the remainder of the commission’s work.

The five companies have put $30 million into a fund in Bermuda, that with interest has grown to $34 million. Some of the companies have been urging Eagleburger to draw on that money to pay future ongoing expenses, but he has resisted.

Virtually all of the commission’s funding is provided by its five insurance company members. In addition to Allianz and Generali, they include Axa of France, and Winterthur and Zurich of Switzerland. The five companies wrote about 35% of the policies in Europe during the period of 1930 to 1945. Many insurance companies have declined to participate in the international commission.

In a related development, the House of Representatives on Wednesday approved an amendment to the State Department budget providing that the department will review the commission’s claims, handling and appeals process.

The amendment was pushed by several members of Congress, including Rep. Henry Waxman (D-Los Angeles), who 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.”