Exclusive: Dispute tied to efforts to restore properties in Israel to heirs of those who died in Holocaust

Israel's receiver-general has been accused of trying to buy off Keren Hayesod to prevent his own dismissal by giving it unfair and discriminatory rights in the dismantling of a company that bought land and made other investments for European Jews who later died in the Holocaust. "The compromise between the receiver-general [kones hanechasim] and Keren Hayesod is the result of a plot by the two made in extreme bad faith with the aim of protecting the private narrow interests of both sides to the detriment of the other creditors of the American Zion Commonwealth," wrote Attorney Nadav Ha'etzni, legal adviser to the Company for the Identification and Restoration of Properties Belonging to the Holocaust Dead, as part of legal action taken in the matter last week. Ha'etzni is demanding that the Jerusalem District Court cancel the agreement and fire Receiver-General Shlomo Shahar. But the Justice Ministry says there is no basis whatsoever to the complaint. The company represented by Ha'etzni was established last year to identify and restore the properties of those who died in the Holocaust. It was set up in accordance with a recommendation by a Knesset committee of investigation headed by MK Colette Avital (Labor), established in 2000 to examine the scope of the problems surrounding disputed assets from properties, bank accounts and other investments made by Jews living in Europe in the years leading up to World War II. In the wake of the committee's findings, the Knesset passed the Property of Holocaust Dead Law, which called for the establishment of a company to locate and concentrate all the unclaimed assets belonging to Holocaust victims, return them to the descendants of their rightful owners and earmark the money for properties whose owners were not identified for the community of Holocaust survivors in Israel. The American Zion Commonwealth was one of the groups that handled such pre-war investments. It had been established in the US in 1914 to purchase lands in Palestine for Jewish development. For example, it bought the land upon which the cities of Afula and Herzliya now stand. Other institutions that made similar investments for Jews living abroad included the Jewish National Fund, Hachsharat Hayishuv and Ha'Ahuza. After the establishment of the state in 1948, the American Zionist Commonwealth became increasingly less active. In 1983, the government appointed the receiver-general, responsible for the liquidation of companies, to take such action regarding the Commonwealth. Twenty-four years later, the liquidation has still not been finalized. In the court action, Ha'etzni wrote that after the Company for the Identification and Restoration of Properties Belonging to the Holocaust Dead was established, it began to locate and concentrate all such property in its hands to track down potential heirs and return the property or its monetary value to them. Ha'etzni charged that when the company asked the Custodian for Absentee Properties for the material on the American Zionist Commonwealth files, the custodian did not tell him that the company was undergoing liquidation. It was only in June that he read a newspaper report stating that Keren Hayesod had filed suit to fire the receiver-general, Shlomo Shahar, who was in charge of the company's liquidation. According to the article, Keren Hayesod had accused Shahar of acting negligently and causing serious damage to the American Zionist Commonwealth's creditors - those in whose name the company had purchased property before the war. Ha'etzni said he asked Shahar to give him all the information regarding the liquidation of the American Zionist Commonwealth in his capacity as representative of many of the company's creditors. Shahar allegedly failed to respond to his repeated requests. According to Ha'etzni, in September, Shahar's representative, Attorney Sigal Ya'acobi, told him that apparently Keren Hayesod and the receiver-general had reached a compromise agreement whereby Keren Hayesod would drop the suit. Ha'etzni said he objected to any such agreement on the grounds that it looked like the outcome of the receiver-general's efforts to buy off Keren Hayesod. Before he could do anything about it, the settlement was brought to court and approved. According to it, Shahar allegedly agreed to appoint a subsidiary of Keren Hayesod to administer the properties belonging to the American Zionist Commonwealth and to illegally take its expenses from the company's general funds rather than from the transaction itself. In return, charged Ha'etzni, Keren Hayesod dropped its suit against the receiver-general. Ha'etzni called on the court to nullify the agreement and fire Shahar. In response to the allegations, the Justice Ministry said, "The receiver-general is acting in this procedure in the capacity of a liquidator and is therefore under the supervision of the court which has the entire picture in front of it. The agreement [between the receiver-general and Keren Hayesod] which the company is attacking, was brought in its entirety before the court, which examined and approved it. It is surprising that the company went to court and raised suspicions and made accusations of so-called negligence without first asking the receiver-general for an explanation of his administration of the properties. Had it done so, it would have learned that Keren Hayesod was satisfied by the receiver-general's explanations regarding his administration of the properties and dropped its charges. "Ha'etzni's provocative statements and insinuations should not have been made since he and the heads of the company are aware of the receiver-general's efforts to help it carry out its activities and responsibilities according to the law." The spokesman for Keren Hayesod referred The Jerusalem Post to the director-general of the Jewish Agency's Department for Participation in Properties. However, he could not be reached despite repeated efforts.