Agency turmoil hinders claims from Holocaust

Documents: An inside look shows that efforts to get long-due insurance claims paid may take more from a fund than victims get.

Special Report

July 07, 2002|By Greg Garland | Greg Garland,SUN STAFF

At a hearing last fall, Lawrence S. Eagleburger angrily brushed aside a California congressman's questions about extravagant spending and mismanagement at an international commission set up to help Holocaust survivors resolve old life insurance claims.

"Frankly, it's none of your business," Eagleburger, a former secretary of state who heads the commission, snapped at Rep. Henry A. Waxman during a heated exchange.

But that's not the way Waxman saw it. The commission's business is important public business, he believed, because the elderly Holocaust survivors and the children of Holocaust families he counts as constituents feel ignored and mistreated by an organization that was supposed to help them settle insurance claims dating to World War II.

Waxman was disturbed by the record of the commission Eagleburger heads, known as the International Commission on Holocaust Era Insurance Claims, or ICHEIC. After three years, it had spent $40 million to operate while only $10 million had been paid on claims filed with the commission.

Insight into what is going wrong at the ICHEIC can be gained from hundreds of pages of internal commission records - many stamped "confidential" - that were obtained by The Sun.

These records depict an agency in disarray that has left thousands of elderly Holocaust survivors frustrated, awaiting answers months and even years after filing claims. Staff members, in internal memos, have faulted the way the process is working and have sounded alarms. Even Eagleburger described it as "a complicated nightmare."

The documents show that:

Eagleburger has projected that $150 million will be needed to cover the commission's operating costs. Much of that could be drawn from the $350 million that European insurance companies have pledged for paying claims and for Holocaust-related humanitarian purposes.

The commission has paid Eagleburger's personal business manager's company at least $1.5 million to run the ICHEIC's business and financial affairs. An internal auditor reviewing the commission's books at its Washington headquarters said that manager Barbara Laumann's "professional know-how ... seems not to be adequate to the job at hand" and that others working for her appeared unqualified.

Commission members and staff traveled regularly to Rome; London; Zurich, Switzerland; and other cities in Europe, running up hefty expense tabs. In 1999, for example, the chief of staff for the agency's headquarters spent $136,653 on travel to Rome, Berlin and other European cities. Most claims settlements have been for less than $10,000.

The ICHEIC has paid a company in England $17.6 million to process claims, but the company has routinely failed to meet deadlines. Thousands of claims were stacked up without action for months as the company and the commission quarreled over contract terms and how different kinds of claims should be handled.

The commission's former claims manager, Pat Webber, warned Eagleburger that the agency could exhaust its financial resources without coming anywhere close to meeting its objectives for getting claims settled. "The process may very soon collapse without producing the results envisaged," she wrote.

Despite warning signs for several months, the ICHEIC did little until recently to check how well insurance companies were following its guidelines for deciding claims. As a result, thousands of claims that might be valid under the ICHEIC rules were rejected.

Eagleburger staunchly defends the commission's performance, pointing out that it is tackling an extraordinarily difficult problem that no one else has been able to solve for more than six decades.

The ravages of World War II left many survivors without documents to back up their claims, national borders shifted, and many insurance companies changed hands, went out of business or were nationalized.

In spite of all this, the commission has performed remarkably well, Eagleburger said. "We've done better than I think the public generally thinks we have."

Eagleburger said that the costs of setting up the commission were high but that expenses have been sharply reduced over the past year. And although the process has been costly, survivors have received money that would not have been paid if the commission didn't exist, he said.

But some Holocaust survivors - such as Leo Rechter, 74, of Queens, N.Y. - say they are disappointed by the commission's performance.

Rechter survived World War II in hiding in Belgium, but his father, who had been a butcher in Vienna, Austria, died in Auschwitz in 1943.

A retired bank executive, Rechter heads the National Association of Jewish Child Holocaust Survivors and is an officer in a nationwide alliance, the Holocaust Survivors Foundation-USA.

"Everybody is making a profit on the Holocaust story except the survivors," Rechter said. "It is morally and ethically repugnant."

`Inventing the wheel'

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