$700m hole in Nazi slave fund

The fund was set up to show solidarity with Nazi victims

By Patrick Bartlett in Frankfurt

A German industry compensation fund for former Nazi slave labourers is $700m short, the BBC has learnt.

German business promised in June to raise half of an agreed $4.4bn - the German government would contribute the rest.

But it is now unclear when payments can begin to the around one million elderly survivors of Nazi-era labour camps.

Otto Graf Lambsdorf negotiated the fund deal

The compensation fund was set up by companies such as Volkswagen and Daimler-Chrysler, who used forced labour during World War II to boost production.

So far, just 5,000 of Germany's roughly 200,000 companies have contributed to the fund agreed last summer after long talks with American-led negotiators.

In return, German companies will be granted protection in the US courts. Earlier this month, a judge in New Jersey dismissed 46 suits filed by former slave labourers, many of them Jewish.

But there are now growing doubts about whether German industry can honour its side of the bargain. Although donations worth $90m have been received in the past month, the German industry fund is still a long way short.

Outstanding lawsuits

The former German minister who negotiated the compensation deal, Otto Graf Lambsdorff, said recently that the refusal of many companies to participate was beginning to damage Germany's reputation.

All German companies had been asked to contribute as a gesture of solidarity with the victims of Nazi crimes.

In the US, there are now calls for a guarantee of payment to be given before the last remaining lawsuits against German companies are dismissed.

But German industry claims the money raised already is enough to cover payments to individual victims; the remaining sum has been earmarked to set up Holocaust-related education projects.

An industry spokesman said payments could not in any case begin until the outstanding lawsuits had been dismissed, and that was unlikely before February at the earliest.