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Last Updated: Tuesday, 28 September, 2004, 11:21 GMT 12:21 UK
How Britain is settling old debts
By Jon Silverman
Home Affairs Analyst

They lost their savings because they lived behind enemy lines. Now, the British government is trying to make amends to people, mostly Jews, who lost millions in the UK during World War II. It's a complicated, sensitive, urgent process - and there's very little documentation to help.

Barbed wire at concentration camp
Barbed wire still surrounds Buchenwald in Germany

Set against the billions spent by the government each year, 16.75m is a mere pinprick.

Yet, the chancellor casts a parsimonious eye over all of his outgoings and there are some inside the Treasury who are a little restive that an initial promise of 2 million has risen eightfold with more to come.

So, what is it for?

This is the money which has been paid to compensate those, mainly Jews, whose cash and property were seized during the Second World War because they lived behind enemy lines.

For the first time, the chairman of the compensation panel, established by the government in 1998, and now winding up its business, has given an insight into one of the more remarkable legacies of the war.

With conflict looming, thousands of European Jews had placed their assets in British banks for safe-keeping. But a 1939 Act allowed the government to seize anything belonging to citizens of states who were fighting alongside Nazi Germany.

Many of the original depositors lost their lives during the conflagration and their relatives have spent 60 years looking for restitution. Now, Lord Archer of Sandwell, a former Solicitor-General, has given a fascinating insight into how he has gone about his job.

Huge number of claims

At the beginning, the panel was almost overwhelmed by the sheer number of claims.

"We had over 1,000 in the first few weeks," says Lord Archer. "We were shocked. And of course, bottlenecks quickly developed but people were very patient."

Usually. One or two threatened to sue over delays. One or two wrote to their MP. An American claimant even complained to the Queen but got no reply.

(It later emerged that a Palace official had put the letter at the bottom of a box where it had been forgotten. The American was more angry about the lack of a royal reply than about the original claim.)

Lack of documentation so long after the event was a perennial problem, but not an insuperable one.

"One old man," says Lord Archer, "could not recall the name of the bank he had placed money in. He could not recall which part of London it was. He had no account slip, no proof whatsoever. But he was so obviously telling the truth that we paid him out anyway."

So, how was the amount of compensation calculated?

When the panel was established, some argued that the interest earned should be the basis for restitution.

"We rejected that because it would have been so complicated," says Lord Archer. "We opted for a simpler measure - inflation. We multiplied the amount deposited by the increase in the retail price index. This gives you a factor of 23."

In some cases, though, the calculation was more problematic. A Hungarian, Gabor Bedo, lodged a claim for 4m for his father's priceless art collection stored in London and later sold at auction after being seized by the British government.

Closure

He received only a fraction in compensation but the money, arriving shortly before his death from cancer, had great symbolic value.

"He felt a chapter had been closed," his friend and lawyer, Kalman Gyarfas, told me.

With an end in sight to the compensation process, another secret has been revealed. The then trade minister, Lord Haskel, has disclosed that in 1998, he was briefed by civil servants to rebuff calls for a government-backed compensation fund.

But he and the trade secretary, Margaret Beckett, rejected that advice.

The rest, as they say, is history.


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