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California and the West

$4.2-Million Holocaust Settlement Uncollected

Insurance: Dutch firms' payments were announced in December, but Quackenbush scandal has stymied plans.

May 17, 2000|HENRY WEINSTEIN | TIMES LEGAL AFFAIRS WRITER

More than five months after he announced that three Dutch insurance companies had agreed to contribute $4.2 million to a humanitarian fund for Holocaust survivors, California Insurance Commissioner Chuck Quackenbush has yet to collect the money and it is unclear when the money will be obtained or distributed.

Frank Mankiewicz, a spokesman for the Dutch insurers, said that the three companies--Aegon, ING and Fortis--had agreed to make the payment but that Insurance Department officials have never actually asked for the money. "I don't know why," said Mankiewicz.

A source close to the Dutch insurers said "the companies expected to write a check immediately" after Quackenbush's Dec. 1 announcement. He said the companies are prepared to provide the funds once a proper vehicle for distribution has been established.

Quackenbush issued a formal statement Tuesday, saying that none of the $4.2 million has been spent.

"We originally envisioned setting up a foundation to be run by a board comprised of leading Holocaust survivor representatives and Jewish community leaders," Quackenbush said. "Because of problems related to the other foundations that were established and the resulting criticisms, this foundation has never been activated," the commissioner said, referring to ongoing controversy over agreements he made with earthquake insurers. Critics have charged that Quackenbush made sweetheart deals that permitted insurers to make donations to a foundation he started to avoid billions of dollars in fines stemming from alleged mishandling of claims generated by the 1994 Northridge earthquake.

Atty. Gen. Bill Lockyer's office and the California Fair Political Practices Commission are investigating Quackenbush's actions and a judge in Sacramento has frozen the assets of the California Research and Assistance Foundation, which was set up by Quackenbush with funds from insurance companies.

Partly in response to the controversy over the earthquake foundation, Assemblyman Wally Knox (D-Los Angeles) on Tuesday asked Lockyer to investigate what had happened to the $4.2-million Holocaust fund announced in December.

In particular, Knox asked Lockyer to investigate whether the donation was made "in lieu of full and timely compliance" with a new state disclosure law that requires European insurers licensed in California to provide lists of all the policies that they issued in Europe from 1920 to 1945.

The Dutch companies are complying with the law, said Mankiewicz, a Washington public relations specialist who served as spokesman for Sens. Robert Kennedy and George McGovern in their 1968 and 1972 presidential bids.

Mankiewicz said that over the years, the Dutch insurers have paid on 98% of the Holocaust-era policy claims filed by Jewish people. In addition, he said that the Dutch Insurance Assn. had set up a $23-million humanitarian fund for Holocaust survivors in the Netherlands last year.

State Insurance Department spokesman Dan Edwards said that next week Quackenbush will present the Legislature with a proposal "to set up an appropriate vehicle to implement the distribution" of the $4.2-million Holocaust fund in a manner to best serve the interests of survivors.

Richard Mahan, a spokesman for the California Holocaust Insurance Settlement Alliance, a survivor advocacy group, said that considerable work had been done on setting up a foundation that would distribute the $4.2 million to needy survivors and that it was unfortunate that the effort had been slowed because of Quackenbush's recent problems.

"The actual structure and work had been been done to create a foundation" and individuals asked to serve on its board, said Mahan, a Marina del Rey resident who has been working at no charge on behalf of survivors.

"If the [Quackenbush] earthquake controversy hadn't hit, I think this foundation would be in existence, the money would be in an account and the foundation would be well on its way to operating," Mahan said. "This thing has been stalled while we search for solutions to political controversies. I hope that the Legislature and all elected officials can rise above the politics and find a solution that will help facilitate and expedite the distribution of the moneys."

The stipulations that the companies signed in December 1999 do not state when they are to provide the money.

Quackenbush spokesman Edwards said he did not know whether the Insurance Department could have collected the money and put it into an escrow account, where it could have drawn interest.

The delay over launching the foundation with the Dutch money is just the latest of many problems that has arisen in the thorny world of Holocaust reparations. In a New York federal court case, two Swiss banks agreed to pay $1.25 billion to settle claims stemming from unreturned wartime accounts, but almost two years later, no plan has been implemented.

On Tuesday, Knox also accused Quackenbush of entering into a secret agreement with other insurers not to begin enforcement proceedings under his Holocaust Victims Insurance Relief Act disclosure law until a court challenge to his bill had been resolved.

In response, Frank Kaplan, a Century City attorney who filed more than 900 pages of legal documents defending the law last week, said that there was nothing secret about what had happened.

Kaplan, who is serving as special counsel to the state Insurance Department, said the insurers had agreed in court papers not to seek a temporary restraining order against the disclosure law if the commission did not bring any enforcement actions until after a June 6 court hearing. At that hearing, a Sacramento judge will consider challenges to the statute lodged by the American Insurance Assn. and three individual insurance companies.

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