Fifty years as prisoners of war

That a painting by Degas in the National Gallery may have been looted from a Jewish family by Nazis is front-page news. But what of Mr Kellerman's tie-pin, deposited for safekeeping before the War? Or Dr Goldberger 's pounds 344, 12s and 10d? Why have they never been returned?

The last POWs could soon be on their way home. They are held not in prison camps, but on the walls of some of the world's most prestigious art institutions: the artworks by masters old and new that were once looted by the Nazis and are now on public display.

A roll-call of suspect works at Britain's own National Gallery includes paintings by Picasso, Renoir, Degas, Van Dyck and Caravaggio. Gallery officials are to examine the provenance of more than 100 paintings to see whether they were stolen by the Nazis. But even if some of the works turn out to be stolen property, there is no guarantee that they will be returned to their rightful owners. The gallery's director, Neil McGregor, has said: "In law we cannot transfer title. So we cannot give a painting back to an individual, but the individual may want compensation."

Mr McGregor's optimism that the National Gallery's collection will remain intact could be misplaced. Nazi loot, whether of gold bars or of artworks, is no longer a national issue but a global one, as the Swiss banks found to their cost after a final settlement of $1.25bn (pounds 780m) with Jewish organisations over Holocaust-era assets.

The spotlight is now on the National Gallery, but back in the summer of 1998 the international art world faced turmoil after 39 nations, led by the United States and including Britain, France and Germany, pledged to identify works of art looted by the Nazis from Holocaust victims, and compensate their heirs. If those nations follow through on their promises, collections could be disbanded and major institutions across the world could find themselves bereft of pieces they believed they legitimately owned.

"This is the last chapter of the Holocaust and both the Government and museums are taking this issue very seriously," says Janice Lopatkin, of the London-based Holocaust Educational Trust. "Art stolen by the Nazis is dispersed all over the world, but if museums are forced to dismantle collections, then so be it."

The owners of these looted works of art were not the only ones to lose heirlooms. The last anyone heard of Marck Kellerman was when he left London for Poland in 1939, some time before the outbreak of war. Mr Kellerman, a Czechoslovak citizen, applied for a visa at the Polish embassy, and left two pieces of jewellery with his agent in London. They were never collected. His tie-pin and bracelet are all that remains of the millions of pounds' worth of assets deposited in British banks by Holocaust victims.

All efforts to trace Mr Kellerman's family, both in the former Czechoslovakia and in Israel, have proved unsuccessful. The British government would be "more than happy" to return the items if an heir were discovered, says Lord Archer of Sandwell, who is responsible for overseeing restitution for one of the most shameful episodes in Britain's post-war history: the post-war confiscation of monies deposited by Jews, mainly from Central and Eastern Europe, in British banks.

Funds deposited by Jews living in countries that came under Nazi rule helped make up the pounds 367m worth of enemy assets that were frozen in Britain under the 1939 Trading With The Enemy Act. All assets handed over to the Custodian of Enemy Property immediately became the property of the British government. But once the war was over, many Holocaust survivors and the heirs of victims who tried to get their money back ran into a wall of obstruction. British civil servants refused to distinguish between assets deposited by Jews and non-Jews from Nazi-controlled countries, or to take into account that Holocaust survivors and heirs would not have the paperwork necessary to reclaim their funds. Some funds were returned to Jewish claimants, but the odds were stacked especially high against those Holocaust survivors who lived behind the Iron Curtain.

Jews, for example from Romania, who had entrusted British banks with their assets during the war, now found thatthey could not reclaim them, because the Romanian government owed Britain money.

As the scandal over the dormant Swiss accounts gathered momentum, the focus soon moved to other Western countries, even those such as Britain which had fought the Nazis. In January 1997, Christoph Meili, a security guard at Union Bank of Switzerland, saved unique historical bank records from destruction by smuggling them out to Jewish groups. Meili's actions made him a hero to Jewish organisations, but his countrymen responded to his actions with a campaign of threats and vilification. In April 1997, the Meilis fled Switzerland for the US, where they sought asylum after a series of death threats against themselves and their children. In August, the US Congress passed special legislation granting the Meili family residency in America.

In April 1998, the British Foreign Office published a report on the treatment of enemy property during the Second World War. A website of more than 25,000 records of those whose property had been confiscated was launched (www.enemy property.gov.uk). The website itself offers an eerie, state- of-the-art link through computer technology to the now-vanished past of Central European Jewry. Many of the 25,000 names are of Jews who died in the Holocaust, or who have long since gone from the addresses at which they are listed. Here is Dr Leo Von Buday-Goldberger, who vanished when he was taken away by Soviet soldiers in 1945. Dr Goldberger had securities worth pounds 344 12s 10d confiscated. And Mr Kalman Kostelitz, of Dorottya Street, Budapest. Mr Kostelitz had pounds 1,006 11s 4d worth of assets seized. Mr Kostelitz returned to Hungary after the war, but failed to reclaim his assets. No matter that he had been in Bergen-Belsen.

As a Jew, Kalman Kostelitz was an enemy of the Hungarian Fascists and their Nazi allies. As a citizen of post-war Communist Hungary, he was deemed an enemy of Britain. As the holder of a foreign bank account in London, he would, if discovered, have been an enemy of the Hungarian Communists. No wonder he never got his money back.

The monies once deposited by Holocaust survivors will never be returned - they no longer exist. None of the original assets is still held by the British government - apart from Marck Kellermann's jewellery - as all have either been liquidated and used to pay British creditors, or returned to their owners. Now though, the heirs of those account holders, such as Kalman Kostelitz and Dr Leo von Buday-Goldberger, can claim compensation. Last December, Peter Mandelson, then secretary of state for trade and industry, detailed the Government's plans to compensate Nazi victims and their heirs whose assets had been confiscated by the British government.

About pounds 25m has been set aside to deal with claims, which will be paid at today's values. That sum is a starting-point; further funds may become available. The scheme should go some way towards closing what, in Mr Mandelson's words, was "not a glorious chapter in our history".

`Hitler's Secret Bankers: How Switzerland Profited From Nazi Genocide' is published by Simon and Schuster