Payout for painting looted by Nazis

"Portrait of Wally'' by Egon Schiele

"Portrait of Wally'' by Egon Schiele

An Austrian museum has agreed to pay more than £12 million for a painting stolen from its Jewish owner by the Nazis.

The dispute over the expressionist painting by Egon Schiele was due to go to trial later in July, but has now been settled outside of court.

The family of its Viennese owner, Lea Bondi Jaray, described the large payout as proportional to the artwork's true value.

The legal battle over “Portrait of Wally” began in 1999 when the painting went on display in New York, on loan from Vienna’s Leopold Museum.

Federal prosecutors seized it amidst accusations that it has been stolen during the Holocaust.

Ms Jaray, who died in 1969, had always insisted the painting was hers and her surviving family maintained the claim.

The financial settlement came with an acknowledgment that the painting had been stolen by a Nazi agent.

It will be displayed in New York’s Museum of Jewish Heritage before being sent back to Austria.

Critics have long claimed the Austrian museum, founded by renowned art collector Rudolph Leopold, contains several works looted from Jewish owners during the Holocaust.

Mr Leopold, who died in June, always denied knowingly acquiring stolen artwork.

The Leopold Museum is home to the largest Egon Schiele collection in the world.

The federal prosecutor for Manhattan, Preet Bharara, who arranged the settlement, said it "marks another small step toward justice for victims of property crimes during WWII."

This is the latest in a series of several cases of artwork looted by the Nazis being returned to Jewish families or compensation paid out for it.

In February 2010 an original painting by Matisse taken from German Jews was returned to its owner's home city.

Last updated: 1:15pm, May 5 2011