LOS ANGELES — Establishment of a $4.2 million humanitarian fund to aid needy Holocaust survivors in California has been delayed by bureaucratic snafus for almost a year, but there are strong hopes that the fund will finally be operative by the end of the year.

An agreement by three Dutch insurance companies to pay out the $4.2 million was triumphantly announced by then-California Insurance Commissioner Chuck Quackenbush on Nov. 30, but as of now, the money is stilling sitting in Holland.

The reason, California officials and the insurance companies agree, is that Quackenbush never asked for the money or set up a mechanism for administering it.

Five months after Quackenbush's November announcement, he became enmeshed in a legislative inquiry on charges that he allowed California insurers to avoid billions of dollars in fines stemming from mishandled earthquake damage claims, in return for much smaller donations to nonprofit funds set up by Quackenbush.

Because of the investigation, Quackenbush said last May, he held back from setting up a fund to receive and administer the Dutch money. He resigned under a cloud shortly after the hearings ended.

However, state auditor Elaine Howle said in a report last week and in an interview Monday that there is no explanation why no effort was made to collect the money during the five months elapsing between the agreement with the Dutch companies and the start of the legislative hearings.

Howle said she has no answer to that question and neither has Steven Green, chief counsel and deputy insurance commissioner, who came on board after Quackenbush's resignation.

However, Green said, he is working with state Attorney General Bill Lockyer to set up a foundation, outside the state Insurance Department, that will meet the legal requirements for administering and distributing the Dutch money.

The fund's board of directors "will have input" from the California Holocaust Insurance Settlement Alliance, consisting of 33 Jewish organizations and individuals and set up by Quackenbush. Its chairman is Jona Goldrich, who was not available for comment.

However, Richard Mahon, spokesman for the alliance, said, "Holocaust survivors will have a voice in the work of the foundation and survivors will be the beneficiaries of the money." He estimated that the foundation will be functioning in 30 to 60 days.

Once the foundation is established, the three Dutch companies — ING Financial Services, Fortis Inc., and Aegon Insurance Group — will transmit the $4.2 million, according to their Washington spokesman Frank Mankiewicz.

"Our concern is that the money will be administered by a legitimate California foundation, with a certain transparency and an impeccable board of directors," he said.