World Jewish Congress lawsuit against Swiss banks
Encyclopedia
The World Jewish Congress lawsuit against Swiss banks was launched to retrieve deposits made by victims of Nazi persecution during and prior to World War II.
(WJC) began negotiations on behalf of various Jewish organizations with Swiss banks and the Swiss government over dormant Jewish World War II bank accounts. Led by Edgar Bronfman
, the heir to the Seagram's
fortune, the WJC entered a class-action in Brooklyn, NY combining several established suits in New York
, California
, and the District of Columbia. The original suits arose from grievances of Holocaust survivors and their heirs against Swiss banks. They alleged improper difficulties in accessing these accounts because of requirements such as death certificates (typically non-existent for Holocaust victims), along with deliberate efforts on the part of some Swiss banks to retain the balances indefinitely. The causes for claims eventually expanded to include the value of art works purported to have been stolen, "damages" to persons denied admission to Switzerland on the strength of refugee applications, and the value or cost of labor purported to have been performed by persons being maintained at Swiss government expense in displaced-person camps during the Holocaust, along with interest on such claims from the time of loss. Plaintiffs included all Holocaust victims, not just Jews.
in which he claimed to possess "recently declassified documents that shed new light" on the Swiss role in the war. He also claimed that "hundreds of millions of dollars" of war-era Jewish assets remained in Swiss banks. At the behest of President Bill Clinton
, Undersecretary of Commerce Stuart Eizenstat testified at these hearings and commissioned a report which accused Switzerland
of being "Nazi Germany's banker." The report relied exclusively on U.S. government archives. It contained no new historical information on Nazi victims' deposits into Swiss banks, and criticized the decisions of U.S. officials who negotiated settlements with Switzerland after the war as being too lenient. Christoph Meili
, a Swiss bank guard, also testified at the hearings, claiming to have witnessed illegal shredding of wartime records at Union Bank of Switzerland (SBG/UBS) in January 1997. He removed wartime records of transactions with German companies and gave them to the Swiss-Israel
i Cultural Association. A warrant was issued for his arrest for violation of banking secrecy laws, and he fled to the U.S. UBS
claimed the records were not relevant to dormant Jewish assets.
, and prolonged the war. Swiss public opinion was overwhelmingly against any settlement. The banks' position was that the settlement demands were grossly out of proportion to the value of unclaimed assets, and the Swiss government's position was that negotiations relating to laundering of assets looted by the Nazis were settled during previous agreements with the Allied
governments and could not be reopened, because no new historical information had come to light. Audits of dormant accounts ordered by the Swiss government in 1962 and 1995 showed a total of $32 million (1995 dollars) in unclaimed war-era accounts. The WJC rejected initial offers from the banks and demanded payment of $1.8 billion to settle the lawsuit. During the negotiations, the Swiss banks agreed to pay for another audit of wartime accounts headed by ex Federal Reserve chairman Paul Volcker
. This audit committee consisted of three representatives from the banks, and three representatives from the Jewish groups. NY City Comptroller Alan G. Hevesi played a crucial role in the negotiations, convening a meeting in December 1997 with Swiss bank executives and Democratic Party
state treasurers to discuss sanctions such as divesting state funds from Swiss banks and withholding licenses. Hevesi also withheld an operating license for the merger of Union Bank of Switzerland with Swiss Bank Corporation, who together made $4 billion in profits per year in New York City. Author Angelo Codevilla (see Reference 7) argues that this was essentially blackmail of the banks by state banking officials, with backing of the US administration, to force a settlement between the banks and the WJC. Negotiations involving the banks, the WJC, and Undersecretary Eizenstat ultimately resulted in a settlement of $1.25 billion in August 1998. The Swiss government refused to take part in the settlement, and started a CHF
300 million Special Fund for Holocaust Victims with the Swiss National Bank
. It also commissioned an independent panel of international scholars known as the Bergier Commission
to study the relationship between Switzerland and the Nazi regime.
300 million and gave its final report in December 1999. It determined that the 1999 book value of all dormant accounts possibly belonging to victims of Nazi persecution that were unclaimed, closed by the Nazis, or closed by unknown persons was CHF 95 million. Of this total, CHF 24 million were "probably" related to victims of Nazi persecution. In addition the commission found "no proof of systematic destruction of records of victim accounts, organized discrimination against the accounts of victims of Nazi persecution, or concerted efforts to divert the funds of victims of Nazi persecution to improper purposes." It also "confirmed evidence of questionable and deceitful actions by some individual banks in the handling of accounts of victims". The Volcker commission recommended that for settlement purposes, the book values should be modified back to 1945 values (by adding back fees paid and subtracting interest) and then be multiplied by 10 to reflect average long-term investment rates in Switzerland. Under these rules, a total of $379.4 million was awarded to account holders or their heirs. In cases where the claimant could be verified but the size of the account could not, a $125,000 award was given. The commission recommended that the remaining balance of the settlement should be given to other victims of Nazi persecution. The Bergier Commission reached similar conclusions about the banks' conduct in its final report, and found that trade with Nazi Germany did not significantly prolong the war
.
announced settlement of this case with his approval of a plan featuring the payment of $1.25 billion into funds controlled by the plaintiff organizations. He appointed Judah Gribetz Special Master to administer the plan, which is sometimes called the Gribetz Plan after its chief author.
By October 2009, some $490 million had been paid out to individual claimants, and acceptance of new claims had been discontinued for some time. This amount includes not only amounts deposited into Swiss banks by purported victims, but compensation for labor purportedly performed in displaced-persons camps, the value of purported looted assets, compensation for persons purported to have sought admission to Switzerland as refugees and to have been denied admission, both Jewish and non-Jewish, plus interest calculated on the claimed losses from the time of loss to the time of payment.
Negotiations
Starting in 1995, the World Jewish CongressWorld Jewish Congress
The World Jewish Congress was founded in Geneva, Switzerland, in August 1936 as an international federation of Jewish communities and organizations...
(WJC) began negotiations on behalf of various Jewish organizations with Swiss banks and the Swiss government over dormant Jewish World War II bank accounts. Led by Edgar Bronfman
Edgar Bronfman, Sr.
Edgar Miles Bronfman is a Canadian businessman. He is a member of the Bronfman family.-Biography:Bronfman is the son of Samuel Bronfman, the founder of Distillers Corporation Limited, who purchased Seagram's in 1928...
, the heir to the Seagram's
Seagram
The Seagram Company Ltd. was a large corporation headquartered in Montreal, Quebec, Canada that was the largest distiller of alcoholic beverages in the world. Toward the end of its independent existence it also controlled various entertainment and other business ventures...
fortune, the WJC entered a class-action in Brooklyn, NY combining several established suits in New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
, and the District of Columbia. The original suits arose from grievances of Holocaust survivors and their heirs against Swiss banks. They alleged improper difficulties in accessing these accounts because of requirements such as death certificates (typically non-existent for Holocaust victims), along with deliberate efforts on the part of some Swiss banks to retain the balances indefinitely. The causes for claims eventually expanded to include the value of art works purported to have been stolen, "damages" to persons denied admission to Switzerland on the strength of refugee applications, and the value or cost of labor purported to have been performed by persons being maintained at Swiss government expense in displaced-person camps during the Holocaust, along with interest on such claims from the time of loss. Plaintiffs included all Holocaust victims, not just Jews.
Hearings
The WJC was able to marshal the unprecedented support of U.S. government officials including senator Alfonse D'Amato R-NY, who held hearings of the Senate Banking CommitteeUnited States Senate Committee on Banking, Housing, and Urban Affairs
The United States Senate Committee on Banking, Housing, and Urban Affairs has jurisdiction over matters related to: banks and banking, price controls, deposit insurance, export promotion and controls, federal monetary policy, financial aid to commerce and industry, issuance of redemption of notes,...
in which he claimed to possess "recently declassified documents that shed new light" on the Swiss role in the war. He also claimed that "hundreds of millions of dollars" of war-era Jewish assets remained in Swiss banks. At the behest of President Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
, Undersecretary of Commerce Stuart Eizenstat testified at these hearings and commissioned a report which accused Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
of being "Nazi Germany's banker." The report relied exclusively on U.S. government archives. It contained no new historical information on Nazi victims' deposits into Swiss banks, and criticized the decisions of U.S. officials who negotiated settlements with Switzerland after the war as being too lenient. Christoph Meili
Christoph Meili
Christoph Meili is a Swiss whistleblower and Swiss-American security professional.In early 1997, Meili worked as a night guard at the Union Bank of Switzerland in Zurich, Switzerland...
, a Swiss bank guard, also testified at the hearings, claiming to have witnessed illegal shredding of wartime records at Union Bank of Switzerland (SBG/UBS) in January 1997. He removed wartime records of transactions with German companies and gave them to the Swiss-Israel
Israel
The State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...
i Cultural Association. A warrant was issued for his arrest for violation of banking secrecy laws, and he fled to the U.S. UBS
UBS AG
UBS AG is a Swiss global financial services company headquartered in Basel and Zürich, Switzerland, which provides investment banking, asset management, and wealth management services for private, corporate, and institutional clients worldwide, as well as retail clients in Switzerland...
claimed the records were not relevant to dormant Jewish assets.
US-Swiss tension
The hearings led to international friction between the US and Switzerland, with boycotts of Swiss companies and products threatened in several US states. In Switzerland, the most controversial contention of the Eizenstat report was that Switzerland assisted the Nazis beyond what was necessary for a neutral countryNeutral country
A neutral power in a particular war is a sovereign state which declares itself to be neutral towards the belligerents. A non-belligerent state does not need to be neutral. The rights and duties of a neutral power are defined in Sections 5 and 13 of the Hague Convention of 1907...
, and prolonged the war. Swiss public opinion was overwhelmingly against any settlement. The banks' position was that the settlement demands were grossly out of proportion to the value of unclaimed assets, and the Swiss government's position was that negotiations relating to laundering of assets looted by the Nazis were settled during previous agreements with the Allied
Allies of World War II
The Allies of World War II were the countries that opposed the Axis powers during the Second World War . Former Axis states contributing to the Allied victory are not considered Allied states...
governments and could not be reopened, because no new historical information had come to light. Audits of dormant accounts ordered by the Swiss government in 1962 and 1995 showed a total of $32 million (1995 dollars) in unclaimed war-era accounts. The WJC rejected initial offers from the banks and demanded payment of $1.8 billion to settle the lawsuit. During the negotiations, the Swiss banks agreed to pay for another audit of wartime accounts headed by ex Federal Reserve chairman Paul Volcker
Paul Volcker
Paul Adolph Volcker, Jr. is an American economist. He was the Chairman of the Federal Reserve under United States Presidents Jimmy Carter and Ronald Reagan from August 1979 to August 1987. He is widely credited with ending the high levels of inflation seen in the United States in the 1970s and...
. This audit committee consisted of three representatives from the banks, and three representatives from the Jewish groups. NY City Comptroller Alan G. Hevesi played a crucial role in the negotiations, convening a meeting in December 1997 with Swiss bank executives and Democratic Party
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...
state treasurers to discuss sanctions such as divesting state funds from Swiss banks and withholding licenses. Hevesi also withheld an operating license for the merger of Union Bank of Switzerland with Swiss Bank Corporation, who together made $4 billion in profits per year in New York City. Author Angelo Codevilla (see Reference 7) argues that this was essentially blackmail of the banks by state banking officials, with backing of the US administration, to force a settlement between the banks and the WJC. Negotiations involving the banks, the WJC, and Undersecretary Eizenstat ultimately resulted in a settlement of $1.25 billion in August 1998. The Swiss government refused to take part in the settlement, and started a CHF
Swiss franc
The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there...
300 million Special Fund for Holocaust Victims with the Swiss National Bank
Swiss National Bank
The Swiss National Bank is the central bank of Switzerland. It is responsible for Swiss monetary policy and for issuing Swiss franc banknotes.The names of the institution in the four official languages of the country are: ; ; ; ....
. It also commissioned an independent panel of international scholars known as the Bergier Commission
Bergier commission
The Bergier commission in Bern was formed by the Swiss government on 12 December 1996. It is also known as the ICE ....
to study the relationship between Switzerland and the Nazi regime.
Volcker and Bergier commissions
The Volcker commission audit cost CHFSwiss franc
The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there...
300 million and gave its final report in December 1999. It determined that the 1999 book value of all dormant accounts possibly belonging to victims of Nazi persecution that were unclaimed, closed by the Nazis, or closed by unknown persons was CHF 95 million. Of this total, CHF 24 million were "probably" related to victims of Nazi persecution. In addition the commission found "no proof of systematic destruction of records of victim accounts, organized discrimination against the accounts of victims of Nazi persecution, or concerted efforts to divert the funds of victims of Nazi persecution to improper purposes." It also "confirmed evidence of questionable and deceitful actions by some individual banks in the handling of accounts of victims". The Volcker commission recommended that for settlement purposes, the book values should be modified back to 1945 values (by adding back fees paid and subtracting interest) and then be multiplied by 10 to reflect average long-term investment rates in Switzerland. Under these rules, a total of $379.4 million was awarded to account holders or their heirs. In cases where the claimant could be verified but the size of the account could not, a $125,000 award was given. The commission recommended that the remaining balance of the settlement should be given to other victims of Nazi persecution. The Bergier Commission reached similar conclusions about the banks' conduct in its final report, and found that trade with Nazi Germany did not significantly prolong the war
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
.
Settlement
On November 22, 2000, Judge Edward R. KormanEdward R. Korman
Edward R. Korman is a United States district judge serving on the United States District Court for the Eastern District of New York. He was nominated by President Ronald Reagan on October 2, 1985, confirmed by the United States Senate on November 1, 1985, commissioned on November 4, 1985, and...
announced settlement of this case with his approval of a plan featuring the payment of $1.25 billion into funds controlled by the plaintiff organizations. He appointed Judah Gribetz Special Master to administer the plan, which is sometimes called the Gribetz Plan after its chief author.
By October 2009, some $490 million had been paid out to individual claimants, and acceptance of new claims had been discontinued for some time. This amount includes not only amounts deposited into Swiss banks by purported victims, but compensation for labor purportedly performed in displaced-persons camps, the value of purported looted assets, compensation for persons purported to have sought admission to Switzerland as refugees and to have been denied admission, both Jewish and non-Jewish, plus interest calculated on the claimed losses from the time of loss to the time of payment.
See also
- Bank secrecyBank secrecyBank secrecy is a legal principle in some jurisdictions under which banks are not allowed to provide to authorities personal and account information about their customers unless certain conditions apply...
- Banking in SwitzerlandBanking in SwitzerlandAll banks in Switzerland are regulated by Swiss Financial Market Supervisory Authority , which derives its authority from a series of federal statutes...
- Alperin v. Vatican Bank
- Credit SuisseCredit SuisseThe Credit Suisse Group AG is a Swiss multinational financial services company headquartered in Zurich, with more than 250 branches in Switzerland and operations in more than 50 countries.-History:...
(Switzerland's second largest bank) - Economy of SwitzerlandEconomy of SwitzerlandThe economy of Switzerland is one of the world's most stable economies. Its policy of long-term monetary security and political stability has made Switzerland a safe haven for investors, creating an economy that is increasingly dependent on a steady tide of foreign investment...
- Gold as an investmentGold as an investmentOf all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises...
- List of banks in Switzerland
- List of class action lawsuits
- Numbered bank accountNumbered bank accountA numbered bank account is a type of bank account where the name of the account holder is kept secret, and he identifies himself to the bank by means of a code word known only by the account holder and a restricted number of bank employees, thus providing the holder with a degree of bank privacy in...
- Private bankPrivate bankPrivate banks are banks that are not incorporated. A private bank is owned by either an individual or a general partner with limited partner...
- Safe deposit boxSafe deposit boxA safe deposit box or wrongly referred to as a safety deposit box is an individually-secured container, usually held within a larger safe or bank vault. Safe deposit boxes are generally located in banks, post offices or other institutions...
- Swiss National BankSwiss National BankThe Swiss National Bank is the central bank of Switzerland. It is responsible for Swiss monetary policy and for issuing Swiss franc banknotes.The names of the institution in the four official languages of the country are: ; ; ; ....
(Switzerland's central bank) - Switzerland during the World WarsSwitzerland during the World WarsDuring both World War I and World War II, Switzerland managed to keep a stance of armed neutrality, and was not involved militarily. However, precisely because of its neutral status, Switzerland was of considerable interest to all parties involved, as the scene for diplomacy, espionage, commerce,...
- UBS AGUBS AGUBS AG is a Swiss global financial services company headquartered in Basel and Zürich, Switzerland, which provides investment banking, asset management, and wealth management services for private, corporate, and institutional clients worldwide, as well as retail clients in Switzerland...
(Switzerland's largest bank)