Swiss banks and Nazi gold
Jul 2nd 1998 | from the print edition
AS THEIR lives draw to a close, Edward Fagan’s 30,000 clients are trying to recover property they lost in the cataclysm of the second world war. “I lose five to ten clients a day,” says Mr Fagan, who thinks European banks and insurers owe up to $54 billion to survivors of the Nazi Holocaust, though they or their families are unlikely to get more than a fraction of that.
On July 1st another clock started ticking: American state and local officials lifted a moratorium on sanctions against Switzerland’s two biggest banks after negotiations on a settlement with Holocaust victims broke down. The longer the dispute drags on, the tougher the sanctions are likely to get.
The decision boosts Mr Fagan and others demanding full restitution for the Nazis’ chief victims. Whether it makes a settlement more likely is less clear. The Clinton administration was desperate to avoid turning a dispute about history into an international trade row by penalising the banks. The Swiss government may file a complaint with the World Trade Organisation. Most ordinary Swiss, who point out that their country has already set up one fund for Holocaust victims and is proposing another, think the lawyers are more interested in cash than in justice.
The gap between what the banks have offered and what the victims’ lawyers would accept is not vast, but the gulf in perceptions is. The banks reckon their offer—$600m plus whatever a special team of accountants uncovers in assets that were unclaimed or wrongly paid out—is at least ten times what their true liability would be. Recent reports by a Swiss historical commission and the American State Department suggest that most of the gold looted by the Nazis was handled by Switzerland’s central bank, which became the target of a new lawsuit this week, not by commercial banks. And most of that gold was stolen from central banks in occupied countries, not from individuals. Banks have threatened to withdraw their offer if sanctions are imposed. They may sue American states or cities who boycott them.
The victims’ lawyers, who have no illusions about collecting tens of billions of dollars and would probably accept $1.5 billion, look at wartime money flows into Switzerland and conclude that the banks received much bigger sums from Jews or their persecutors. Gold was only part of it. One lawyer cites a 1945 document in which a Swiss official states that the banks held $40m-50m in dormant accounts, worth $400m-500m today. That is ten times what the banks have so far uncovered in unclaimed accounts. The banks are said to have handled even bigger sums in looted assets.
A deal, which may yet be struck as sanctions bite, would not end the saga of lost Jewish wealth. The World Jewish Congress estimates that $9 billion-14 billion, worth ten times that much now, was stolen from Jews. Much of that never reached Switzerland. Mr Fagan recently sued Germany’s two biggest banks, which, he says, acted as receivers of stolen Jewish property. Life-insurance policies were “the poor man’s Swiss bank account”, says a Jewish activist; 16 European insurers are targets of another lawsuit.
Meanwhile governments, even of countries that did not belong to Germany’s wartime axis, are beginning to make amends. Last week Norway’s government approved a fund of 450m kroner ($58.6m) for Holocaust survivors and their families, the first government of a Nazi-occupied country to offer compensation. Britain recently agreed to let 25,000 people, mostly Jews, reclaim deposits in British banks that were confiscated because they were citizens of enemy countries. A score of other countries have started investigations, established funds or returned assets, according to the Holocaust Education Trust in London. Many of these fall short of delivering full restitution and unvarnished truth. It has yet to be proven that the battling of New York lawyers will deliver more to wartime victims.
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