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Fifty years after the end of World War II, the ghosts of the Holocaust still stalk the corridors of Swiss banks surprising banks too. A year ago last June, Hans Baer, then chairman of Switzerland’s best-known Jewish-owned bank, Bank Julius Baer, read a Wall Street Journal article alleging his bank had mistreated heirs of victims of Nazi persecution. The article was in part accurate. After receiving a request in 1987 from the daughters of former client Moses Blum for a search for missing funds they believed to be held by the bank, the bank had replied “icily” the newspaper claimed that there were no records of such funds within the past 10 years. Under Swiss law, the bank’s letter was quoted as saying, the bank was not obliged to keep records dating any further back. (The law in fact applies only to records of accounts that have been closed.) The bank had reportedly charged the Blum daughters Sfr100 ($82) for this information. Crucially, the story (repeated a week later in an Israeli magazine) reported that the daughters believed Blum had deposited money in the bank before being interned in the Dachau concentration camp in 1938. This turned out to be untrue. After reading the Wall Street Journal account, Baer ordered an inquiry. In spite of the bank’s previous claim, records were discovered Swiss banks frequently wheel out the 10-year rule when records of previously held assets are being sought, but in fact they often hold onto records of closed accounts much longer. These showed Blum had indeed opened an account, but not until the mid-1950s. He died in 1957 and the records indicated that in the early 1970s his widow closed the account and disposed of a relatively small balance. The last correspondence between the bank and Blum’s daughters was in 1988, says a bank spokesman, and the bank’s impression was that it had dealt purely with inheritance, not with a Holocaust claim. Bank Julius Baer may well have other unclaimed deposits made by foreigners who subsequently died of natural causes or while imprisoned, or were executed or were too embarrassed to claim them but it’s ironic that it should have been picked out in the press for failing to return Jewish money. Because of its Jewish origins, the bank itself had suffered discrimination, being effectively excluded from dealings with official Germany during World War II. Baer, who says he didn’t know of the original request from the Blum daughters, attributes the bank’s initial bungling to bureaucratic incompetence. And the fact is it is often extremely difficult to trace dormant accounts and assess claimants. But this wasn’t the whole story. The Wall Street Journal article appeared at the height of 50th anniversary celebrations of the end of World War II and in the midst of a concerted campaign by the World Jewish Congress (WJC) to put the ghosts of the Holocaust to rest. That included trying to force Swiss banks to open their books so that heirs of Holocaust victims could discover, once and for all, whether they were still holding orphan Jewish assets deposited by family members before the end of the war or assets looted by the Nazis. It is still not clear why Bank Julius Baer, among 400 or so banks in Switzerland alone, was the focus of two major articles at the time. “It was a well-orchestrated attack by the World Jewish Congress,” says Baer. “It got me mad because it was against our bank.” Elan Steinberg, executive director of the WJC, says the organization had nothing to do with the articles. “The point is not an individual case which may or may not be justified. The issue is the process, which must be transparent and open so that Holocaust survivors and others can see that justice, as best as it can be achieved, can be achieved.” Like most Swiss banks, Bank Julius Baer has in the past willingly accepted deposits from foreigners without asking too many questions. This approach to banking secrecy has led to many international allegations that Swiss banks have been helping citizens of other countries avoid tax, break exchange controls and hide the proceeds of criminal activities. But with globalization and international treaties on money-laundering, Swiss banks have adopted a more discriminating approach to accepting deposits from banks. As a Jewish bank, Julius Baer was quite willing before and during World War II to accept Jewish money from Germany and other occupied countries, even though it knew its customers were breaking German regulations. These depositors were taking substantial risks and no-one today would criticize the bank for helping them. Apart from that, while many Swiss banks were heavily and profitably engaged in financial transactions with official Germany throughout the period, Julius Baer was effectively ring-fenced by the Germans because its owners were Jewish to the extent of having its weekly bulletin on politics and economics banned from circulation in Germany from 1936 onwards. In charge of a relatively small private bank in 1945 (with only a few employees and a balance sheet of Sfr13 million), the partners, Baer told a congressional committee in the US last year, “personally knew the bank’s clients and their families, and sympathized with their fate, which is demonstrated in many personal correspondences of that era”. The WJC, set up in Geneva before World War II and now based in New York, has lobbied for decades for banks in many countries to search for funds of Holocaust victims, and to identify and return assets looted by the Nazis from Jewish citizens. It has also campaigned for public admissions of complicity with the Nazi regime from supposedly neutral countries like Switzerland. The 50th anniversary celebrations provided a unique opportunity to further these causes. Safer havens than Switzerland The collapse of communism led the WJC to set up a separate body, the World Jewish Restitution Organization, to identify Jewish assets confiscated by communist governments after World War II, and either return them to their rightful owners or donate them to Jewish charities. With the opening of communist archives in eastern Europe and the availability of previously classified post-war Allied documents in Washington, the trail frequently led to Switzerland, Steinberg says. But Norway, which was occupied by the Nazis, also came under the searchlight, as did Sweden. Some experts believe Sweden was a far more important haven for Jewish money before and during the war than Switzerland, and that it should therefore receive more attention than Switzerland when it comes to locating missing Jewish assets. This is because northern European Jews were, as a rule, geographically closer to Sweden. Furthermore, Swiss banks were in some disrepute, having suffered a wave of collapses in the 1930s, and Switzerland looked more vulnerable to Nazi invasion. But it is the insular Swiss who have faced most criticism over the issue. That Bank Julius Baer was singled out may be coincidental these days it is more closely associated with the “gnomes of Zurich” than with its Jewish origins. But it is a different matter for the Swiss banking community in general. After cooperating closely with the Nazis during the war, Swiss banks closed ranks post-war, resisting Allied in particular US efforts to locate Nazi assets and return them to their rightful owners. “If the Swedes were stubborn, the Swiss were the cube of stubbornness,” Dean Acheson, then an assistant US secretary of state, later recounted. The result is that Swiss banks are still bearing the brunt of resentment, having failed to satisfy the world Jewish community that they are not sitting on millions some say billions of unclaimed Jewish assets despite a legally mandated search in 1962 which supposedly uncovered all remaining assets. The issue is so emotive it is not surprising facts get twisted and that unlikely targets, such as Bank Julius Baer, are picked out. “They [the bankers] react out of their heads and their law, and the others react out of their guts,” says Rolf Bloch, head of the Swiss-Jewish Association, the Swiss affiliate of the WJC. “There are two worlds. They are acting and reacting out of their separate worlds. This is one of the problems which is creating mistrust on the one side and very formal behaviour on the other.” Finally, though, as Bloch points out, “the banks are prisoners of banking secrecy”. Baer knows this only too well. Around the time the newspaper article appeared, he had been hearing rumblings from Swiss diplomats abroad. “Somebody had to invent something,” he says. “We had to get moving and do something. This warfare with the World Jewish Congress was certainly getting ridiculous.” Baer began work with members of the Swiss Bankers Association (SBA) to find a solution, in September 1995. The result was after a somewhat stormy passage an agreement on May 2 between the WJRO, the WJC and the SBA that an independent auditor should be allowed “unfettered access to all relevant files in banking institutions regarding dormant accounts and other assets and financial instruments deposited before, during and immediately after the Second World War”. The auditor would be appointed by a committee of “eminent persons” representing both sides and an independent chairman who is expected to be Paul Volcker, former chairman of the US Federal Reserve. Baer is one of the seven signatories to the agreement. Among the others are Edgar Bronfman, chairman of the WJRO and the WJC, and Georg Krayer, head of the SBA. These negotiations were, however, paralleled by more generalized attempts to solve the problem of dormant assets. They sprang from an initiative by the Swiss parliament in 1994 to clean up the image of Swiss banking abroad. But the SBA’s response to this initiative was destined to lead to conflict with the Jewish organization, which felt that the SBA might be attempting to pre-empt its separate negotiations. The SBA was worried about the parliamentary initiative because the legislators were calling for the establishment of an external registry with the power to require the banks to report on all accounts that had been inactive over a specified period. Unobtrusive as this might sound to an outsider, Swiss bankers regarded it as tantamount to a violation of banking secrecy even within Swiss borders government interference seemed to threaten their well-protected world. The SBA immediately launched its own initiative, designed to keep such matters in its own hands, announcing in January 1995 that as a result of the parliamentary proposals it had asked a committee to review the issue and to propose solutions. In September the association announced new guidelines, which included a requirement that banks should identify any accounts that had been inactive for 10 years or more. Instead of setting up an external registry, the SBA proposed the creation of a central contact office attached to the banking ombudsman in Zurich (whose office is supported by the SBA). This was reckoned by the SBA to overcome worries about breaches of banking secrecy because, as SBA secretary Christoph Winzeler put it, the “contact office is under banking secrecy obligations from both sides (meaning the client and the bank)”. The central contact office would pass on to the banks the names of “legitimate and identified claimants” of dormant assets. The banks would be required to deal with these requests. It was the role of the quiet, unassuming Bloch, who is a director of Bank Leumi (Schweiz) and runs a chocolate factory near Berne inherited from his father, to tie the separate but related strands together. In the light of the new SBA approach to dormant assets, he asked it to make a special effort to look for unclaimed Jewish assets. In particular, he was concerned about relatives of victims of Nazi persecution resident in eastern Europe, who before the collapse of the communist bloc were unable to make claims. In September 1995, when the SBA initiatives were announced, formal negotiations with the WJC also began. The WJC wanted an independent external review of the process of checking for dormant assets in which the Swiss banking establishment was now engaged. In addition, though, it wanted searches to be made for assets that derived from Nazi looting and in this case not just dormant assets (inactive for more than 10 years). The WJC also wanted the process widened to include insurance companies and other non-banking financial institutions, and this point was eventually tacked on to the May 2 agreement. As part of the process, the two sides agreed to maintain contact and, claims the WJC, to agree the text of any public statements on Jewish assets. The question remained: how much was left? Through a post-war entity called the Swiss Clearing Agency, a total of Sfr697 million in German assets had been identified by 1952 and of this Sfr16,538,612 was, according to the SBA, identified as belonging to people persecuted by the Nazi regime and was returned to appropriate beneficiaries. This did not include Swiss assets of Sfr4.6 billion frozen in the US during the war. According to the SBA the proportion of that which belongs to victims of Nazi persecution can no longer be established. In 1962, under pressure from the World War II Allies, the Swiss passed legislation requiring banks to identify unclaimed funds held by them for foreigners “persecuted for racial, religious or political reasons”. But the law was flawed, not least because there was no outside supervision and because some names of account-holders were not readily identifiable as Jewish. And although the law did not exclude the identification of eastern European claims, the banks apparently felt that this would risk the funds passing to communist governments rather than the beneficial owners. After this legislation was passed, the Swiss government received some 7,000 responses to an appeal for victims’ relatives to lay claims if they believed they had family money in Swiss banks. However, only 961 accounts were identified, with total deposits of Sfr9.5 million. Three-quarters of that was returned to its rightful owners, and the rest to a Swiss-Israeli association and a refugee organization. Even the SBA concedes that this sum “seems paltry” by today’s standards, but it argues that it was in line with the then estimates of the Swiss Jewish Society which, in 1947, had spoken of unclaimed assets “worth only a few million francs”. Furthermore, it says the banks adhered to the conditions set out in the decree “diligently” and with “due care”. The SBA says one of the large banks even employed two rabbis to scrutinize all accounts and deposits. The Swiss banks considered the matter closed after the 1962 exercise. But because there had been no independent confirmation of the bank searches, the WJC felt there was still room for doubt about their completeness and accuracy. Bad feelings were allowed to fester for another 30 years. “The handling of these cases has been wrong,” says Bloch. “They [the banks] handled it in a very technical way. They gave it to the lawyers to handle. It was very correct but it was very remote and cool. There was no empathy. People felt misunderstood, that they weren’t being listened to.” Outside assistance Although there has been progress, it’s not clear that the Swiss banks have learned from their earlier diplomatic errors. For example, even before negotiations with the WJC began, the SBA, pursuing the initiative begun in January 1995, conducted its own preliminary survey of 20 of the largest Swiss banks, showing scant regard for outside approval of the way it was doing this. The very month that the SBA began talks with the WJC, it published the results of its survey. According to this, there were 440 foreigners’ accounts opened before 1945 that had been dormant at least 10 years. Their total value was Sfr35 million, Sfr9 million of which originated in Germany and eastern Europe. With the talks with the WJC still under way, a more thorough survey once again conducted unilaterally by the SBA was carried out. This involved contacting 400 financial institutions in Switzerland and Liechtenstein. This February, the SBA announced final figures on the basis of this second survey. There were, it said, 36 banks which had deposits dating from before the end of the war and these totalled Sfr38.7 million. To the WJC this looked like pre-emption of investigations carried out according to mutually agreed procedures under negotiation between the WJC and the SBA but yet to be settled. “The [February] press conference was in complete breach of our agreement with them [the SBA],” says Steinberg. “I heard through the BBC that they were holding a press conference. We warned them that if they did, we would reject their findings.” And although the WJC refused to accept Sfr38.7 million as a final figure, in itself it proved that there was still money that had not been returned to its rightful owners. “It shows that they have not returned all the money in dormant accounts,” says Steinberg. The refusal of the SBA to pay heed to Steinberg’s warnings the SBA’s Winzeler says the SBA had “domestic” considerations to deal with as well led the WJC to seek influential help outside Switzerland. It contacted New York Republican senator Alfonse D’Amato, chairman of the Senate banking committee, whose local constituency in Long Island has a large Jewish population, and he in turn organized Senate hearings. Baer of Bank Julius Baer testified in Washington in April, reiterating the results of the SBA survey and reporting the progress of the banking ombudsman who had been collecting names since January and had hired two extra officials to speed the search. Baer encouraged prospective claimants to write or fax the ombudsman. He downplayed the likelihood of there being vast undiscovered amounts in Switzerland, deposited by Holocaust victims. Even before the war started, he pointed out, Switzerland had been regarded as unstable, nearly surrounded by fascist states. Baer told the senate committee: “Between 1938 and 1940, in response to fears concerning the safety of Switzerland, an uninterrupted flow of capital fled Switzerland to the safest haven, the United States. Indeed, not only did clients have their assets sent here, the Swiss banks themselves transferred much of their own assets to the United States.” By then the WJC had reason to believe it was making progress in pressing for a supervised approach to the investigation of dormant assets. In May, Swiss president Kasper Villiger publicly admitted that his country bore “a considerable burden of guilt” for its treatment of Jews during the Nazi period. And agreement was finally reached between the SBA and the WJC on the establishment of a special committee and an independent auditor. The ombudsman, Hanspeter Hani, an energetic lawyer, has now received approximately 1,600 requests for help, about 80% of which are from Jewish families. Switzerland being Switzerland, this doesn’t come cheap: applicants must pay a fee of Sfr300 with their letters, which may at least discourage dishonest opportunists. Hani is going about the business with Swiss efficiency, but also sympathetically. He has accepted two-thirds of the applications as being suitable at face value for further investigation; the rest are being followed up with further questions. With each application he lists all the names the applicant considers might be on the account and has not rejected applications for lack of information. “What I have to avoid is rejecting a request that could be solid because the applicant doesn’t know enough,” he says. The list is in two parts: 50 pages involve accounts opened before the end of the war; the rest accounts opened subsequently. At the end of May it was distributed to 400 banks. Since the banks have now theoretically earmarked all dormant funds, they should each have lists they can check against Hani’s. Typically, for security reasons, Swiss banks do not keep centralized records, but some have centralized lists of dormant accounts. Those banks that don’t are expected to circulate Hani’s list to all their branches. If this seems a duplication of effort, it is the price of the highly secretive Swiss banking system. There are major imponderables for the Jewish community. There is the problem that third parties were often used to deposit the money because of the principals’ dangerous position. Family names may therefore not tally with names on bank files. This was of course as true in 1962 as it is now, but there remains the possibility that the committee may find a solution. The other imponderable is funds looted by the Nazis. “This is where, in the minds of people who speak of millions, it may come from,” says Bloch. “They [the Swiss banks] can’t find this because most of the Nazi accounts have been moved to other places Argentina and Spain, for example.” But the WJC hopes the commission will come up with a more satisfactory answer. Politics and, no doubt, a few cheats aside, it is clear that, half century after the war, the relatives of Holocaust victims are still trying to find traces of whatever they think may remain of their family wealth be it in the form of bank deposits, insurance policies, gold, art or real estate. The letters to Hani’s office in Zurich come from all over the world and recount the most tragic experiences. “I wish to verify an account … of my family who did not survive their stay in Auschwitz,” reads one. “My complete family, father, mother, two sisters, one brother, died in a concentration camp. At 16 I was left behind without my family,” recounts another. A third says: “I believe that my father had deposited [money in a Swiss bank account]. I guess it could have been in the name of my father, grandfather, my mother, my sister…” Says Hani: “I read letters that say all of my family had disappeared. They are not so easy to read.” Eventually an independent auditor will be appointed by the committee to ensure that banks and other financial institutions have conducted proper searches. “They [the banks] will not come up with a lot of money,” predicts Bloch. But, he says, at least with a bipartisan committee and an independent auditor there will be “truth, transparency and a belief in what we are told”. That is the hope, at least. The shame is that it had to wait half a century. |
