Metro Views: Bank accounts, bank accounts

Settlement of US class-action lawsuit filed in 1996 against major Swiss banks during Nazi era is now under threat by Israel and US survivors’ groups

Repeat after me: bank accounts, bank accounts, bank accounts. In the mid-1990s, Jewish organizations and a handful of lawyers – some savvy, some less so – demanded the return of Naziera Jewish accounts in Swiss banks. The accounts had become dormant because the Jewish depositors did not survive the Holocaust, or because crucial documents did not survive, leaving families unable to prove their rights to the accounts.
The claims against the Swiss banks fostered an environment in the US that, decades after the Holocaust, generated other Nazi-era claims, including for insurance policies that European companies had failed to honor, as well as compensation for slave and forced labor. There also were claims for artworks that had been looted or displaced in Europe between 1933 and 1945.
These were material claims with strong moral underpinnings – the idea that survivors and heirs should recover what was taken from them, or be compensated for damages done to them during the Nazi era.
A class-action lawsuit against the major Swiss banks was filed in US federal court in Brooklyn in 1996. A $1.25 billion settlement was announced in 1998 under US District Judge Edward R. Korman.
Under the terms of the settlement, the Swiss banks UBS and Credit Suisse seemed to fall on their proverbial swords, accepting virtually all liabilities for the wartime behavior of Switzerland, its national bank, as well Swiss private banks. The two banks insisted on a “global settlement” – a kitchen sink of claims in which the common factor was some claim or grievance against Switzerland or a Swiss enterprise. This compelled dividing the $1.25 billion into five classes.
These classes were claimants for bank accounts (the depositors); two classes of slave laborers (those who performed slave labor for Swiss corporations, or those who were in German facilities that were financed by the Swiss); a class of refugees who were excluded or deported from Switzerland, or mistreated in Switzerland because of their ethnic or religious origin. Finally, there was the “looted assets” class, which referred to Nazi victims whose looted property was fenced through Swiss entities.
That UBS and Credit Suisse were willing to bear all the weight of Switzerland’s Nazi-era history was their prerogative. It made for an odd situation. As Korman noted, “The claims of those other [non-bank] classes lacked any legal merit.”
However, the fundamentals of the case did not change: the lawsuit against the two banks was a restitution case to recover bank accounts.
IN AN ORDER issued on June 16, with the unwieldy name “Memorandum & Order Approving Adjustment of Presumptive Values Used in the Claims Resolution Process and Authorizing Additional Payments for Deposited Assets Class Plausible Undocumented Awards,” Korman signaled that the Swiss banks case is nearly at an end all these years later.
The judge has managed to keep the settlement on track. No easy task for claims for accounts that are more than 60 years old, and that originated in a foreign nation whose institutions’ assets have been absorbed and reabsorbed by changes in bank ownership and organization.
According to court documents, some $581 million has been allocated to nearly 18,000 owners of Holocaust-era Swiss bank accounts. In addition, compensation has been paid to nearly 200,000 slave laborers and their heirs, and more than 4,100 survivors or heirs received the so-called refugee funds from the settlement.
The court faced daunting forensic accounting problems in assessing and adjusting the current value of bank accounts. But these problems seemed to pale against efforts by some Jewish organizations, lawyers and the State of Israel to ignore depositors’ property rights – their claims to their family accounts – and to treat the Swiss case, even in advance of the settlement announcement, as a Jewish slush fund. Early on, many survivors cruelly were led to believe that they would benefit from the lawsuit, even if their families had no connection to Switzerland or its banks. In 1997, Switzerland itself created a humanitarian fund, separate from the banks case, to aid needy survivors. Many viewed that Swiss money as an entitlement, not a generous gesture, feeding the notion that the Swiss banks lawsuit was money-for-all.
The settlement’s “looted assets” class, not well understood by some and exploited by others, created additional problems. In theory, it would have required a mechanism to determine whether property, from among more than a million potential claimants, had been looted and whether it passed through Switzerland. Such a mechanism would have been prohibitively expensive and an administrative nightmare.
Korman’s alternative remedy was to craft a system to benefit the neediest survivors who, in this specific instance, wouldn’t have been eligible for payments under the Swiss banks settlement. The humanitarian aspects were not negotiated under the settlement; the original parties to the suit did not advocate for the interests of needy survivors. Nonetheless, the judge was within his judicial discretion when the settlement provided $205 million to help some 231,000 needy survivors, primarily in the former Soviet Union, obtain food, medical care, winter relief and emergency grants.
Now, as Korman seeks to wrap up the claims for the Swiss banks lawsuit that began in 1996, there has been the continuing threat from the State of Israel and survivors in the US to delay the process.
They seek more funds for a select group of the needy. They question the increases in the adjusted value of bank account awards, as if a depositor should be compelled to relinquish a percentage of his bank account to help Nazi victims in Israel or Florida. They also suggested that victims in the former Soviet Union receive a disproportionate share of the funds intended for the needy, as if humanitarian funds should be allocated on the basis of geography rather than hunger.
Korman, whose decisions were upheld by a US appellate court, did a noble service to the needy.
But this compassionate aid should not distort the essential purpose of the Swiss banks settlement. The lawsuit was a restitution case about bank accounts, bank accounts, bank accounts. It was a claim with legal and moral legitimacy. But when the State of Israel and survivors’ groups in the US demanded more cash for their own purposes, they did not simply stall the conclusion of the Swiss banks settlement. Instead, they ran roughshod over individual property rights and undermined the moral basis of every Jewish claim: that victims are entitled to recover the property stolen from them.