World Jewish Congress lawsuit against Swiss banks

Starting in 1995 the World Jewish Congress (WJC), a group with strong political connections to U.S. federal and state officials, 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 were unable to access these numbered (anonymous) private accounts because of alleged stonewalling or requirements such as death certificates (obviously non-existent for victims of the concentration camps). The WJC was able to marshall the unprecedented support of U.S. government officials including senator Alfonse D'Amato R-NY, who held hearings of the Senate Banking Committee 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 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 Jan 1997. He removed wartime records of transactions with German companies and gave them to the Swiss-Israeli 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.

The hearings led to international friction between the U.S. and Switzerland, with boycotts of Swiss companies and products threatened in several states. In Switzerland, the most controversial contention of the Eizenstat report was that Switzerland assisted the Nazis beyond what was necessary for a neutral country, 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 demanded payment of $1.8 billion to settle the lawsuit. 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 Dec 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. 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.

The Volcker commission audit cost CHF 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. They 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, but found that trade with Nazi Germany did not significantly prolong the war.