Switzerland's Moral Dilemma

For the Jews of Nazi-occupied Europe, Switzerland might as well have been on the far side of the moon. Time after time, fleeing Jews were turned back at the border--in what the Swiss recently revealed was a secret agreement with Nazi Germany. The President of Switzerland, Kasper Villiger, admitted on May 7 that his country "bears a considerable burden of guilt for the treatment of Jews by our country." But in his speech before parliament, Villiger did not address an issue that continues to haunt the Swiss: Their banks may still hold on their balance sheets--as assets, not as liabilities--uncounted millions of dollars deposited by Jews slaughtered in the Holocaust.

The Swiss banking community maintains that it returned most unclaimed Jewish funds years ago. But Jewish organizations and critics in Israel and elsewhere believe otherwise and have persuaded the Swiss to take another look at the issue. The central question is a touchy one: Do banks have a moral responsibility not to profit from deposits of persecuted people when the heirs cannot be found? The banks contend that this is a nonissue, saying that most of the money was disbursed and that they've properly responded to claims. But critics are dubious. "I have no doubt that some of the missing funds found their way into the banks' profits, and shareholders received dividends from funds which don't belong to them," says Akiva Levinsky, ex-treasurer of Israel's quasi-official Jewish Agency, which has dealt with the matter over the years.

BURDEN OF PROOF. How much abandoned money may remain in Swiss bank vaults--and balance sheets? No one knows for sure, but estimates range from tens of millions to hundreds of millions of Swiss francs. One probably overgenerous Israeli newspaper estimate puts the figure at $6.7 billion. But whatever the amount, it is a sensitive subject in Switzerland for a simple reason: Swiss banks get to keep abandoned funds.

Switzerland treats inactive accounts far differently than the U.S., where banks must turn over abandoned accounts to the state if the owners or heirs cannot be found. Swiss law holds that if an account is inactive for 10 years, the bank must post a notice in the branch where the account is handled. Ten years after the notice is posted, the bank is allowed to take possession of the unclaimed funds. If the rightful owners, or heirs, turn up later, they can claim the funds--if they can furnish satisfactory proof. And that is a big "if" in Switzerland.

Even before the deposits were considered abandoned and taken by the banks, critics charge, only rarely were refugees or their descendants able to pry the funds from the Swiss. The banks required documentation, including the account number, branch, and proof of inheritance. "The Swiss made it difficult for the original depositors to get their money, let alone for the heirs who often came out of Auschwitz without as much as a scrap of paper," says Amram Blum, former Israeli administrator general in charge of absentee property.

In thousands of cases, the heirs received brief written responses that nothing had been found. In each instance, the banks charged a hefty fee to conduct the search. However, the Swiss maintain that they were simply following usual procedures. "This is a normal practice. It has nothing to do with Jewish money particularly. We would charge a search fee for anyone looking for missing money in our bank," says Franz Raggenbass, a spokesman for Union Bank of Switzerland.

DEAD LETTER. It wasn't until 1962 that the Swiss government required banks to report funds held by them on behalf of foreigners or refugees from the war. According to reports in Israel--the Swiss never released any figures--the banks reported 9.5 million Swiss francs in unclaimed funds. At that time, the Swiss government asked all claimants to register. About 7,000 did so--though Levinsky says only a few of these claims were accepted. They received about 7.5 million francs when the Swiss disbursed the funds in 1972. Jewish communities in Switzerland and a Swiss refugee organization got the remaining 2 million francs. The 1962 ordinance did not apply to those living in Eastern Europe, as the Swiss feared that the funds would be confiscated by the Communists.

The 9.5 million-franc figure did not include numbered accounts, safe-deposit boxes, or holdings of Jewish-owned companies. "From the Swiss point of view, companies did not perish at Auschwitz"--even if their owners did--Levinsky notes. To the Swiss, the issue was a dead letter after 1972, when the funds were disbursed. Swiss banks did agree to carry out searches for missing funds--for a price--and to turn over abandoned money to the owners or heirs. But Levinsky knows of no one who has had any success. Swiss banking officials wouldn't comment.

Part of the problem in tracing Swiss bank accounts is the tight secrecy of Swiss banking laws. Banks must keep account records open indefinitely--but that is not always enough. Since 1934, when the Swiss tightened their secrecy laws, banks could open accounts with numbers, and the banks often had no record of who owned the account. Swiss law permits banks to destroy correspondence related to accounts after 20 years. That could help shroud the origins of the numbered accounts.

Critics maintain that the Swiss have approached the issue in a particularly heartless manner. During his five years as Israeli economic consul in Zurich in the early '80s, dozens of Jews asked Noah Flug for assistance in tracking down funds deposited in Swiss banks by relatives prior to and during World War II. In nearly all cases, the trail went cold. "The Swiss banks took a legalistic approach to the problem and were very inflexible," says Flug, now general secretary of the World Jewish Restitution Organization, formed to deal with Jewish claims in Eastern Europe. Swiss banking officials declined to comment.

LUMP SUM? As recently as March, Jean-Paul Chapuis, secretary general of the Swiss Bankers Assn., was saying that the problem of Jewish money had been solved. But in April, not long before Villiger's revelation of the secret pact with the Nazis, the bankers caved in. At the behest of the Swiss government, the association began an inquiry into the issue and has promised a report on the subject by yearend. "The money remains the property of the depositors and their legal heirs," says Kurt Hauri, director of the Swiss Federal Banking Commission.

Levinsky says the Swiss willingness to reopen the matter could lead to an overall settlement in which a lump sum would be paid to settle the claims once and for all. But the Swiss will have the last word. Will they insist upon paying only legal heirs who can furnish documentation--even though entire families perished during the war, leaving no heirs and no records? In fact, it isn't even clear if they will conduct any searches. Bankers Assn. spokeswoman Silvia Matile says the inquiry "is aimed at proving, among other things, whether the search for this money is feasible or not." The answer, for 50 years, has been no--and as long as it remains so, this sour episode from World War II will continue to cast a pall over the Swiss banking world.

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