The question of dormant accounts held by Holocaust victims in Swiss banks became a major international controversy in the mid-1990s, leading to a comprehensive independent audit of Swiss banking records, a $1.25 billion class action settlement in 1998, and a fundamental reassessment of Switzerland’s wartime conduct. The investigation, conducted by the Independent Committee of Eminent Persons under former United States Federal Reserve Chairman Paul Volcker, was the most thorough institutional examination of any wartime banking system. The settlement was the largest single Holocaust restitution payment by financial institutions and produced a substantial change in Swiss public consciousness of the country’s wartime role.
The dormant accounts issue
European Jews who foresaw the danger of the Nazi period had deposited substantial amounts of money, securities and valuables in Swiss banks for safekeeping during the 1930s and the early 1940s. The Swiss banking secrecy laws of 1934 had made such deposits attractive on the legitimate basis that they would be insulated from German political and economic intervention. After the Holocaust, many of the depositors were dead and their heirs were unable or unwilling to claim the accounts. The Swiss banks did not, on their own initiative, search for the heirs.
The standard pattern was that heirs who attempted to recover funds were defeated by procedural obstacles. Swiss banks required documentation of the depositor’s death; victims of the Holocaust generally had no death certificates, having been killed in camps that did not produce them. Heirs were required to produce the original deposit documentation; this had been confiscated by the Gestapo, lost in the destruction of European Jewish life, or destroyed by the heirs themselves to avoid persecution. Maintenance fees on dormant accounts depleted the principal over the post-war decades. Some banks, on the available evidence, simply retained the funds without taking any active steps to identify or notify potential heirs.
The Swiss banking system maintained, through the post-war decades, that the dormant accounts were a small problem of marginal significance. Periodic surveys conducted by the Swiss Bankers Association reported small numbers of dormant accounts and small total values. The surveys were, the subsequent investigation showed, substantially understated.
The American political pressure, 1995 to 1998
The shift came through American political and legal pressure beginning in 1995. The World Jewish Congress under Edgar Bronfman Sr and Israel Singer began a public campaign on the dormant accounts issue, working with Senator Alfonse D’Amato of New York, Chairman of the Senate Banking Committee. D’Amato held hearings in 1996 and 1997 that produced substantial American press coverage and political pressure. Class action lawsuits were filed in United States federal courts against the major Swiss banks in 1996 and 1997.
The combined pressure produced an agreement in May 1996 between the Swiss Bankers Association and the World Jewish Restitution Organisation to establish an Independent Committee of Eminent Persons to audit Swiss bank records. The Committee was chaired by Paul Volcker, former Chairman of the United States Federal Reserve, with representatives from both sides and from neutral parties.
The Volcker Commission audit, 1996 to 1999
The Volcker Commission audit was the most thorough investigation of any banking system ever conducted. The Commission engaged five major international accounting firms to examine the records of around 250 Swiss banks. The auditors examined 4.1 million accounts opened between 1933 and 1945 and looked for accounts with characteristics suggesting connection to Holocaust victims (depositor addresses in countries from which Jews were deported, dormant status since 1945, names matching published lists of Holocaust victims). The audit identified approximately 54,000 accounts with “probable or possible” connection to Holocaust victims.
The audit also produced findings on the wider Swiss banking conduct that went substantially beyond the dormant accounts question. The Commission documented systematic obstruction of heir claims, retention of funds beyond what was justified by the procedural rules, and a wider pattern of Swiss banking conduct that the Commission described as substantially short of the moral and legal obligations the institutions had owed to their victim depositors.
The 1998 settlement
The Commission’s findings, combined with the continuing American class action pressure and the substantial reputational damage to the Swiss banking industry, produced a class action settlement in August 1998. UBS and Credit Suisse, the two largest Swiss banks, agreed to pay $1.25 billion in settlement of all claims arising from the dormant accounts, looted assets, slave labour and refugee policy issues. The settlement was the largest single Holocaust restitution payment by financial institutions in history.
The settlement funds were administered by a Special Master appointed by the United States District Court for the Eastern District of New York. Payments were made between 1999 and 2013 to over 450,000 individual claimants in 80 countries, divided into four classes (depositor heirs, slave labourers, refugees who had been turned away at Swiss borders, and looted asset claimants).
The wider Swiss reckoning
The Volcker Commission and the 1998 settlement triggered a wider reassessment of Swiss wartime conduct. The Swiss Federal Council established the Bergier Commission (Independent Commission of Experts Switzerland — Second World War) in December 1996 to examine the wider Swiss wartime record. The Bergier Commission’s final report of 2002 substantially documented Swiss commercial collaboration with Nazi Germany, the Swiss National Bank’s acceptance of looted gold, the Swiss refugee policy that had turned away Jews fleeing the Holocaust, and the wider pattern of Swiss commercial and financial conduct during the war. The Commission’s findings constitute the most thorough national self-examination of any wartime neutral.
See also
- Switzerland
- The Swiss National Bank and Looted Gold
- Swiss Insurance Companies and Unpaid Policies
- The Luxembourg Agreement 1952
Sources
- Independent Committee of Eminent Persons, Report on Dormant Accounts of Victims of Nazi Persecution in Swiss Banks, December 1999 (the Volcker Commission Report)
- Stuart E. Eizenstat, Imperfect Justice: Looted Assets, Slave Labor, and the Unfinished Business of World War II, Public Affairs, 2003
- Tom Bower, Nazi Gold: The Full Story of the Fifty-Year Swiss-Nazi Conspiracy to Steal Billions from Europe’s Jews and Holocaust Survivors, HarperCollins, 1997
- Itamar Levin, The Last Deposit: Swiss Banks and Holocaust Victims’ Accounts, Praeger, 1999
- Independent Commission of Experts Switzerland — Second World War (Bergier Commission), Final Report, Pendo, 2002
- In re Holocaust Victim Assets Litigation, US District Court for the Eastern District of New York, settlement and administration documents, 1998-2013