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'Nazi gold' settlement mixes intangibles with money

hirschkorn By Phil Hirschkorn
CNN Producer

August 21, 1998
Web posted at: 12:08 p.m. EDT (1608 GMT)

In this story:

NEW YORK (CNN) -- The decades-long dispute over "Nazi gold" is coming to an end, changing the legacy of World War II and the public perception of two parties in particular -- the Jewish people and the Swiss.

For both the Jews who lost family members and family assets, and the Swiss whose bank secrecy laws built a moat around those families' long-dormant accounts, the struggle represents a last, dark battle of the war.

The light on the horizon appeared last week when UBS AG (United Bank of Switzerland) and Credit Suisse promised to pay $1.25 billion over several years to compensate Jewish Holocaust survivors and descendants of Holocaust victims. It is also to cover all such claims against the Swiss government and industries.


But the affair has cost the Swiss much more in reputation and identity.

And while the settlement offers a belated sense of justice to many survivor families, it leaves one question unanswered: As the 20th century comes to a close, can Jews achieve closure on one of its greatest atrocities?

Not even money is neutral

The Swiss payment represents material and moral restitution for the wrongful treatment of European Jews who, starting in the 1930s, entrusted their assets to the Swiss safe haven as Adolf Hitler's regime rose to power.

After the war, in which so many Jewish depositors died, the banks treated their accounts as dormant and retained the money instead of repaying it.

A half-century later, the struggle to get the money back mushroomed with the filing of a class-action lawsuit in October 1996.

Momentum built as public figures including U.S. Senate Banking Committee Chairman Alfonse D'Amato and World Jewish Congress President Edgar Bronfman threw their prestige behind the plaintiffs' cause.

Their research into newly declassified documents showed Germany funneled $450 million in gold (worth an estimated $4.5 billion today) through Switzerland, mainly the Swiss National Bank.

Evidence indicated the stolen gold, when converted to hard currency such as Swiss francs, enabled Germany to purchase war supplies and armaments, fueling the Nazi war machine and prolonging the war and the genocide.

Swiss banks profited from trafficking in gold the Nazis looted from sources as diverse as the treasuries of occupied Belgium and Holland and the wedding bands and teeth of concentration camp victims.

Other neutral countries, including Sweden, Spain, Portugal, Turkey, Argentina, continued to export minerals to Germany and accept gold, too. But Switzerland handled three-quarters of the Nazis' transactions, even after the Swiss knew of the Nazi extermination scheme.

The lawsuit settlement may be seen by some observers as well as those involved, then, as Swiss reparations to the Jewish people.

The sum far exceeds what's likely to be found in those dormant accounts in a special audit by former U.S. Federal Reserve Chairman Paul Volcker, to be completed at the end of the year. To date, the banks have identified 5,500 accounts belonging to non-Swiss customers with a value of $45 million.


The Swiss helped the Allied cause, too: They allowed Allied spy operations to be based on Swiss turf, and Swiss banks bought almost twice as much gold from the Allies as from Germany (though the Allied gold wasn't stolen).

But the revelations about helping Germany have forced the Swiss to question whether it was, after all, their official neutrality and the mighty Alps that deterred a German invasion.

And the repayments they are making now may represent for them a partial resolution to the moral quandary raised by such self-examination.

'The principle is justice'

It could be months before any Holocaust survivors or other designated beneficiaries see a penny of the Swiss banks' $1.25 billion.

By the end of the year, the banks are expected to transfer the first $250 million into an account to be administered by the U.S. District Court in New York where the suit was settled.

The settlement figure, to be fulfilled in three annual installments, is no small sum. But neither is it a lottery win for individual plaintiffs.

Dividing the pie will be a complicated process, and the number of beneficiaries is not even known, so it's impossible to predict what the average benefit will be.

Meanwhile, the clock is ticking.

"Materially we are talking about a group of people whose average age is 80," said Elan Steinberg of the World Jewish Congress.

The Jewish victory in the Swiss banks controversy will not complete war-related restitution. Legal action is pending against German banks, European insurers that denied claims for people killed in Hitler's camps and even the company that resmelted German gold.

And 17 other countries are undertaking investigations into possible compensation of Jewish victims, Steinberg says.

Margaret Zentner
Holocaust survivor Margaret Zentner  

"The principle is justice -- the money comes afterwards," says Margaret Zentner, echoing the view of fellow plaintiffs. A German-born Jew, Zentner survived the Nazi camps at Terezin and Auschwitz, with her immediate family intact, but lost 60 relatives.

"It was morally right," she said of the Swiss settlement. "They had been sitting on this money all those years."

Jewish children still learn the Holocaust mantra, "Never Forget," right along with the religion's rituals.

Perhaps the money will bring a measure of material forgiveness for the Swiss from Jewish beneficiaries -- but not forgetting. Indeed, the payments can only amend history, not change it.

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