Holbrooke’s Swiss Bank Diplomacy

By most accounts, Edgar Bronfman, the Seagrams heir and former head of the World Jewish Congress, was the hero of the historic Swiss bank deal. He is widely credited with launching the initiative that eventually led Swiss banks to agree to a $1.25 billion settlement to resolve claims that they hoarded bank accounts opened by Jews who were murdered by the Nazis.

But with the death of Richard Holbrooke last week has come fresh details of the U.S. diplomat’s pivotal and secret efforts in 1996 to convince Swiss banks to take the steps that led to that settlement.

Holbrooke entered the picture at a time when the Swiss banks were being accused by some of stonewalling on this issue; there were even calls for the Swiss banks to be barred from doing business in America.

When he died at the age of 69, Holbrooke was hailed as the diplomat who brokered the accord that ended the war in Bosnia, and he was serving as a special representative for Afghanistan and Pakistan. But in 1996, as vice president of Credit Suisse First Boston, Holbrooke called Elan Steinberg, then executive director of the World Jewish Congress, to express concern about an intensifying campaign against Swiss banks.

The anger stemmed from the banks’ insistence that there were only 755 Nazi-era dormant accounts and their denial that they hoarded thousands of savings accounts of Jews murdered in the Holocaust.

“We had dealt with [Holbrooke] on property restitution issues when he was assistant secretary for European affairs,” Steinberg recalled Monday. “He wanted to know all the bank issues, so he came to my office and I reviewed the bank accounts issue and how the Swiss were stonewalling. After a few hours, he said, ‘I need to resolve this.’”

In the ensuing discussion, Holbrooke suggested setting up an independent commission to search Swiss banks for dormant Holocaust-era accounts, and to the immediate establishment of a $200 million Swiss Humanitarian Fund for all needy survivors.

Steinberg said that when the fund was first discussed, the figure of $100 million was suggested and Holbrooke replied, “That’s nothing; it’s a rounding error on their books.”

Holbrooke left the meeting and arranged for the WJC to meet with representatives of the Swiss banks. Eventually, the humanitarian fund was created and in 1997 it distributed between $350 and $1,500 to each of nearly 120,000 needy survivors.

The $1.25 billion settlement eventually paid 452,000 individuals a total of $1,218,000. Another $10 million went to Yad Vashem in Israel and the U.S. Holocaust Memorial Museum in Washington to memorialize the names of Holocaust victims.

Judah Gribetz, the special master appointed by Brooklyn Federal Judge Edward Korman to oversee distribution of the fund, said $711 million went to the heirs of 18,000 dormant Swiss accounts and that 231,000 needy survivors received a total of $205 million, and 198,000 slave laborers received $288 million.