German Companies Move Closer to Creating Fund for Slave Laborers

German companies and Jewish officials took a step this week toward creating a fund that could top $1 billion to compensate Holocaust survivors used as forced laborers during World War II.

The Jewish officials, representing an umbrella group responsible for negotiating Holocaust-era claims with Germany, accepted “in principle” a German proposal presented at a meeting here Monday.

“We have a possible breakthrough,” said Israel Singer, the secretary- general of the World Jewish Congress, who led the Jewish delegation at the talks.

The sides agreed to open formal negotiations to create a fund to compensate slave laborers and those who were forced to sell property in Germany at bargain prices during the Nazi era.

In return, German negotiators, representing the government and German companies, want to end the class-action lawsuits brought by Holocaust survivors seeking some $18 billion from such companies as Volkswagen, Siemens and Daimler-Benz, which recently merged with Chrysler.

Money for the fund would come from an estimated 20 German companies, including Volkswagen and Siemens, as well as the Deutsche and Dresdner banks.

These lawsuits, along with threats to oppose a buyout by Deutsche Bank, Germany’s largest bank, of the U.S.-based Bankers Trust are widely credited with bringing German industry to the negotiating table.

The recent flurry of activity also comes less than one week after Deutsche Bank revealed it had funded the construction of Auschwitz and other Nazi projects.

In the early 1980s, a top Deutsche Bank official was barred from entering the United States because of his ties with the Nazis.

The deal could be thwarted by lawyers involved in the class-action suits, several of whom say they will oppose any effort to end the lawsuits. They say the umbrella group negotiating the settlement, the Conference on Jewish Material Claims Against Germany, does not best represent the interests of individual Holocaust survivors and vow to continue the suits.

Although no money was discussed at this week’s Washington meetings, which included representatives of the U.S. and Israeli governments, sources indicated that they expect the German funds to match or exceed the $1.25 billion Swiss settlement negotiated last year.

However, the actual amount of the settlement will be determined by the number of slave laborers, Germany’s previous reparations programs and the value of property sold, sources said.

In many respects, the attempt to settle the claims against German companies and banks mirrors the standoff between Jewish officials and Swiss banks accused of hoarding Holocaust victims’ wealth.

But German institutions seem intent on avoiding the sort of quagmire that enveloped Switzerland and its banks in recent years by pledging cooperation before tensions mount and trust dissolves.

However, the Germans made clear that the size of a settlement would depend on the level of risk facing the companies from parties outside a settlement deal.

Negotiations are expected to resume next week in Germany, with a goal set by the German side to begin dispensing checks by September, the 60th anniversary of the beginning of World War II.

A presumed settlement would include contributions from a host of German companies and banks and would be open to Jews and non-Jews around the world.

In Washington this week, Bodo Hombach, minister of the German chancellery, presented an initiative aimed at establishing two remembrance funds. The proposal was presented on behalf of German companies and banks.

One would “respond to the moral obligations of German enterprises arising from the Second World War,” giving payments directly to victims. The other would provide “an appropriate endowment for the future,” funding projects agreed to by a future board, according to a translation of the proposal provided to JTA by the German negotiators.

In addition to seeking an end to class-action suits, the German proposal wants the Jewish community to “scotch any plans for a boycott” of German banks.

The World Jewish Congress reportedly had threatened to “impose a kind of divestment campaign,” similar to that imposed against South Africa during its apartheid rule.

As for Deutsche Bank’s plans to buy Bankers Trust this spring, Alan Hevesi, New York City’s comptroller, said in a news conference Tuesday in New York that he was “encouraged” by the progress of the talks.

But Hevesi, who took a lead role in threatening a boycott that led Swiss banks to reach a restitution settlement, said he would not yet reverse his recommendation against the bank’s buyout plan.

Following three hours of talks with senior German officials and the chairman of Deutsche Bank, the sides “are on the right road” to negotiate an agreement that meets the “moral, historical as well as financial responsibility” of the German companies, said Elan Steinberg, executive director of the World Jewish Congress.

One of the major points to be negotiated is a goal of the German side for “political, moral as well as legal closure,” said Steinberg, who participated in Monday’s negotiating session.

The tone of the negotiations marks a sharp difference from those with Swiss banks and government officials, according to both Jewish and German participants.

The Germans say they are specifically looking for a better atmosphere — both in the talks and among their citizens.

“The last thing we want is the public attitude of Switzerland,” Hombach said, according to a participant at a Jewish-sponsored luncheon with the German government and bank officials.

The German side is trying to put together a “cooperative, non-confrontational, fair and very expeditious, swift and speedy” solution, Hombach said at the American Jewish Committee luncheon.

We’re trying to avoid the “bull-in-the-china-shop effect,” he said.