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Focus on Issues: Jewish Groups Are Debating Who Should Get Swiss Funds

December 21, 1998
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Four months after Swiss banks agreed to pay a whopping $1.25 billion to settle Holocaust-era claims, Jewish groups and attorneys are still debating who should get the money and how to distribute it.

Jewish organizations and lawyers who represented Holocaust survivors in a class-action lawsuit against the banks agree the bulk of the funds should be turned over directly to Holocaust survivors.

But there is a divergence of opinion about whether any portion of the fund should be diverted for other purposes — either for attorney’s fees or for institutions or programs dedicated to Holocaust education and remembrance.

It is a question in which Jewish organizations, Holocaust survivors and their attorneys all intend to have a say.

At the same time, the key players have sought to dispel any notion that there is some sort of unseemly scramble for money taking place, as some news reports have suggested. Most disparaged a recent front-page New York Times story that ran under the headline “Jewish Groups Fight for Spoils of Swiss Case.”

In fact, all decisions about distribution of the fund ultimately reside with U.S. District Court Judge Edward Korman, who the two sides to the settlement agreed would serve as an arbiter.

The issue is likely to come into sharper focus when the settlement agreement is finalized and Korman appoints an outside attorney as a special master to review competing distribution proposals and make a recommendation.

Those involved in the case asked Korman to appoint the special master in hopes of avoiding a long legal skirmish over the issue.

Sources say Judah Gribbitz, a longtime Jewish activist who formerly served as chairman of the National Jewish Community Relations Advisory Council and the Hebrew Free Loan Society, is expected to be tapped for the job.

Various proposals for distribution will be submitted to the court after the special master is appointed, most likely early next year.

The World Jewish Restitution Organization — an umbrella body of groups representing much of the organized Jewish community, Holocaust survivors and the State of Israel — has been developing a proposal to give the bulk of the fund to Holocaust survivors.

But the plan would retain some of the money for institutions and programs that benefit survivors and Holocaust remembrance.

The plan calls for first paying those with identified Swiss bank accounts. Those assets are estimated to total only about $200 million.

The remaining billion or so would go to Holocaust survivors — 55 percent as cash payments, 25 percent for medical and social services, and 20 percent for Holocaust education, research, and various social and cultural projects.

The idea of diverting money for programs or institutions troubles at least one attorney involved in the case.

“Tell that to all the hundreds of thousands of destitute survivors to whom an extra hundred dollars would be very meaningful,” said Edward Fagan, a New York lawyer who believes survivors should be the only ones making decisions about distribution.

For his part, Rabbi Marvin Hier, dean of the Los Angeles-based Simon Wiesenthal Center, said he would support giving a portion of the money to institutions that preserve Holocaust memory, provided that “the survivors sign off on it.”

Others have proposed distributing the bulk of the fund to Israel, similar to the way the German reparations program was handled.

“Israel is the inheritor state of those who left no inheritors,” said Abraham Foxman, national director of the Anti-Defamation League, pointing out that more Holocaust survivors live in Israel than anywhere else.

The issue of attorneys fees is another source of contention that the court will ultimately decide.

Only a few of the two dozen or so lawyers who worked on the case intend to apply to the court for fees. Early in the process, an executive committee set up by the lawyers urged everyone to work on the case pro bono. But for those who could not afford to, the committee agreed that fees should be modest and only cover work that actually advanced the case.

Most Jewish officials, however, have said they believe it is wholly inappropriate for lawyers to be seeking fees.

“Nobody should be profiting from the Holocaust,” said Elan Steinberg, executive director of the World Jewish Congress, adding, “We have had many offers from lawyers who are willing to do this pro bono.”

Foxman said it would be preferable for lawyers to work pro bono, lest restitution efforts “become a vehicle for ambulance chasing.”

Fagan, who has played one of the more visible and controversial roles in working on the Swiss case and other compensation claims, said asking attorneys not to seek fees is “contrary to every tenet of the American justice system.”

“If lawyers don’t have the chance to apply for fees, then it has a chilling effect” on efforts to litigate and resolve other cases, he said.

Sources involved in the settlement said they expect the judge to ultimately award roughly $2 million to $3 million in fees among a handful of lawyers, amounting to only a few months’ interest on the $1.25 billion total.

Some lawyers now pursuing the so-called “second-generation” of cases, which include efforts to seek compensation from other European banks, insurers and companies that profited from slave labor during World War II, have since reassessed the fee issue.

Mel Weiss, a lead attorney in the Swiss bank case who decided at the outset to work pro bono, said his firm will likely put in for fees in other cases it is now handling.

“We realized we couldn’t keep doing it pro bono,” Weiss said. “We just don’t have the resources. It’s too big a burden for our firm.”

Another concern will be assuring that the money can be distributed as quickly as possible.

The fact that it is a court settlement, however, imposes certain constraints on the process. It is expected to take another six to nine months to complete the process of establishing a settlement plan and holding public hearings, after which point Holocaust survivors can begin to apply for payments.

Steinberg of the WJC said the processes might have been speeded up, but “since the U.S. government supported a court settlement, that’s the road that has to be taken.”

Still, most advocates for Holocaust survivors stress that bureaucratic entanglements should be avoided so that aging survivors can be assured of cash payments within their lifetime.

It would be “great tragedy,” Hier of the Wiesenthal Center said, if “the Swiss were quicker to pay than the Jewish organizations were to distribute.”

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