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Focus on Issues: U.S. Official Cautions Lawyers on Impact of Suing Swiss Banks

April 14, 1997
See Original Daily Bulletin From This Date

Class-action lawsuits against Swiss banks may interfere with efforts to compensate Holocaust victims and reach a settlement with Switzerland, the Clinton administration’s point man on restitution issues has cautioned.

“Obviously I can’t stop people from exercising their right to sue,” said Undersecretary of Commerce Stuart Eizenstat, who is heading a U.S. historical review of Swiss-Nazi dealings and looted assets.

But “we have a way of settling this matter in a quiet and dignified way.”

Three class-action lawsuits against Swiss banks have been filed on behalf of Holocaust victims and their heirs in the past year as international pressure has mounted on Switzerland to locate missing Jewish assets and provide a full accounting of its wartime past.

Jewish organizations have said Swiss banks hold up to $7 billion from Jewish deposits made during the war years.

In March, lawyers consolidated the complaints into one lawsuit intended to force the banks into compensating individuals directly and turning over all relevant historical documents.

While working toward similar goals — namely, forcing the Swiss to come clean and securing restitution for aging survivors — advocates of the lawsuits have opted for a different approach than that supported by most government officials and the World Jewish Congress, which has spearheaded international calls for Swiss restitution.

Earlier this year, after relentless criticism and prodding from Jewish groups, Switzerland’s three largest banks agreed to establish a humanitarian fund to begin compensating Holocaust victims and their heirs whose assets vanished into the Swiss banking system.

That fund now stands at some $190 million, as a result of pledges made by the three banks, and from subsequent pledges made by the Swiss central bank and by Swiss industrial giants.

Some attorneys pressing the lawsuits have taken a dubious view of the fund’s creation, saying that the Swiss remain too vague about questions of how and when the fund will be disbursed.

According to an agreement reached earlier this year between the Swiss government and the WJC, a seven-member executive board will administer the fund. The board, which has yet to be named, would include four prominent Swiss and three individuals recommended by Jewish groups.

Swiss officials have said the first payments should come by this summer.

Nonetheless, the attorneys are continuing to press for their own settlement with the banks.

“No political resolution can give closure to legal obligations,” Michael Hausfeld, a lead attorney in the consolidated lawsuit, said in an interview.

Rabbi Abraham Cooper, associate dean of the Simon Wiesenthal Center, which is supporting the litigation against Swiss banks, said that only the threat of a lawsuit might have the impact to empower Switzerland’s “process of finding the truth.”

For his part, Eizenstat, in remarks to a delegation of Orthodox Jews from Agudath Israel of America who met with top officials in Washington last week, said, “I hope there will be a way for a universal settlement.”

The lawsuits, he added, may run the risk of looking “like a grab by lawyers for legal fees.”

Backers of the lawsuits took issue with Eizenstat’s characterization.

“It’s very hard for there to be a grab for legal fees when most of us have said that we’re doing this pro bono,” said Hausfeld, a Washington attorney who has taken on some of America’s biggest corporations.

Edward Fagan, a New York attorney involved in the lawsuits who has said he will accept fees, declined to comment.

Hausfeld, meanwhile, stressed that finding justice for Holocaust victims should not be a matter that is subject to “political negotiation.”

“The political process is not open, nor fair, nor necessarily just,” Hausfeld said, referring to the Swiss humanitarian fund established at the urging of the World Jewish Congress.

“It is subject to backroom deals which do not have the interests of the victims as either the first or exclusive priority.”

Elan Steinberg, executive director of the WJC, said advocates of the class- action lawsuits “have a right to pursue any avenue of justice.” But he called Hausfeld’s remarks “an insult to the Jewish people” and to his organization, which has been “operating with recognition of the government of Israel on behalf of the organized Holocaust survivor community.”

Some attorneys involved in the lawsuits have threatened to seek an injunction against distribution of the humanitarian fund unless Swiss banks declare that the fund is separate from the claims asserted in the lawsuits.

Eizenstat said in an interview that the threatened injunction could represent an obstacle as needy Holocaust survivors await restitution.

“We’re talking about people who are aged and at risk to die any month,” he said.

Steinberg stressed that the WJC agreed to the establishment of the humanitarian fund because it “explicitly does not prejudice any of the legal claims, or the outcome of a final settlement.”

But backers of the lawsuit remain skeptical. They see the involvement of American courts as a necessary measure to prevent Swiss banks from exploiting Swiss laws to delay and block action on claims.

“When you’re dealing with a banking community that has systematically stonewalled, lied and stolen, you have to play hardball or you’re not going to get their attention,” said Cooper of the Wiesenthal Center.

Noting the different tactics among Jewish groups in attempting to secure restitution, he said, “We all want to get to the same place. But forgive us if we have zero confidence in the banks.”

Eizenstat took a different view in stressing the need for a universal settlement.

“The Swiss have got to have some sense that at the end of the day, there’s some closure,” he said.

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