Fifteen years ago Swiss banks reached a settlement in a US lawsuit over money belonging to Holocaust survivors and heirs. Today, two diplomats involved in the crisis see the era from different perspectives, but agree that justice has been done.
In 1996, Thomas Borer was a young, up-and-coming Swiss diplomat serving in the ministry for foreign affairs in Bern. Madeleine Kunin was newly appointed by President Bill Clinton as the United States Ambassador to Switzerland.
Both were unaware that they were soon to become involved in a political crisis that would test the people and governments of the «sister republics» for several years.
In separate interviews with swissinfo.ch, the two former ambassadors reflected on the diverging interests and viewpoints that caused the dormant accounts controversy between the United States and Switzerland in the late 1990’s.
How did it start?
In 1995 a class action lawsuit was filed in New York on behalf of the World Jewish Congress, alleging that Holocaust survivors and their heirs were being denied access to dormant Swiss bank accounts.
In Switzerland little attention was paid to the issue. According to Thomas Borer, «in general the Swiss bankers and the Swiss as a whole were of the strong belief that all the issues of the Second World War – Swiss banking, et cetera – were settled after the war».
But they weren’t. In August 1996, Kunin arrived at the US Embassy in Bern. «The issue of Switzerland’s role during World War II was simmering when I arrived, and it really kept me occupied almost every day that I was ambassador, in one form or another,» she says.
Already in early 1996, US Senator Alfonse D’Amato of New York had begun holding hearings into the dormant Swiss bank accounts of Holocaust victims.
«The banks in particular took a long time to be cooperative,» says Kunin. «They put up very strong bureaucratic barriers for anyone who was seeking to find a dormant account.»
Because the focus was on the dormant accounts in the beginning, says Borer, the Swiss government believed that the demands of the World Jewish Congress should be handled by the banks. In May 1996 the Swiss Bankers Association and several Jewish organisations created the Independent Committee of Eminent Persons, headed by former Chairman of the US Federal Reserve Paul Volcker, to conduct an independent audit for the purpose of identifying dormant Swiss bank accounts.
Swiss inertia
Meanwhile, in the early fall of 1996, President Bill Clinton asked Undersecretary of Commerce Stuart Eizenstat to investigate US and Allied efforts to recover and restore gold and other assets looted by the Nazis during the Second World War. A major storm was brewing. But it took a while for the Swiss government to recognise – and react to – the problem.
«Our political system, having no president but seven federal councillors, seven ministers, is not really adequate to handle political crises,» says Borer.
The issue had historical, legal, financial, economic and foreign relations aspects, each technically falling under a different department. «So we had five or six federal councillors involved and each of them thought maybe the others should take care,» Borer says.
In the end it was the minister of foreign affairs, Flavio Cotti, who took charge, and a task force was created to deal with the issue.
Taking action
The Task Force Switzerland Second World War was formed in October 1996, and Thomas Borer was invited to serve as its head. Borer was based in Bern, but «most of the time I was in an airplane, flying to New York, Washington, London, Israel and other capitals.» As the issue became more political, it also generated unrelenting media attention.
«I would say that from October 1996 on, there was a newspaper or media report every day in Switzerland,» Borer remembers.
One of the roles of the task force was to counter the negative publicity generated by the media and politicians in the US. In testimony before the Senate banking committee in May 1997, Borer assured Senator D’Amato that the Volcker Commission’s audit had «already begun to bear fruit and, as the banks have promised, not one penny that may have belonged to a Holocaust victim will remain in a Swiss bank».
In addition to the Swiss task force headed by Borer, an independent international commission – headed by Swiss historian Jean-Francois Bergier – had been created by the Swiss Parliament in December 1996 to study Switzerland’s role as a financial centre in World War II. That commission’s objective, says Borer today, was «to find historical truth».
Fanning the flames
One version of the truth was released on May 7, 1997, by Stuart Eizenstat – a report based on some 15 million pages of documents declassified and stored at the National Archives and Records Administration (NARA) outside of Washington.
Among other things, the report described Switzerland as «Nazi Germany’s banker» and claimed that Switzerland and other neutral nations benefitted from their trade and financial dealings with the Germans and helped prolong the war effort.
Borer remembers his reaction. «I had a chance to read the report a day earlier and I was shocked. At that time I was already a specialist in the Second World War and Switzerland’s role. And the findings of Eizenstat, and especially his political resumé, were just wrong. Even if historians found out the facts, he made another story out of it.»
Before the release of the report, «I would say most Swiss were in favour of solving this issue,» Borer says. But accusing Switzerland of helping Nazi Germany «was too much. So the resistance in Switzerland became very, very strong.»
According to Madeleine Kunin, the Swiss felt they were being treated unfairly. «There was a feeling, ‘Why are we being picked on? Why are we being examined?’ And I think for a long time there was a sense of denial that Switzerland had done anything wrong.»
Resolution
Kunin believes that not all Swiss opposed the investigations. «There were many younger people who felt that it was time for this chapter of Switzerland’s history to be debated and discussed,» she says.
And the Swiss banks began to realise that their reputation and economic future were being threatened, Kunin believes. «At the end I think there was cooperation, but it took a long time.»
In July 1997 the Swiss banks published a new list of dormant bank accounts, which would allow relatives to make claims. The list appeared in newspapers around the world. For Kunin this was not only a political achievement but a personal revelation. Born in Zurich in 1933, she had fled to New York with her Jewish family in 1940.
«The special moment in my life came when I found my mother’s name on one of the lists, as having a dormant account,» she says. «And suddenly I was part of the story.»
The story took a long time to reach a conclusion. «At the end both sides were exhausted,» Borer remembers.
Finally, on August 12, 1998, the Swiss banks agreed to return $1.25 billion (CHF1.16 billion) to Holocaust victims and their heirs. The settlement – and the long process leading up to it – was presided over by New York Judge Edward R Korman, who Borer says «did a great job of bringing the parties together….»
In 2013 – 15 years later – Judge Korman has filed orders regarding the final distribution of funds from the settlement accounts and the offices of the Claims Resolution Tribunal have closed.
«Sometimes these things need time for both sides to understand it,» says Borer. Reflecting back, he concedes that «maybe we Swiss had a too positive view of our role in the Second World War.» Still, he stresses that Switzerland was «in a very tough position. . . . We didn’t have the luxury of having an ocean and a half between us and Nazi Germany. We had the River Rhine.»
Ultimately, Thomas Borer believes the agreement reached was «a very good settlement for both sides. It put an end to the quarrels which took over three years. I think it brought closure.»
Former US Ambassador Madeleine Kunin agrees. «I think after so many years it’s hard to return everything to everyone. But considering how difficult that task was, I would think we came close to seeing justice being done. Like many chapters of history it was complicated. But in the end I left feeling Switzerland had done the right thing.»