State to Lift Boycott of Swiss Banks

State Treasurer Matt Fong said Thursday that beginning next week, California will lift the state investment boycott of Swiss banks accused of hoarding deposits made by World War II Holocaust victims.

Fong said that since he ordered the investment moratorium in August, the Swiss have made satisfactory progress toward tracking down the rightful owners of dormant accounts established by Jews as Hitler’s armies advanced across Europe.

The boycott was imposed to apply pressure on the Swiss to locate depositors, or their heirs, who had placed their assets with banks in neutral Switzerland.

When Fong announced the moratorium in October, he was criticized by the State Department and at least one Jewish group, the Anti-Defamation League of B’nai B’rith, which said his action could harm diplomatic attempts to resolve the problem.

At the time, Fong’s critics said, the Swiss were showing a good-faith effort to correct the decades-old wrong. To date, the Swiss have published lists of dormant accounts totaling more than $50 million and have invited rightful parties to make claims.

U.S. officials, Swiss diplomats and Swiss bankers met repeatedly with Fong to persuade him to call off the boycott.

Fong had supporters, however, including Rabbi Marvin Heir, dean and founder of the Simon Wiesenthal Center in Los Angeles. Fong’s act “was a good idea,” said Heir, who has negotiated with Swiss bankers over their wartime holdings. “Without the pressure from the world, [Swiss bankers] never would have come forward” to reveal the Holocaust survivors’ dormant holdings.

The treasurer’s action put a stop to trades totaling $2 billion in state investment funds at three Swiss banks and one U.S. subsidiary, his office said.

Fong said in a statement Thursday, “It’s time to trust . . . the actions of the Swiss banks.” Starting Monday, he said, “Swiss investments will be considered in the same manner as any other”--based on the best rate of return.

A special unit in the treasurer’s office invests state funds regularly, making up to 20 trades a day worth $700 million, netting the state an average income of $1 billion a year, according to Fong’s office.

Fong warned Thursday that if the Swiss banks begin “wavering in their commitment” to honor verified Holocaust-related claims, the sanctions will be reimposed.

“The world is watching,” said Fong, an all-but-declared candidate for a U.S. Senate seat next year. “It is up to the banks to verify their good standing.”

Swiss banks in recent months have come under international censure for silently profiting from Nazi era dealings, both from Holocaust victims’ deposits and for serving as so-called “bankers for the Nazis” in stolen gold.

Overall amounts are disputed. The Swiss Bankers Assn. has denied claims from Jewish groups that the Swiss banks hold “billions” in Holocaust-era deposits, but definitive totals remain unknown.

Stolen gold held in Swiss banks for the Nazis, according to a U.S. government report last May, had a value at war’s end of $185 million to $289 million in 1946 dollars.

This week, the United States led an effort launched in London to set aside the last $54.5 million of stolen gold retrieved by the Allies after the war and, rather than return it to recipient countries, use it as a fund for Holocaust survivors. The U.S. pledged $29 million toward setting up the fund and urged other donor nations to add contributions.