Fong Tells of Halt in Investments at Swiss Banks

California Treasurer Matt Fong said this week that he has stopped investing billions in state funds in Swiss banks until they offer more information about deposits withheld from Jewish Holocaust victims and their survivors.

“This is a very critical issue, one that I have been monitoring closely,” Fong said.

He said he acted this summer after the world learned that neutral Switzerland banks appeared to have colluded with Nazi officials during World War II and still may be holding assets of Holocaust victims.

Fong disclosed that California had halted cumulative investments totaling $2 billion in three Swiss banks and one U.S. subsidiary, and that the policy began in August.

Asked why a state institution taking a major step on an international issue of conscience had not announced its decision right away, Fong spokesman Roger Wildermuth said that “the goal was not to garner media attention, although that’s not to say we kept it secret.” Fong mentioned the move in speeches, Wildermuth said.

“We can understand why the media would feel otherwise, but we didn’t choose to release it,” he said.

Fong, who has indicated he will seek the GOP nomination to run for the U.S. Senate seat held by Democrat Barbara Boxer next year, announced the move against the Swiss institutions Tuesday. That was after financial publications reported that New York City had taken similar action.

Fong said the $2 billion in withheld or withdrawn investments were in the form of certificates of deposit and “bankers acceptances”--a form of bank lending based on commodity income.

The institutions affected are Union Bank of Switzerland, Swiss Bank and Credit Suisse, as well as the latter’s U.S. subsidiary, Credit Suisse First Boston.

In imposing “a moratorium” on state investments in those banks, Fong said, he asked the institutions in August “for full disclosure of the nature of dormant accounts.” The accounts represent funds hurriedly deposited for safekeeping mainly by European Jews as Adolf Hitler’s armies advanced on their homelands.

Fong said Wednesday that he is “encouraged by the response from the Swiss government, Swiss banks and the U.S. State Department” in showing that the Swiss are trying to right the decades-old wrong.

The moratorium, however, will stay in place until the Swiss have made “more progress toward clearing up the dormant accounts,” Wildermuth said.

Since this week’s announcement, Fong has met with representatives of Credit Suisse First Boston, according to his office. Others planning to see him include the Swiss ambassador and State Department officials.

“I made it clear to all parties involved that this moratorium was not implemented to punish” but rather to “encourage” the Swiss to step up efforts to make full disclosure and settle the dormant accounts, Fong said.