Bank Settlement on Holocaust Deposits OKd

A federal judge on Wednesday approved a historic $1.25-billion Holocaust settlement between more than 550,000 claimants and two Swiss banks accused of keeping money that was deposited by Nazi victims.

Under the settlement, within 30 days a distribution plan will be filed with the court spelling out how the money will be divided.

“The alternative to this settlement was prolonged, complex and difficult litigation in which plaintiffs’ chance of success was uncertain. . . ,” said U.S. District Judge Edward R. Korman. “A speedy settlement for a reasonable sum is far preferable to continued litigation.”

Korman prefaced his legal order with the words of Ernest Lobet, a Holocaust survivor, who appeared before him in November during a hearing on the plan.

“I have no quarrel with the settlement,” said Lobet, a 75-year-old lawyer who spent two years as a slave laborer in the concentration camp at Auschwitz.

“I do not say it is fair, because fairness is a relative term. No amount of money can possibly be fair under those circumstances,” Lobet testified, “but I’m quite sure it is the very best that could be done. . . . The world is not perfect.”

The next step in the process that brings the elderly survivors and their heirs closer to receiving checks is for Judah Gribetz, a lawyer and former New York City deputy mayor whom Korman appointed as a special master, to file his plan for distribution of the funds.

That will be followed by a hearing at which Korman will consider what to do with money left over after claims are paid.

“There is a legitimate and healthy debate where unclaimed assets should go,” said Elan Steinberg, executive director of the World Jewish Congress, who praised Korman’s ruling as a landmark representing “not only material restitution but moral restitution.”

“Symbolically, it is a victory for the cause of justice and the cause of memory,” Steinberg said.

Lawyers in the case agreed.

“We finally crossed an important threshold,” said Burt Neuborne, a lead lawyer for the plaintiffs. “The clock starts running.”

Both the Swiss government and that nation’s two largest banks, Credit Suisse Group AG and UBS AG, welcomed Korman’s ruling. In May, the banks agreed to grant access to victims and their families to databases containing 2.1 million Holocaust-era accounts.

But Korman noted that some other Swiss financial institutions have not been as cooperative.

“The Swiss private and cantonal banks do not feel a moral obligation to the victims of Nazi persecution,” he said pointedly in his court order approving the settlement.

The judge charged that the attitude of these banks “amounts to nothing less than a replay of the conduct that created the problems addressed in this case.”

In August 1998, with the help of mediation by Korman, lawyers for the Holocaust victims and their families reached a settlement with Credit Suisse and UBS.

The plaintiffs charged that the victims, who had deposited funds in banks in Switzerland for safety as the Nazis swept to power in Europe, were unable to claim their assets after the war.

Lawyers argued that the banks set up an impenetrable wall of obstacles while benefiting from the funds, in some cases even going so far as to demand death certificates that were impossible to get for people who died in gas chambers at concentration camps.

As the case progressed, about 20 states and 30 U.S. municipalities threatened sanctions against the banks.

The suit led to creation of a commission headed by Paul A. Volcker, former chairman of the Federal Reserve Board, to audit bank records to identify accounts that could belong to victims of Nazi persecution.

The Volcker Committee concluded that about 54,000 Swiss bank accounts appeared to have a “probable” or “possible” connection to Holocaust victims. Later, upon further scrutiny, the number was reduced to between 45,000 and 50,000.

In a memorandum accompanying his order, Korman said that the findings of the Volcker Committee suggest that the value of Holocaust assets held by the Swiss banks could exceed the $1.25-billion settlement figure.

Neuborne, a professor at New York University Law School, said that he hopes the hearing on Gribetz’s distribution plan will not be contentious. Various groups already have made proposals for what to do with funds that remain after Holocaust victims or their relatives are paid.

The World Jewish Congress is suggesting that some of the money be used to provide medical and social services for needy survivors and that a smaller fraction go to remembrance and research about the Holocaust. Others argue that funds should be earmarked for other uses, including refurbishing neglected Jewish cemeteries in Eastern Europe.

Melvyn Weiss, another plaintiffs’ lawyer, said that, if there are disagreements over how the funds will be spent, appeals to higher courts could result.

“That could delay things for two years,” Weiss said.

“This is a very significant step along the road,” he said of the judge’s action, “but there is a road ahead.”