Litigating the Nazi past

Justice and the Holocaust are incompatible -- not every wrongdoer can be held to account and no victim can ever be made whole. Two fascinating new books describe human suffering, desperation, determination and accomplishment revolving around “unfinished business” in the Holocaust’s wake. Their story begins in the 1990s when Swiss banks were widely accused of hiding dormant accounts and enriching themselves during the Nazi period with looted gold, including gold from the teeth of concentration camp inmates.

Over the next few years, the public uproar inspired some American Jewish organizations and lawyers to demand that Swiss banks alleged to have collaborated with the Nazis make restitution to survivors. Politicians joined the fray and threatened economic sanctions against Switzerland. The accused banks were outraged at what they considered blackmail and extortion. Whether the actors are heroes or villains, or both, depends on the eye of the beholder.

The Swiss bank controversy was a media bombshell. Billionaire industrialist Edgar Bronfman, president of the World Jewish Congress, found a willing ear in President Clinton. Bronfman and his aide, Rabbi Israel Singer of Brooklyn, soon enlisted Sen. Alphonse M. D’Amato (R-N.Y.), powerful chairman of the Senate Banking Committee. For the next 2 1/2 years, beginning in 1996, writes Stuart E. Eizenstat in “Imperfect Justice: Looted Assets, Slave Labor, and the Unfinished Business of World War II,” D’Amato “milked the Swiss controversy for all it was worth.” In Switzerland, the senator was denounced as a venal politician chasing the Jewish vote.

“Imperfect Justice” is Eizenstat’s exciting account of his six-year effort to obtain compensation for Nazi victims from Swiss banks while he served as a high-ranking State Department official. The Harvard-trained lawyer was glad to be tapped to mediate the sensitive issue threatening U.S.-Swiss relations. Then, according to Eizenstat, “lawyers hijacked the Swiss bank dispute.”

The race to the courthouse was won by New York lawyer Edward Fagan, who “shamelessly [used] elderly Holocaust survivors as props.” Fagan filed a complaint in U.S. District Court in Brooklyn in October 1996 demanding $20 billion for his unknown clients. Similar class actions by other lawyers followed. As a humanitarian gesture, $500 checks were sent on behalf of the banks to a number of needy concentration camp survivors.

In time, Chief U.S. District Court Judge Edward R. Korman persuaded the lawyers not to push their luck. The banks became convinced that it would be cheaper to settle than be excluded from American financial markets. They paid $1.25 billion to forever dispose of all Holocaust-related claims against any Swiss nationals or companies. It was, according to insider Eizenstat, “far beyond anyone’s expectations.” But implementing the settlement would present problems that were also beyond expectations.

The surprising capitulation by the Swiss banks sparked new assaults against Germany and its companies by what Eizenstat terms “lions on the prowl.” The sharp eyes of class-action lawyers turned toward the deep pockets of well-known firms they accused of being Nazi accomplices in looting and abusing inmates as slaves.

Michael J. Bazyler, the son of Polish Holocaust survivors and a professor at Whittier Law School, gives details of nationwide litigation in which courts rejected the legal basis for such claims. His book “Holocaust Justice: The Battle for Restitution in America’s Courts,” like Eizenstat’s, is enlightening and provocative.

Starting in 1948, U.S. military occupation decrees had mandated that properties confiscated under Nazi rule be returned to their former owners. In 1952, a treaty was signed by the West German government, Israel and a consortium of leading Jewish organizations worldwide calling for expanded eligibility and compensation for survivors of persecution.

With postwar Germany’s limited capacity to pay, obvious gaps were unavoidable. Many of those hardest hit were not covered. Slave labor claims were left unsettled. In the 1960s, after failed litigation in German courts, the consortium squeezed a pittance from five major German firms for those few camp survivors who could prove they toiled for any of the companies. The corporate directors paid as little as they could get away with: 15,000 survivors had to divide about $26 million. Other slave laborers received nothing. And although Hitler’s armies had totally ravaged countries occupied in the East, those former slave laborers who still resided in territories under Soviet domination were excluded. The reason given was that there were no diplomatic relations between Germany and communist nations. This spurious excuse vanished with the fall of communist regimes beginning around 1990.

By that time, West Germany had already disbursed more than $50 billion to Jewish and non-Jewish claimants pursuant to legislation enacted as a sign of partial atonement for the sordid Nazi past. German leaders recognized that the former East Germany and the newly independent Eastern countries would have to be included in new restitution programs. But many taxpayers resented additional demands by aggressive American advocates who gave the impression that nothing had been paid until they charged on the scene as champions of morality and justice -- half a century later. It appeared politically desirable to wrap up all residual claims in one fell swoop.

In the end, it was agreed that a separate German foundation with the felicitous title “Remembrance, Responsibility and the Future” would be created and funded by about $5 billion, half of which would come from donations by German firms. Most of the money was earmarked for impoverished non-Jewish victims of Nazi persecution who still resided in Eastern Europe. As far as the Germans were concerned, the most crucial point was to be sure that adding this $5 billion to the $50 billion that had already been paid would end all claims, forever. Without “legal peace” there would be no deal. The United States, prodded by Eizenstat, became the guarantor.

Both books describe similar experiences with class-action lawsuits and settlements with other European and U.S. entities. The targets included Austrian banks, possessors of stolen works of art, insurance companies and governments that still retained confiscated properties. How these demands were met and the infighting with local Jewish communities, as well as non-Jewish groups eager for a greater slice of the meager pie, help round out the sorry story. Ignoring what he terms “uncomfortable and unsavory tactics,” Eizenstat concludes by thanking a host of American and German officials for “the stunning results.” He pays little attention, though, to results achieved long before he arrived on the scene.

Despite impressive totals, achieved at the cost of aggravating deep-seated antagonisms, the discrepancies between the amounts payable to different beneficiaries cast a disquieting shadow on this enterprise. The administrative costs were enormous. Class-action lawyers, some of whom said they expected no fees, were awarded many millions of dollars. In contrast, survivors of persecution can receive no more than $8,500 from the combined Swiss and German funds. Laborers who were not camp inmates can get no more than $3,500. When payments will be completed remains uncertain.

These two readable books describe a historical process that is still evolving toward the protection of human rights everywhere. Bazyler sees Holocaust restitution as a model for addressing persecutions of many peoples. The statute for the newly created International Criminal Court (despite misguided U.S. opposition) provides that victims of massive atrocities are legally entitled to “restitution, compensation and rehabilitation.” The implementation of these noble declarations will be influenced by the experiences recounted in these important volumes, and these precedents, one hopes, may pave the way toward a more humane future for all victims of crimes against humanity. The ripples of the efforts detailed by Bazyler and Eizenstat, like the memory of the Holocaust, may never come to rest.