Between the Alps and a Hard Place (25 page)

Gribetz's job was to reconcile the welter of interests among groups and individuals who clamored for a slice of the proceeds. Ordered in March 1999 to submit a tentative plan for distribution by December 29 of that year, Gribetz got an extension until March 31, 2000. Judge Korman went out of his way to state that Gribetz was not especially connected with any group of claimants or lawyers: “I am not going to do anything that is going to create the reality or the impression that anyone has the inside track.”
¹²
But since there were no objective criteria for deciding about distribution any more than there had been objective criteria for deciding the settlement amount, Gribetz's plan for distribution could only ratify the power of each party to get the inside track.

By March 14, 2000, however, Korman had issued a strange order to the effect that Gribetz would not submit his plan until further notice. Korman stated that the report must await his final ruling on the case, and that that would come only after the Swiss banks had “implement[ed] two of the central recommendations of the Volcker commission.” He, not Volcker, called these matters “central.” They were the creation of “a central archive of data on all 4.1 million accounts to be established and [publication of] the names of some 25,000 account holders identified as possibly or probably related to victims of Nazi persecution.”

This is strange because as we shall see the Volcker report actually
discouraged
publication of massive numbers of names. Also, Israel Singer had expressed strong reservations about such publication. Nevertheless, in March 2000 Swiss bankers, perhaps looking forward to being spectators of the consequences, decided to publish the names of the accounts. The archive on 4.1 million accounts would take time to establish, and it would
be quite useless for determining the validity of individual claims, because reference to this master list would duplicate the work of the Volcker commission. The Swiss banks had no interest in this matter. Yet on May 3, 2000, Switzerland's two largest banks, UBS and Credit Suisse, agreed to establish a central archive containing the 2.1 million accounts on their records opened between 1933 and 1945. (The other 2 million were spread out among hundreds of minor banks.)

As a result, Judge Korman was quoted in the press to the effect that he might soon give final approval to the settlement and—more to the point—to the special master's report. At this writing the special master's report had not been published, much less approved. Why at least a fifteen-month delay? Why a court document giving the implausible impression that the Swiss banks, having agreed to give up $1.25 billion, were eager to hold on to the last possible scrap of the victims' money? Perhaps the answer had to do with the intensity of the fight for the money amongst the plaintiffs.

The battle for the $1.25 billion was between competing groups of lawyers and numerous Jewish organizations. At the court hearings on the settlement, various people had asked emotionally that the money, all of it, be distributed forthwith to Jewish and other survivors of the Holocaust, most of whom were fast approaching the natural end of their lives. Yet there was never any chance that the court would divide the settlement sum by the number of Holocaust survivors and other potential claimants, some half million people, and cut checks for $2,000 to each. This would have deprived the WJC of the power that comes from distributing a ten-figure amount of money, and
the lawyers from collecting on their claims for $13 million in fees. Nor, for the same reason, was there any chance that the money would be turned over to the U.S. (or Israeli) government to be distributed under the scrutiny to which democratic governments are subject.

The interests of the individual survivors were represented by Gizella Weisshaus, in whose name attorney Edward D. Fagan had filed one of the original suits. Estranged from Fagan, she demanded that at least 70 percent of the funds go to individuals. The lawyers split into two groups, one led by Fagan, the other by Melvyn Weiss and Michael Hausfeld. Both groups of lawyers argued for their own big fees and maintained that substantial amounts of money should go to the organizations they represented, such as the Simon Wiesenthal Center in Los Angeles. Bronfman's WJC argued that it should take the lead in distributing the proceeds since, it said, Bronfman was also president of the Jewish Restitution Organization, which was connected to (but note, not under the direction of) the Israeli government. The WJC claimed that it was empowered by the state of Israel “to represent the Jewish people in Holocaust-related matters,” and that “we have been mandated to represent them.”
¹³
This was simply untrue.

Name-calling quickly came to characterize the jostling at the money trough. Columnist Charles Krauthammer said the lawyers and organizations fighting for the money “recall the worst of racial hustling and class action opportunism in the United States.”
¹⁴
Abraham Foxman of the Anti-Defamation League—uninvolved in the struggle—warned that the claimants were making “an industry on the memory of the victims.” And it is indeed difficult to disagree with what each of the claimants said of the others—namely, that they were
chiefly interested in gaining wealth, power, and glory in the name of the dead. One lawyer charged $5,000 for reading a book on Swiss gold transactions, but this was far less damning than that under the WJC's proposal direct payments to survivors
and services provided by Jewish organizations
, however the organizations might define them, were lumped in a single category to which 80 percent of the funds would go. The rest would go straight to the organizations. But of course giving money to organizations that claim to serve survivors is more like giving money to organizations than to survivors. And in fact the structure of the settlement agreement was stacked in favor of organizations.

Of the five categories of beneficiaries established by the settlement agreement the one with the highest priority for payment, the one at first sight likeliest to deliver money to real Holocaust survivors and heirs, is comprised of those who “had assets . . . on deposit at any Swiss bank, investment fund, or another custodian prior to May 9, 1945.” Yet the amount of money allocated to this category could never have been more than a small slice of the $1.25 billion, and a substantial part of that slice was likely to end up in the hands of the distributing organization. By the time the Independent Committee of Eminent Persons under former Federal Reserve Chairman Paul Volcker was established to make a definitive report on the number, value, and property of accounts in Swiss banks dormant since World War II, those accounts had already been thinned by several sets of searches over the years. But while the Volcker committee examined every single account opened in Switzerland between 1933 and 1945 (6.8 million), and further increased the estimate of the number of dormant accounts that
might
have belonged to Holocaust victims, it had no more success than Swiss bankers in identifying proprietors.

The committee first excluded the accounts for which no records remained due to bank mergers and authorized disposal, as well as purely domestic accounts. It also excluded dormant accounts opened earlier (among which was one Lenin had established during his exile in Zurich). Then it matched the remaining 2.2 million accounts against the names of all known or suspected victims of the Holocaust (5.5 million). About 356,000 names matched to some extent, or were otherwise suggested to be relevant. Of these, more than 300,000 were further determined to have been domestic, or unmatched chronologically, or properly closed. Some 53,000 were left with a “possible or probable relationship with Nazi persecution.” But more than half of these had been closed for various reasons, and most of the rest had been paid in some way. Only 2,726 were classified as “open and dormant.” Most had little value. The Volcker report said:

The report concluded that the inclusion of any account as “probably or possibly related” is not necessarily evidence about who owns the account, since the matches involve common names, and evidence considered normal in judicial or financial proceedings is almost totally lacking. Moreover, the committee made no attempt to place monetary value on the unclaimed accounts. Thus it did not take up the bet by the Swiss bankers' association that the cost of the Volcker process—200 million Swiss francs—would exceed very substantially the amount of money it turned up.

The committee's judgment on the process of liquidating these accounts further suggested that those in charge of the process could do pretty much what they wanted:

Certainly this had been the experience of the administrator general of Israel's Justice Ministry, who had published a list of five thousand dormant accounts held by Israeli banks and ended up giving title to all of ten claimants. Anyone whom the special master put in charge of the claims resolution process would face precisely the same problems of distribution as the Swiss banks or the Israeli justice minister had faced.

The questionnaire sent out under the court's mandate to potential claimants of these accounts asked for substantiating documents that the claimants would not be able to produce for the distributors any more than they had been able to produce for the Swiss bankers themselves. Just like the Swiss banks, the Jewish organizations would not hand out fortunes to old ladies bearing stories of a long lost father who made obscure remarks about having stashed money in a Swiss bank. Unlike the banks, however, these organizations had political constituents to feed. Besides, since the average age of potential claimants was seventy-five, they were dying off at the rate of about forty thousand per year. Hence the pressure on the distributing organizations to give away money that would otherwise be theirs was sure to diminish, while the incentive to delay would grow.

The second category, consisting of persons who lost “assets disguised by a Swiss entity for the benefit of an Axis company, entity or person associated with the Nazi regime,” was even less likely to contain well-documented claims for substantial sums. How could any person whose money or business or cars were taken by the Nazis argue, much less prove, that the value of those assets was somehow “cloaked” in Switzerland rather than simply consumed in the maw of the Reich's war machine? The Volcker committee's brief reference to this problem basically stated its insolubility. The money devoted to this category also had to end up in the distributors' hands.

The third and fifth categories gave the distributors total discretion. The third concerned slave laborers whose work somehow passed through Switzerland. But to tell where the value of anyone's work flowed in a complex modern economy was as impossible as to discover what operation of a human body was due to any given bit of food it had consumed. The fifth
included slave laborers who worked in Swiss-owned facilities in Nazi-occupied Europe. But by definition any factory in Germany or any occupied country operated not according to the wishes of its legal owners but according to those of the Nazis who had power of life and death over managers as well as laborers.

The fourth category, those who “unsuccessfully sought entry into Switzerland to avoid Nazi persecution,” had the advantage of dealing with possibly identifiable persons. Leave aside why the plaintiffs did not seek damages against American or Swedish authorities who had denied asylum to persons fleeing the Nazis. The practical question was: How could anyone show that he or she was denied entry into Switzerland (deportation is another matter)? One person's story would be as good or as bad as another's. To the extent that refusal of asylum meant death, there should have been no one around with a right to collect. Add the fact that the distributors of the money had every reason to believe that every application they denied would mean more money for their own organization, and it was reasonable to deduce that little money from this category would ever reach individual claimants.

Who then would be the beneficiaries of such wide discretion over so much money? Could it be that past, present, and future constituents of the distributing organizations would do better than unconnected persons?

Finally, by the time of the settlement, the Jewish organizations that were vying for the power to distribute the take had compiled a solid record of delay and inefficiency in distributing previously established funds. In 1997, for example, Swiss government and industry established a $200 million fund for Holocaust victims. Distribution was to be handled by the WJC
in its capacity as an affiliate of the World Jewish Restitution Organization. Yet a year after the fund was supposed to begin disbursing, the WJC had actually sent out only 10 percent of its funds. The newspapers were full of anguished cries from those who had expected benefits.
¹⁷
In the end, the effective beneficiaries turned out to be the organizations themselves. No one familiar with Michels's Iron Law of Bureaucracy could be surprised.