by Bower, Tom
On March 14, 1950, Werner Schmid, a liberal politician, asked if the government planned to transfer Hungarian heirless assets to the regime in Budapest. To conceal the truth, Petitpierre promised to give an answer sometime in the future. The sensitivity of Schmid’s question and his promise of permanent vigilance stirred Max Schwab, under constant pressure from Oetterli, to rewrite history and add confusion to the problem of the heirless assets, the claims by survivors for unidentified accounts, and the continuing freeze on German property. “The Allies never mentioned that the Nazis’ victims should be specially treated,” Schwab wrote to Stucki and the Political Department. “Even if the Americans wanted special treatment, the British and French would not be so eager.” Aligning himself with the government and the banks, Schwab dismissed the credibility of all Jewish demands. “Ninety percent of the applicants say they’ve been persecuted,” he said, reciting the familiar mantra, “and we can’t check.” Schwab’s certainty, however, was soon shaken by the unexpected response to the Swiss government’s public appeal in Israel, which encouraged more claims from the new Diaspora around the world. Reading that cascade of letters evoked cynicism in Bern rather than sympathy, but it also aroused trepidation.
Relating pitiful tales of escape while whole families were murdered, survivors pleaded for help in finding an unknown numbered account opened by a father or an uncle in Switzerland. Lydia Wohlin, writing from New York, described how her family from Bialystok, Poland, had been murdered. Struggling in postwar Europe, Wohlin met an old Polish friend who recalled that her father had opened an account in Switzerland. “Could you be so kind,” asked Wohlin, “to find the bank? I understand it is a very hard thing to do.” Similarly, Hanna Milkowska, living in London, had heard from a friend of her dead husband that there was an account, although she too did not know the details.
Penniless in a kibbutz near Haifa, Israel, Diamant Schimshohn knew precisely the name of the Swiss company to which his father had entrusted his money in 1939. Schimshohn asked the Swiss president for help, explaining that his entire family had later been deported to Auschwitz: He escaped while all of the others died. “During the whole war and afterward,” he wrote to the president, “I just dreamed of completing my medical studies.… My father said that the money was for his children’s education. Could you please help me find it and satisfy my innate desire to study medicine?… I hope, your Excellency, that you will understand the human purpose of my request and will relieve so much of my tragedy as is possible by supporting myself.” The reply from the president’s office, the response given in identical terms to hundreds of similar pleas, was short: “Please write to the Swiss Bankers Association, who may be able to help you.”
Seymour Rubin, representing claimants, had experienced the Bankers Association’s customary answer to inquiries: “A number of legal and practical problems arise.” The “problems,” condemned by Rubin as “completely impossible requirements,” were the need for the depositor’s authenticated death certificate, proof of heirship and—an “indispensable” stipulation—the precise identification of the bank account. “Proof of death in a gas chamber is extremely difficult,” complained Rubin. “All we know is that the deceased was last seen entering a concentration camp and is not known to have ever emerged.” Requiring the claimants to provide “exact details about the banks in which the accounts in question exist” was unrealistic and illogical. The Jews had chosen to deposit their money in Switzerland because anonymity was guaranteed. They were unlikely to reveal the details of the secret to their families. Rubin had pursued the case of Izak Goldwasser, whose heirs had asked the Bankers Association for help in finding his bank account. The Bankers Association’s initial response had been encouraging. Rubin was convinced that the account had been found. But suddenly the door was firmly closed with the excuse that the banks’ secrecy rules precluded the release of any information. Rubin suspected that a bank, a member of the association, wanted to conceal the existence of Goldwasser’s account, but the terse assertion of ignorance by the association, regretting its inability to find “any trace” of an account, could not be disproved. In the face of deceit, the outsider was helpless.
Erwin Haymann, a Genevan lawyer, was confounded by the same problem. Haymann had been retained by the widow of an Italian Jew murdered by the Germans; he had good evidence that SF1 million had been deposited in a Crédit Suisse account in Geneva. The bank, pleading secrecy, refused to help the widow regain her money. In desperation, the lawyer appealed to the Bankers Association for help, but the bankers, Haymann protested, “do nothing to help the inheritors.” Even inheritors with authentic documents were unwelcome.
Lydia Reginek’s husband Hans had been murdered in Auschwitz soon after arriving on July 14, 1941. Unusually, the following day, the widow received a telegram from the camp commander announcing his death. Before the end of the war, Lydia Reginek had obtained from the Polish courts an official death certificate and an order declaring that she was the inheritor of her husband’s wealth in Switzerland. Yet in Switzerland, seeking possession of his estate, Reginek was told that the authorities did not recognize the validity of the Polish documents. The new communist Polish government, explained the bank, had declared that everything committed during the Nazi occupation was invalid. The bank’s objection was supported by a Swiss court. The banks justified their caution by stories of fraud. Too often, the association claimed, they had responded to a pitiful tale of survival and, discovering that an account did exist in the survivor’s name, had released money—only to welcome at the bank, once the first claimant had disappeared, another member of the same family who stated a better claim.
Amid the confusion, emotion and recrimination, the Israeli diplomat Gershon Meron had, after weeks of searching through dozens of claims, identified two compelling cases that he believed, properly pursued, would strip the bankers of their sanctimony. Hirschel Bragowski, who was the uncle of Anna Merlinski, and Julius Spira had been gassed in extermination camps and were known by their relatives to have deposited money in Swiss bank accounts. Since their own application for information had been stonewalled, Meron asked Zehnder for assistance. Meron’s inquiries were passed to the Bankers Association. In reply, the association recited its obligations under the secrecy laws, its strict requirements for the precise location of the account and legal proof that Bragowski and Spira had died and that the claimants were entitled to their estates. Thereafter, declared the association, “we would be very glad to undertake a new search for the account.” As a dutiful messenger, Zehnder passed on the news to Meron. Unlike previous inquirers, the Israeli enjoyed sufficient status to reject Swiss guile. “Be more cooperative,” he bluntly threatened Zehnder, “or I will seek a more legal solution.” Unaccustomed to undiplomatic language and appreciative of power, Zehnder warned the Bankers Association that Meron would demand special regulations in the absence of an unsatisfactory reply. “We agree,” Zehnder wrote to the Association, “that this sort of solution should be avoided if possible. We can achieve that only if we compromise with the Israelis.”
Zehnder’s sober appeal for good sense was read by Max Oetterli. He was confident that everything was under control and that the chance of special legislation was remote, and so his instinct was to retaliate. Unlike Robert Dunant, who had gradually softened his stance toward the Jewish question, Oetterli was vigorously antagonistic to the Jews. Zehnder’s letter provoked him into blasting the Political Department for the suggestion that the association should dispatch a circular to its members. “Don’t expect any response to your letter,” he cursed Maurice Jaccard, one of Zehnder’s subordinates, in a telephone call. “The Israelis’ constant protests are quite simply fallacious.” Attempting to reason with the excited Oetterli, Jaccard explained, “I can’t prevent your association from adopting that attitude, but the Israelis won’t be satisfied with your ‘solution.’ They’ll just double their efforts and even demand a decree in court to obtain the documents.” Oetterli was implacable.
In a message to Zehnder, Jaccard reported, “Herr Oetterli was rather excited and spoke in despicable words about “‘Jewish propaganda.’”
The following day, Oetterli telephoned Rudolf Bindschedler, the Political Department’s senior lawyer. Renowned for his long silences, Bindschedler had been affected by the letters of complaint from Jewish survivors seeking help. Now he was listening to an excited bankers’ spokesman cajoling the department: “Don’t simply collapse because of a demand from Tel Aviv. Fight the Israelis.” Damning the Washington Accord and the “famous exchange of letters,” Oetterli warned that the bankers would not tolerate any change in the existing laws. Trying to calm him, Bindschedler explained, “When the existing laws were introduced, there hadn’t been an heirless assets problem. The Israeli request is not based on the accord.” Then the lawyer issued an unexpected counterwarning: If the association remained unhelpful, new legislation might be necessary. Deaf to that caution, Oetterli defiantly terminated the conversation. After reading his typed record of the exchange, Bindschedler wrote in pencil in the margin, “Glaringly exposes the Bankers Association and Oetterli.”
For one month, Switzerland’s senior bankers contemplated the Political Department’s attitude. Given the sympathy they could rely upon from Petitpierre, the bankers considered, Bindschedler’s comments could be ignored, but it might be worthwhile to nudge the department toward a greater understanding of the realities of Israel and the Jews. The immediate difficulty was Meron’s request for information about the Spira and Bragowski accounts. The best response, the association believed, was to cast suspicion on the Israeli government’s motives. “Israel needs foreign currency,” the association wrote to the Political Department, “and forces its citizens to exchange that currency into Israeli pounds at huge losses.” The new instruction to Swiss banks receiving queries from current Israeli clients was to send no letters to Israel. Slyly, the association added that if the Swiss banks transferred any money to Israel it would effectively be confiscated. “We doubt,” wrote the association, “that the Israeli request was freely supported by the named inheritors.” Unwittingly, by acknowledging that money would be transferred to Israel, the bankers had implied that the claimants were genuine. That nuance was missed by Zehnder, who marked the letter’s comments about Israel’s alleged motives “correct.”
Unsure whether others in the department understood that the Bankers Association opposed any changes in the law that would release the heirless assets or disclose bank accounts, Oetterli started bullying officials. “With despicable words,” commented Jaccard, “he talks about the Israeli requests.” Oetterli’s uncontrolled anti-Semitism provoked him into a contemptuous assertion that the department’s officials were unwilling to understand that the term “heirless assets” was meaningless. Too many complainants, he said, uneasy that support for the banks was not universal, were approaching the Department. Among the complainants was Erwin Haymann, the lawyer in Geneva specializing in such claims whose inquiries concerning the bank account of Max Reiser, a murdered Polish Jew, had been stalled. “You advised me,” he wrote to the Political Department, “to ask the Bankers Association for information … the same advice as in previous cases. I have followed that advice scrupulously, but I never receive any information from the Bankers Association and sometimes not even a reply.” Politely, Haymann warned the department: “It seems to me absolutely vital, in the interests of both Switzerland and the settlement of this business, that a solution is found to this problem.” The department did not respond. Then in autumn 1951, Oetterli’s anger reignited.
Philip Schmid, another member of the Swiss parliament, was criticizing the government for failing to donate the heirless assets to the Nazis’ victims; and officials in the Political Department had, in a lukewarm, noncommittal manner, assured George Brunschvig of the Swiss Federation of Jewish Communities that they would consider legislation compelling banks and other financial institutions to register all dormant accounts. To Oetterli, even these insignificant expressions of intent amounted to a crisis. Apoplectic, he shouted at Maurice Jaccard that the department should show him any proposed reply to Schmid before it was published. Shaken by Oetterli’s assumption that the government was merely an agency serving the banks’ interests, Jaccard made a mental note to ignore that demand, but his manner did not betray any disdain. The official had, however, come to share with Alexander and Bindschedler, the two senior lawyers, a sense of outrage at the iniquity of the banks’ behavior. To strengthen their case for a law, they dispatched an inquiry to Switzerland’s embassies in Washington and Western Europe asking for information about their host government’s treatment of heirless assets. Switzerland, they knew, would react only to foreign pressure.
Oetterli understood the same. In its annual report, the Bankers Association prominently complained that foreign governments were applying “pressure” on the banks, implicitly reproaching the Political Department for failing to provide protection. The association’s next step, since it was fearful that the government might bow to foreign influence and change the law, was a public offensive. Under the headline “German assets in Switzerland,” the Swiss Bank Corporation published a bulletin asserting: “Charges have been made that Switzerland allowed her territory to be used by Nazi organizations to hide looted property. An official census of German Assets in Switzerland has shown that these suspicions are entirely unfounded and that the total value of German assets in Switzerland is far below what irresponsible quarters had alleged.” Another statement, issued by the Bankers Association, warned against “special legislation introduced because of pressure by foreign organizations,” which would constitute a “severe violation and change of our system of justice.”
Oetterli’s frenzy was not inexplicable. Seven years after the war, the banks, insurance companies and other trustees were better able to gauge the amounts in dormant and unclaimed accounts. At stake was a gigantic, unmonitored windfall. In addition, as tax rates soared across Europe, secret accounts in Switzerland had become increasingly attractive to the rich. Protecting German property and Nazi loot and defending the secrecy laws acted as a magnet for potential customers seeking a safe refuge for their undeclared income. Any threat to the secrecy laws, Oetterli understood, threatened his members’ fortunes. Suppression of information was crucial for the banks’ profits, and any exposure of their illegal activities was to be ruthlessly resisted. The history of one scandal, suppressed over the previous months, indicated the trouble that would befall his profession if Oetterli’s tactics failed.
Rumors of the bankers’ success in preventing an investigation had reached Dr. Lüthy, a government lawyer. The subject was the official investigation into the provision of false affidavits offered with stolen securities during the war. Appalled by the bankers’ obstructionism, Lüthy wrote to Minister of Justice von Steiger asking him to consider the circumstances. The Bankers Association—“a state within a state,” according to Lüthy—had been aware of the illegalities before the authorities had; and the bankers had profitably exploited the public’s trust to avoid punishment. Lüthy wanted the culprits imprisoned. Among those Lüthy named as culpable was Henri Grandjean, a director of Crédit Suisse who had purchased stolen French bonds attached to false affidavits. According to Lüthy, Grandjean, as a member of the French Committee of the Bankers Association, had abused his position. “His profits were huge,” declared the lawyer. Yet at the end of his eighteen-page letter, Lüthy performed a remarkable about-face and reconsidered his earlier request for exposure and punishment. “These facts,” he concluded, “are not known to the public. Happily!”
At the end of 1950, Lüthy’s recommendation that the scandal should remain secret was overridden. Revelations by communists and social democrats about other falsifications and dishonesties had compelled Petitpierre to make a statement to parliament about the Bankers Association’s conduct. By then, the foreign minister’s loyalty toward all bankers, including those who had profited from the false affidavits, was
so intense that a confidential tip about shares, offered to him by a Volksbank director, did not even evoke a written reply that could officially distance him from the suggestion. In an uninterrupted one-hour speech to Switzerland’s politicians, Petitpierre adhered to the gospel that the government could not interfere in the banks’ internal affairs. He selectively admitted known mistakes while protecting the association from demands for state control. His solution, adroitly legal, was a cover-up. The responsibility for further investigation and any prosecutions, he announced, was to be dispersed among all the cantons. In a confidential letter, he justified this maneuver by explaining that any personal culpability had to be subordinated to “important external considerations.… A trial in a canton court would arouse much less attention than one in a federal court.” The anonymous victims—those whose shares had been stolen and who were unable to obtain their recovery—won no sympathy from Petitpierre. As a precaution, in January 1952 the Ministry of Justice was ordered to draft legislation requiring banks to declare unclaimed deposits, but that was a perfunctory detail. Ignoring the suffering of the innocent was a consistent policy, passed down from the minister to the Compensation Office. In rare cases, though, such as that of the Mendelssohn-Bartholdy family, the victims were unwilling to succumb.
By 1952, Otto Mendelssohn-Bartholdy, the grandson of the composer, had died and his son Hugo, living in Switzerland, was urging Hans Frölicher, the director of the Political Department’s German Interests Section, to assist his campaign to gain access to the family’s Bodenkreditbank shares, worth SF1 million, confiscated during the war by the Nazis. A complication had already robbed the family of a considerable amount. In 1948, the Bodenkreditbank had made a call on shareholders for extra cash. Those who failed to pay lost a significant slice of their investment, and the Compensation Office had refused to release any of Mendelssohn-Bartholdy’s money to maintain the value of his shares—a fate shared by all those who suffered the Compensation Office’s discrimination against German Jews. More persistent than others, Hugo Mendelssohn-Bartholdy had obtained from the new communist government in East Berlin a document testifying that the family was stateless. But the document was discounted by the Compensation Office on the ground that it was not the original individual decree issued by the Nazis. Similarly, the Compensation Office rejected a document issued by the Nazi Reichsbank showing that the shares had been confiscated from their stateless owners. The Compensation Office explained that the Reichsbank’s declaration did not specify whether the stateless person was Otto or Hugo Mendelssohn-Bartholdy. “The Compensation Office is looking for any pretext to avoid releasing my money,” Mendelssohn-Bartholdy wrote to Frölicher.