by Bower, Tom
In May 1949, before the Polish agreement was signed, Swiss officials had wanted to use the heirless assets of Polish Jews as compensation for the loss of Swiss property in Poland. One year later, after the international protests and the arguments within Switzerland, Petitpierre had notionally retreated from that idea, although the principle was unchanged. After a survey, the total of Polish heirless assets was fixed by Switzerland’s financial community at SF541,000. Five years later, the banks revised their figure to SF23,300. After another three years, in 1958, the figure had fallen to SF17,550, plus SF849 for insurance policies. By 1963, the strategy behind the original agreement had collapsed. Deliveries of Polish coal were less than anticipated and only half the SF53.5 million compensation to Swiss property owners had been paid. Negotiations resolved the breakdown. Sufficient Polish money was paid into Account N in the National Bank to satisfy all Switzerland’s claims. The Poles now demanded that the heirless assets be transferred to the account.
In 1965, Swiss ministers agreed that Polish and Hungarian heirless assets should be kept separate from the “unclaimed fund.” Weber’s office disregarded that direction by paying all the deposits that were less than SF1,000 into that fund, allowing the banks to retain the money. Ten years passed. Sporadically, the Polish government inquired about the heirless assets and received unrevealing replies. Embarrassed by the agreement, the Swiss, who always preached about their passionate adherence to the law and to legal obligations, had decided unilaterally to reduce sharply the amount to be transferred and also to vary the terms by refusing to name the depositors, to prevent any unpleasant recrimination. The result for the Polish government was disagreeable. Despite the original agreement, it was unable to fulfill its legal obligations to transfer the money to the survivors or their heirs. That consequence was precisely what the Swiss government had intended. On August 6, 1975, SF463,954 was transferred to Account N, the Polish government’s account at the National Bank. No explanation was provided for how the banks had arrived at such a precise figure. The Swiss government merely hoped that the subject was closed.
Settling the payment to Hungary under the terms of the agreement on July 19, 1950, was more complicated. Six hundred thousand Hungarians in 1939 had been Jews, and the government in Budapest was now convinced that thousands of rich Jews had deposited hundreds of millions of francs in Switzerland’s banks. Under the “confidential” agreement that was successfully kept secret, Switzerland had agreed to help the Hungarian government find the assets of any person named by the Budapest authorities. Shortly after the agreement was signed, the Hungarian government submitted names of those suspected of having accounts who had died without heirs. One name proved to be accurate, but the depositor was actually alive and had settled in the West. Other names and deposit details were also accurate, but the Political Department, acting on the banks’ instructions, resisted confirming any information. Weber’s own list of thirty Hungarian dormant accounts was not even passed to the Political Department. That money, Weber had decided, should be transferred into the “unclaimed fund,” even if the heirs could have been identified. Discussions were abruptly halted soon afterward by the uprising in Hungary in 1956 and political upheaval elsewhere in Europe.
Talks resumed in 1963, as the Hungarians, expecting a windfall, urged the Swiss to hand over the heirless assets to fund Hungary’s repayment of its own debts to Switzerland. Simultaneously, the Hungarians also demanded the names of the account holders to allow them to trace the heirs. That request sparked a row among the competing Trade, Political, and Justice Departments in Switzerland. The resolution favored the banks. No names would be provided to the Hungarian government.
The Hungarian negotiators were baffled. Not only was Switzerland refusing to trace the rightful owners of the money, but it was also protecting those Nazis and their collaborators who might have transferred to Switzerland money that was stolen or extracted through blackmail from Hungarians. Altogether, Swiss policy was a deliberate injustice that would enrich the wrong people. Unfazed by that possibility, Diez, the lawyer in the Political Department, replied that Switzerland’s policy would not be dictated by Hungary. “We have already defended ourselves against more powerful opponents,” the lawyer told the Hungarian ambassador. “The claims and demands you insist on are so exaggerated and wide ranging that it’s not even worth discussing them.”
Ignoring the Hungarians was nevertheless impossible. Under the pressure of Swiss exporters, the government needed to satisfy the Hungarians, who could threaten to make compensation for Swiss property owners dependent on the transfer of the heirless assets. The solution, proposed the Political Department, was to offer Hungary a lump sum without admitting any obligations or identifying the owners of the accounts. The object, explained Diez, was to avoid setting a precedent that would allow Israel to establish its own claims. To obviate legal complications in Switzerland, Diez declared that the unclaimed Hungarian assets would be “confiscated” from the banks. That, decided the official, was a legally acceptable way to avoid telling parliament about the deal and would deflect the Hungarians’ demand for the names of the original depositors.
The Hungarians were no longer just baffled but angered. Switzerland’s solution, said their negotiators, was “painful” and “completely negative.” The proposal tilted the settlement in Switzerland’s favor, awarding it “unjustified enrichment.”
The Claims Office in 1964 had calculated how much of the heirless assets belonged to Hungarians. Its first report on December 7 stated that fifty-three depositors had owned SF460,500 and there were nine unopened safe-deposit boxes. One year later, the sum registered had not altered but the safe-deposit boxes were no longer mentioned. By 1971, the office reported that the amount of Hungarian heirless assets had fallen to “half the amount”—SF217,000—because the heirs had been traced. That might have been true, but more likely the office had allowed the banks to retain the money, which had been the fate of all but two of the cases presented by the Hungarian government. “This is a thin result,” Diez conceded after refraining from giving the Hungarians any information beyond those two cases. “There are limits to everything.”
In Hungary, there were no illusions about the behavior of the Swiss. While Switzerland still bemoaned its failure to resist U.S. pressure in Washington in 1946, the legitimate demands of the Eastern European countries were, according to cynics in Budapest, being “heroically resisted” by Bern to allow self-enrichment with the unclaimed assets.
That criticism suited Switzerland. Faced with similar demands for heirless assets from other Eastern European countries and Israel, Swiss politicians and bankers were anxious to appear unyielding. Any settlement with Hungary that transferred heirless assets threatened that image. Diez proposed outright deceit. Having agreed that Hungary should be given without explanation SF325,000 withdrawn from the “unclaimed fund,” Diez proposed to conceal the payment. It would simply be subtracted from the compensation paid by Hungary to Switzerland for the confiscated property. Nothing in the published documents would reveal that Hungary had received any heirless assets. No announcement would be made to the Swiss parliament, nor would the necessary parliamentary approval be sought to withdraw the compensation from the fund. To sugar the pill, SF400,000 was deducted from Hungary’s debts in 1973, and nothing more was said. The Swiss government had used the Jewish heirless assets for its own purposes, and for the next twenty-three years, as the conspirators died one by one, it seemed that the nation could draw a final veil over its collaboration and deception.
16
THE DEAL
Edgar Bronfman does not appreciate infidelity. Blessed with a billion-dollar fortune, the stylish heir to the Canadian Seagram distillery empire is accustomed to compliance and obedience from others. But as a businessman Bronfman likes and is accustomed to making deals. Unfortunately for Switzerland, when George Krayer, the chairman of the Swiss Bankers Association, met the president of the World Jewish Congress in September 1995, he mis
judged the new crusader. Krayer believed that Bronfman, as a professional dealmaker, would regard his offer to pay a lump sum in final settlement of Jewish grievances as an attractive deal. The banker did not contemplate that a businessman might be troubled by questions of morality.
Ever since his election as president in 1981, Edgar Bronfman, sixty-eight, had gradually jettisoned his playboy lifestyle. Besides managing the world’s biggest liquor manufacturer, he had transformed himself into a notable personality among world Jewry. From his unique office in the Seagram Building in central Manhattan, surrounded by Rodin sculptures, a Miró tapestry, and other masterpieces, he had saved the moribund World Jewish Congress—cofounded in 1936 by Nahum Goldmann to crusade against Nazism—from bankruptcy and in 1991 had tasted the success of his first crusade. With energy, gusto and skill, the three senior executives employed by the World Jewish Congress in New York had captured universal attention by establishing that Kurt Waldheim, the president of Austria and the respected former secretary general of the United Nations, was a liar and had been associated with Nazi war crimes. Singlehandedly, the WJC had destroyed the politician’s reputation and had tarnished Austria forever. Four years later, Bronfman arrived on his private jet in Bern with two members of the Waldheim team to reactivate the cause of the heirless assets and dormant accounts.
Israel Singer, the WJC’s general secretary, an orthodox Jew and graduate of a rabbinical seminary, was an experienced strategist with a good understanding of history and twenty years of experience in negotiating on behalf of the Jews with foreign governments. Renowned for his volatile temperament, Singer was the logistician on whom Bronfman relied. The mouthpiece was Elan Steinberg, the executive director, who shared Singer’s aggressive energy and his courage to shout when others might shy away out of embarrassment; he would prove to be a shrewd propagandist. The level of noise generated by these two men suggested an enormous organization, but in reality the two were the complete executive staff of the World Jewish Congress. That truth was understood by the Swiss bankers.
Bronfman had flown to Bern at the suggestion of Rolf Bloch, the president of the Swiss Federation of Jewish Communities. Over the previous four months, Bloch had noticed a significant change of mood in Switzerland. The collapse of communism and the restitution of confiscated property to Jews in the former East Germany had encouraged Kaspar Villiger, the Swiss president, to choose the fiftieth anniversary of the end of World War II as the occasion for an emotional appeal. A new study of Switzerland’s wartime treatment of the Jews by Jacques Picard, a Swiss historian, based on newly released archives had recently exposed the wartime government’s anti-Semitism as much worse than previously thought. Speaking in parliament, Villiger had told his countrymen that Switzerland must apologize to the Jewish community for its behavior toward the refugees during the war. “We can only bow our heads in silence before those whom we led into suffering and captivity, even death,” he had intoned. “We can only bow our heads before the family members and descendants.”
Bloch reported to Bronfman that the discussions he had started with the Bankers Association in March had progressed substantially. “The bankers are showing a new sensitivity,” said the representative of Switzerland’s small Jewish community. “They are aware of the new attitude in Switzerland. There’s anger that Switzerland deceived foreign governments about its relations with the Nazis and that the Swiss lied about their handling of the property of the Jews.” The Bankers Association had agreed with Bloch that their members should be asked to produce a final account on the heirless assets and unclaimed accounts. After six months of preparatory discussions, Bloch had arranged a meeting with Bronfman that, everyone agreed, would remain strictly private.
George Krayer, the chairman of the Bankers Association, was waiting for the three Americans on September 12 in a private room at La Grande Société, a club near the parliament building. Standing with the chairman were Hans Baer, an affable Jewish banker who had spent his childhood during the war in the United States; and two association officials: Jean-Paul Chapuis, the secretary general, and Heinrich Schneider, his deputy responsible for internal matters. Standing in the background were several lawyers and Hanspeter Häni, recently appointed as the Bankers Association’s ombudsman to help Jews find dormant accounts in Swiss banks. Since Häni was overtly pessimistic about finding “much for the heirs of the Holocaust,” his presence was a warning that the association could not be trusted.
None failed to be impressed as Bronfman, a tall, imposing figure, entered the room. As president of both the WJC and the World Jewish Restitution Organization, Bronfman had received the endorsement of Yitzhak Rabin, the prime minister of Israel, as the representative of world Jewry in Switzerland. On the other hand, the two swarthy men peering through thick glasses who accompanied the tycoon struck the waiting bankers as men who, like their predecessors over the previous fifty years, required reluctant toleration but could eventually be ignored.
After shaking hands, Bronfman rapidly became irritated. They were standing in a small room without tables or chairs, and the mood was frosty, in marked contrast to the warmth they had encountered in meetings earlier that day with the Swiss president and the chairman of the Swiss Bankers Commission. “They are pledged to negotiate in good faith and in secrecy,” Kaspar Villiger had told Bronfman, “until you reach a just solution.” Yet the bankers were exuding unfriendliness. Pompously, Krayer announced to Bronfman that a survey conducted by the Bankers Association had found dormant accounts with a total value of SF38 million ($32 million). Although not all the SF38 million was identified as originally deposited by Jews, the sharp increase from SF9.4 million disclosed after the 1962 law should have alerted the association that suspicions would be aroused. Instead, the Swiss bankers believed the contrary: that the Jews would be satisfied and grateful that more money had been discovered. For Krayer and the Bankers Association, that money was the solution to the historical problem. Bronfman, they judged, would shake on the deal, eat the lunch offered and depart forever.
“Will you take this as a final settlement?” asked Krayer.
Bronfman and Singer were shocked. “I don’t like the ‘take it or leave it’ attitude,” replied Bronfman. “I haven’t come here to discuss money. I’m here to discuss a process.” Krayer retreated. The tension lifted.
As the party sat down for lunch, the Jews’ optimism returned. Two historic obstacles had been removed. Recently, under pressure from Washington, Switzerland’s banking secrecy laws had been weakened to prevent deposits of drug money and, while Krayer had said in the past that he had “no knowledge” of dormant accounts, he was now volunteering to the visitors that “the banks had not behaved well.” Since the survey among the association’s 440 members had revealed the existence of dormant accounts, the banker remedied the introductory insult by promising, “We will certainly return the money, every penny, which belongs to the Jews.”
Bronfman had no reason to disbelieve the banker. “We’re not here to talk about the amounts of money,” repeated Bronfman, “just about the procedure.” Krayer nodded. By the end of the meal, an agreement had been reached. The association would conduct another comprehensive survey among its members for all dormant accounts and—Bronfman emphasized that “this is most important”—there would in the meantime be absolute secrecy. Publicity, it was agreed, would suggest that a final sum had been discovered, and that would provoke controversy and demands for payment. To smooth the presentation, the two sides agreed that their best course was to aim for unanimity before any announcement was made. Until an agreement on the final sum had been reached, they decided, their discussions should remain secret. It’ll be a rare occasion that we stick to a pact of silence, thought Steinberg as they drove to the hotel. Pleased with the meeting, Bronfman and the two executives flew to Belgium to attend another meeting at the European parliament about restitution. The secrets of the Swiss banks, it appeared, would be finally revealed.
Over the next ten weeks, Israel
Singer returned three times to Bern to meet Krayer and discuss progress. As Singer sat in a suite at the Schweizerhof Hotel, his mood varied. The bankers, he said, telephoning Bronfman, were suspiciously slow. In particular, Heinrich Schneider, the Bankers Association’s secretary responsible for interior affairs, was hostile. Parochial and antiforeigner, Schneider was also hampered by his intellect. Like Max Oetterli, his understanding was limited to Swiss politics and prejudices. Singer believed the decision to meet in Bern rather than in the association’s own buildings in Basel reflected a distaste for allowing Jews into the association’s headquarters. Although Singer had become immune to slights, by the time of his return to New York in December he suspected that the Swiss bankers were intent on breaking their undertaking. A threshold had been passed. A telephone call sealed the fate of Krayer’s strategy. Bronfman struck out for an alliance with an unlikely partner—Senator Alfonse D’Amato.