Nonetheless, the tone of the report strongly suggests that Switzerland, a Nazi sympathizer and collaborator, took the Jews’ money just as it took Nazi gold, and got away with it for a long time—but that the day of reckoning was at last at hand.
The point, in short, was to extort money from the Swiss. As in the days of Brennus, and World War II, and as ever it shall be, when the sword is heavy, the arguments don’t have to be good, or the scales honest.
CHAPTER 5
Money and Power in U. S. Foreign Policy
“The strong do what they can and the weak suffer what they must.”
—Thucydides
BETWEEN 1995 AND 1999 SWITZERLAND was again beset by a great power’s claim on its economy. The challenge posed by the Clinton administration and the World Jewish Congress had one element in common with that of World War II: Power alone determined how much the weak had to pay to the strong. The power was wielded by American public figures acting officiously rather than officially on behalf of private parties, while the ransom was paid by Swiss private parties to satisfy a claim that had been made on the whole country. Why? Because the American private parties had access to just a bit of the power of the U.S. government.
It hardly matters how Edgar Bronfman, president of the World Jewish Congress (WJC), rented the governmental power he wielded against Switzerland. The point is that the money he invested in political contributions within the U.S. political system ended up delivering to him control over a disproportionately larger amount of money. It was domestic interest-group politics projected internationally. Power makes money.
By September 1995, when Edgar Bronfman met with the president of Switzerland and had lunch with the Swiss Bankers’ Association, his hosts knew that his WJC was demanding money. The WJC had already shown that it could embarrass the president of Austria, Kurt Waldheim, by generating media attention about his wartime collaboration with Nazi abuses. In Eastern Europe the WJC had taken the lead in a drive to return former Jewish property—mostly old synagogue buildings—to Jewish use. And it had already fired a shot across Switzerland’s bow by generating articles that publicized a long-standing fact: Swiss banks still carried many accounts that had not been claimed since the war, and Jews claiming to be heirs of depositors had received little help and much insensitivity from the banks. Therefore, the articles generated by the WJC suggested, the banks were perpetuating at least part of one of the century’s most disgraceful episodes—and hinted at a broader critique of Switzerland’s role in the war.1
Swiss authorities, and the bankers themselves, were eager enough to pay in order to avoid having to defend themselves against these charges. In 1962, and again in 1995, the government had ordered the banks to search for accounts that might be construed as having belonged to foreign Jews. Since there is no way of knowing for sure the relationship of any given account holder to the Nazi regime or to its victims, never mind the holder’s race or religion, the number and amount they came up with each time necessarily depended on arbitrary criteria for designating an account holder as “Jewish” in his or her absence. The 1962 survey picked out as Jews some 750 persons who had Jewish-sounding names. The 1995 survey started from the opposite premise: unless there was reason to think otherwise, the account was dubbed “Jewish.” The 1995 surveys had indicated that eight hundred accounts still unclaimed after previous reviews contained approximately $32 million. The Swiss bankers were eager to give this sum to Mr. Bronfman (sixty-four times what the Kennedy administration had given to Jewish organizations in 1962), and to be left alone. So, at the lunch, they formally offered it to the WJC. Bronfman did not even consider the offer; his interest, he claimed, lay in setting up a process to determine just how much was owed.
The Swiss authorities and bankers had no idea of the power that Bronfman represented, or of what he would put them through. They also held on to the silly notion that Bronfman was interested only in the money in unclaimed accounts. In fact, since Bronfman never advanced objective criteria for his demands, he wanted such money as his power could reap. The fuss over the unclaimed accounts and the banks’ well-known insensitive insistence that claimants provide full documentation for their claim was only a kind of propellant for a much bolder claim on the whole of Switzerland for alleged past sins. Just as his claims went beyond what might be called justice for individual Jews, Bronfman’s power was rooted not so much in the Jewish community as in the American political process itself.
Bronfman and the WJC
Edgar Bronfman describes his life as a love-hate relationship with his father’s legacy.2 In his book, The Making of a Jew, he recounts that as a college student his first act of rebellion was to abandon Judaism de facto. But because of family and business connections, he still moved in Jewish circles and fulfilled his father’s role in Jewish charities. Nahum Goldmann, president of the World Jewish Congress, recognized Bronfman’s business talents; in 1979 he drew Bronfman into succeeding him as president of the WJC, then at a low point of influence.
The WJC had been founded in Geneva in 1936 to marshal the efforts of Jewish organizations around the world to induce their respective governments to accept Jews fleeing Nazism. It failed. After the war, it succeeded in becoming the broker of a settlement between Ben Gurion’s Israel and Adenauer’s Germany that eventually yielded Israel $73 billion. This success came because the state of Israel chose the WJC as an intermediary, and Adenauer’s Germany was eager to pay. Success did not come from any strength inherent in the congress. In short, the WJC is an organization of organizations that has tried to cast itself as the representative of all the world’s Jews. In this it has not been terribly successful; the state of Israel, home to about one-third of the world’s Jewish population, does not delegate the right to represent world Jewry, more than a third of all Jews live in the United States and think of themselves as part of other organizations or none at all, while the rest are scattered over the rest of the world and wield little influence. The power of the WJC, therefore, has waxed and waned with the willingness of governments to give it a role.
As regards the anti-Swiss campaign, and contrary to its claims, the WJC emphatically did not act as an agent of the state of Israel. Interviewed by this author, responsible officials in Jerusalem’s Foreign Ministry, who requested anonymity, stated that it was not Israel’s position that Switzerland had collaborated with the Nazis during World War II, that the state of Israel was not a party to the WJC’s campaign, and that it wanted to stay as far away from that campaign as possible. Israel, they said, had better relations with Switzerland than with any other European country. Relations were particularly close between the two countries’ armed forces since they were the only ones in the world based to the maximum extent on reserves. Israel would do nothing to jeopardize these relations. When asked whether Israel would agree to distribute any of the money from the settlement between the WJC and Switzerland, one official recoiled in horror, while the other said that regardless of how much trouble such a task would make for Israel, the government could not refuse it if the WJC offered. But both agreed that Bronfman would never make such an offer. In short, Israel’s position is that the World Jewish Congress in no way represents Israel.
Bronfman increased the WJC’s power by raising money, and his own by buying access to government with his own and his company’s political contributions. He also had a flair for picking causes and for making bold assertions of authority. In the 1980s the congress rose to prominence by championing the cause of Jews in the old Soviet Union. Bronfman’s small measure of success in this came because he pressed the idea onto Soviet leaders that earning a clean bill of health from Jewish businessmen was the road to getting what they wanted from the West. Under Bronfman, the WJC has also worked to build up Jewish education in order to strengthen Jewish identity and discourage assimilation.
Bronfman makes clear that his effort in such causes was not because he had become either a believer or a practitioner of Judaism. Rather, mild curiosity about the reli
gion resulted from his success in building the WJC’s organization. He wrote that he began to read a little of the Bible for the first time in 1994. He got the identity he had sought from childhood from his secular, organizational involvement in Jewish causes.
The depth of Bronfman’s identity as a Jew may be seen by his non-liquor business, namely entertainment. Seagram Company bought Interscope Records, which produced CDs of “gangsta rappers” and such disciples of pornography, violence against women, and death as Marilyn Manson and Nine Inch Nails. Until August 1997 Bronfman also owned Death Row Records, which produced the equally deadly works of rappers Tupac Shakur and Snoop Doggy Dogg. He sold the latter only under pressure from shareholder lawsuits. Since no moral code, certainly not Judaism, sanctions such things, it is safe to conclude that morality did not drive Edgar Bronfman. His anti-Swiss campaign had nothing to do with religion, and little to do with race. It was personal fulfillment through the exercise of power.
Power
Bronfman’s power consisted of high-level connections within the Democratic Party, of which he was a principal financier in New York and California, as well as at the national level.
A measure of that power is the Bronfman family’s (and company’s) 1995–1996 soft money donation of $1,261,700 to the Clinton-Gore campaign. Throughout the country, countless local Democratic officials know that pleasing Bronfman means money, as well as favor in Washington. As the Eizenstat report’s reference to President Clinton suggests, the president himself ordered Undersecretary of State Stuart Eizenstat to put the State Department’s resources behind Bronfman’s effort to get money from the Swiss. Such Democratic officeholders as New York City Comptroller Alan Hevesi and then California Lieutenant Governor Gray Davis did not need much prompting to follow Bronfman’s lead.
Occasionally Bronfman’s money lures Republicans. For the anti-Swiss campaign Bronfman was able to recruit Alfonse D’Amato, then Republican senator from New York and chairman of the Senate Banking Committee. D’Amato had already earned a reputation for wholehearted devotion to his constituents’ claims, becoming known as “Senator Pothole,” and sending out his staff on what he called “pork patrols” to discover any and all benefits for his constituents. From his beginnings as a politician on Long Island, D’Amato had developed sincere affection for the two dominant ethnic groups of his area, the Italians and the Jews. One photo in his office showed him bowing under the pope’s extended hand, and another next to former Israeli Prime Minister Menachem Begin (and indistinguishable from him). He never looked too closely at the merits of the claims of his favorite groups but took on their causes with gusto. Of all the politicians involved in Bronfman’s effort against Switzerland, D’Amato may have been the only one who actually believed the whole set of accusations. None of this kept Bronfman from helping Charles Schumer, a wheelhorse of New York’s Democratic Party machine, in his successful 1998 campaign to unseat Senator D’Amato.
When Bronfman approached Swiss bankers and officials, he had reason to believe that a campaign in the press and pressure from the Clinton administration would be enough to shake a multibillion-dollar sum out of the Swiss government. But it quickly became clear that while such weapons could generate pressure, they could not actually force the Swiss to pay. Thus as early as 1996 Bronfman turned to what had become the routine, profitable way to fleece politically weak corporate enemies in America—the class action lawsuit. A few words are in order on this feature of latter-day American public life.
Until 1966 plaintiffs who wanted to join in a common, class action lawsuit against a company had actually to co-sign the same documents. As a result, participants in such suits were few. Their specific interest made it likely that they, rather than their lawyers, would keep control of the suit and its proceeds. That year, however, a new law allowed some plaintiffs to claim that they were representing all actual or potential plaintiffs similarly affected by the defendant. Industry did not object too strenuously because this allowed a judge to foreclose any suit by any individual deemed to have been a member of the “class” whose representatives the judge had previously recognized. So, in a way, the law allowed defendants to make one-time payments for protection against lawsuits.
Since 1966 any person who wants not to be part of a class action suit either because he wishes to preserve his own right to sue or because he does not feel represented by those whom the judge has recognized as representatives of the class must file an affidavit stating why he is not part of the class. But this rarely happens. Hence the “classes” contain huge numbers who wind up with pittances. The parties who gain the most money are the lawyers who bring the suits. The politicians who back them gain power as well as some cash.
This system has put great power in the hands of judges. If the judge finds that any given set of plaintiffs (in practice, their lawyers) represents a class containing millions of people, the lawyers for that class can bring enormous pressure to bear on the defendant to settle—meaning to pay ransom without ever going to trial. The suits are usually brought by public officials, or ostentatiously backed by them. Tearful “victims” make good subjects for the evening news, which begins the pressure on corporate targets. In the lengthy process of fighting the suits through innumerable legal maneuvers, the defendants stand to gain nothing if they win and to lose much regardless of whether they win or lose, while the plaintiffs’ lawyers lose nothing but their time if the suit fails and stand to make fortunes if it succeeds. Then there is the process of “discovery,” by which the defendants’ documents are used to generate unfavorable headlines. And of course, as in the Swiss case, the judges themselves put pressure on the defendants to settle by letting them know how they would rule. But the real hammer is that public officials take the presence of the class action suits they themselves are generating, or backing, as an excuse to act as if all the plaintiffs’ accusations had been proven. Thus they begin to issue bureaucratic regulations, hold up licenses, and generally harass the defendants. So much for the “stick.” The “carrot” in class action suits is the defendant’s expectation that once a settlement is reached with the officially sanctioned claimants, the settlement will preclude other challenges. Indeed, in the multibillion-dollar settlement by state attorneys general against U.S. tobacco companies, the government pledged special protection of the defendants’ market share and profits. This guaranteed a steady stream of cash for the plaintiffs while the defendants pass to consumers the cost of buying protection both from government and from competitors. In other words, the process amounts to using the legal system to run a protection racket.
The truth of the accusations is immaterial, above all because those who bring the suits have every intention of preventing them from coming to trial before a jury. In the words of Andrew Cuomo, President Clinton’s secretary of housing and urban development, gun manufacturers would be subjected to the “death of a thousand cuts” if they resisted pressure to accept his demands. But, “If all the parties act in good faith we’ll stay at the negotiating table.”3 Cuomo was referring to a suit he brought supposedly on behalf of public housing tenants alleging that gun manufacturers had been negligent as regards sales and safety devices and hence were responsible for the fact that residents of federal housing projects were several times more likely to be shot than the average American. The suit was backed by President Clinton himself, for whom reduction in gun ownership by Americans has been a goal put out of reach by the public’s opposition. But a straightforward trial of the accusations would not have brought Cuomo and Clinton closer to their goal. Any trial would have shown their allegation to be a non sequitur, that the manufacturers’ behavior followed existing law, and that some public housing tenants’ appetite for crack cocaine fed drug traffickers and their violence. Such suits are no more about law than about truth, however; they are about who can do what to whom.
Often, as in a major suit against the makers of women’s silicone breast implants, research eventually shows that the accusations are scientifically gro
undless. Never mind. By then the defendants have “settled,” giving up the right to sue back. And lots of money has changed hands. The real-life “heroine” of the blockbuster movie Erin Brockovich made $2 million out of accusations against a California utility for its disposal of a chemical that she claimed caused many diseases. Later it was proved that the chemical in question in the concentrations cited was unlikely to have caused any of them. No matter. The take was $333 million.
This is very big business. Some law firms involved in a massive suit against U.S. tobacco companies in the 1990s netted billion-dollar chunks of the $246 billion settlement spread out over twenty-five years. In Texas alone, the lawyers’ take was $3 billion. These lawyers, collectively known as the “Plaintiff Bar,” then recycle some of their profits to the Democratic politicians who make the suits possible. A tobacco suit lawyer who contributed $70,000 said: “We want to make sure we have a Democratic president, House, and Senate. There is some serious tobacco money being spread around.”4 In 1999 the top five law firms that benefited from the tobacco suits recycled $1.8 million of “soft money” into the Democratic Party. In the 1996 election cycle, trial lawyers contributed some $5 million in soft money to the party and another $5 million in money to specific Democratic candidates. Thus they are one of the party’s top constituencies. By comparison, note that Bronfman, his company, and his family contributed some $1.25 million.
Settlements also end typically with the defendants’ agreeing with some of the accusations, as well as with the regulations slapped on their activities that the officials sought in the first place but were unable to achieve through the legislative process. In the domestic arena class action suits have become perhaps the principal means by which the Democratic Party and its associated interest groups achieve political goals, penalize their political opponents, and take in money—all things they could not do by passing laws or trying cases.
Between the Alps and a Hard Place Page 17