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Statement by Under Secretary of Commerce Stuart Eizenstat before the House Banking and Financial Services Committee, Washington, DC, December 11, 1996
I would like to thank Chairman Leach and the House Committee on Banking and Financial Services for this opportunity to testify as part of its "inquiry into the disposition of assets deposited in Swiss banks by Nazi victims and related issues."
Mr. Chairman, the Clinton Administration cares deeply about this issue and recognizes that many injustices from World War II have gone unresolved for more than 50 years. We applaud you and your colleagues for your leadership in bringing this issue to the attention of the American and international community. I would also like to acknowledge at this time the presence of representatives of the World Jewish Congress and others who have helped bring this issue to light and who are cooperating with us in the effort to achieve a comprehensive and transparent examination of issues. I would also like to acknowledge the leadership, tenacity, and energy Senator Al D'Amato has demonstrated.
On April 23 I testified before Senator D'Amato and the Senate Committee on Banking, Housing and Urban Affairs on this same cluster of issues. My involvement with these issues began in January 1995, while still U.S. Ambassador to the EU in Brussels, when I was designated as a Special Envoy for Property Restitution. In that role I led the U.S. effort to urge the countries of central and eastern Europe to provide restitution or compensation for properties confiscated by the Nazis and/or the communist governments in the region. We have made some important progress, but much work remains. A critical priority has been assistance for the aging, destitute surviving communities. Not only did they suffer under the Nazis, but because they lived in communist countries, they received little or no compensation from Germany.
It is in this role that the Administration has tasked me with coordinating the historical examination of the intertwined issues commonly referred to as "Nazi assets." Most recently, I visited Switzerland in May of this year for a series of productive discussions with our embassy officials, Swiss officials, and private citizens, all of whom, like ourselves, are attempting to examine these issues. The goal of our interagency task force, involving 11 agencies of the Federal Government, is to establish a clear picture of the U.S. role in the retrieval and disbursement of Nazi gold and other assets and to take a hard look at the present policy implications of those actions. This, in turn, will shed additional light on the role of the Government of Switzerland and of Swiss financial institutions during and after World War II regarding Nazi assets.
Mr. Chairman, in recognition of the high public and congressional interest in these issues, the Administration's goal is to present a preliminary historical report in early 1997. Because we are dealing with events that happened so long ago and with individual documents with little or no knowledge of the context into which they fit, we have established a research working group of historians, led by the Department of State Historian, preparing a historical report about the central issues we are addressing here. The group is already hard at work, reviewing thousands of boxes of records.
The report will cover at least the following topics: wartime efforts to develop an Allied policy on the recovery and restitution of assets wrongfully appropriated by Nazi Germany; the emergence of the "Safe Haven" program to trace and secure Nazi assets; the end of hostilities and efforts to recover and distribute Nazi assets through the Paris Agreement; the Washington Agreement and the Tripartite Gold Commission. At the same time this report is issued, the historians expect to publish a guide to the National Archives materials, so that all the relevant documents will be readily available to scholars, journalists, and all interested parties.
For this purpose, we have also established two other working groups:
I am encouraged by the progress the United States Government and the other interested parties are making. Before describing what I know about the Swiss investigations into these issues, let me review for you and the other committee members what we mean when we discuss Nazi assets and what has been done with recovered Nazi assets in the past.
Several distinct aspects of the broad question of accounting for and distributing German assets after World War II have been loosely referred to as "Nazi Gold." In fact, there are three main categories:
1) Monetary gold looted from the central banks of occupied countries, recovered by the Allies and distributed by the Tripartite Gold Commission (U.S., U.K., and France) to claimant countries;
2) Other private German and Nazi property blocked in Switzerland and elsewhere at the end of WWII this includes assets looted from victims of Nazism;
3) Heirless and unclaimed assets of Holocaust victims. At the moment, we are focusing on those deposited in Swiss banks between 1933 and 1945, in which there has been no action for at least 10 years (commonly known as dormant accounts). You will hear from Paul Volcker later today on the efforts of the commission he is chairing to address these unresolved issues.
There has been particular confusion between monetary gold, looted by the Nazi regime from the central banks of occupied countries, some of which was transferred to Switzerland and other neutral countries, and other German assets held in Switzerland at the end of the war. The latter consisted of all types of assets, from nonmonetary gold and currency to other negotiable instruments and property held by private Germans and by German entities.
How did the U.S. and the other Allies try to go about recovering these various Nazi assets and what did we do with them? As I have mentioned, we know only very little at this point about the process. We expect that the historical report that we are working on will shortly shed more light on these questions. In addition, these matters are attracting interest from a wide range of scholars and we will continue to learn more about the period as our efforts bear fruit.
Mr. Chairman, with your understanding and under the proviso that much of the following information is the result of our first soundings and is subject to revision and correction in our 1997 report, I would like to share our understanding so far of these immediate postWar events. What seems already apparent is the Allied approach in the 1946 Paris Reparation Agreement. Given the general devastation and lack of records in wartorn Europe, the Allies decided that it would be impossible to entertain individual claims for reparation and wrote into the agreement that all parties' claims would constitute the totality of claims both of individual governments and of their citizens. Individuals would then look to their own governments to press their claims against Germany.
To ensure that there could be no Nazi return to power, the Allies focused on the need for each signatory government to "hold or dispose of German (external assets in its jurisdiction so as to) preclude their return to German ownership or control."
The parties to the Paris Agreement charged the United States, the United Kingdom, and France with the responsibility for recovering external German assets from the neutrals and for making the net proceeds from liquidating these assets available to the InterAllied Reparation Agency.
To take care of those Nazi victims who were "in dire need of aid (but unable) to claim the assistance of any Government in receiving reparation" the Paris Agreement provided that nonmonetary gold recovered by the Allies in Germany and an additional $25 million from the proceeds of liquidating German assets in neutral countries would be transferred to the Intergovernmental Committee on Refugees. Governments of neutral countries were also to be requested to make available for this purpose heirless assets of Nazi victims.
At the 1946 Paris Conference, it was also decided that 90% of the heirless funds recovered in neutral countries should be made available for the rehabilitation and resettlement of Jewish victims, again via the Intergovernmental Committee on Refugees. According to an earlier State Department document, this percentage proportion reflected the overwhelming preponderance of Jews among the many victims of Nazi aggression who were unable to claim the assistance of any government in seeking reparations and the recognition that the recovered funds were overwhelmingly Jewish in origin.
The Paris Agreement charged the United Kingdom, the United States, and France with the recovery of monetary gold to be placed in a pool for distribution to claimant countries "in proportion to their respective losses of gold through looting or by wrongful removal to Germany."
Mr. Chairman, we know more about the disposition of the monetary gold at this point than about the other categories. I ask for your indulgence in going into somewhat greater detail.
In September 1946, the Allied powers established the Tripartite Commission for the Restitution of Monetary Gold (or TGC) to carry out the portion of the Paris Reparation Agreement dealing with looted monetary gold. Located in Brussels, the commission consists of representatives of the U.S., U.K., and France. The TGC was not responsible for the recovery of the gold. The Allied powers themselves recovered what monetary gold could be found, from occupied Germany and through negotiations with the neutral nations to which the Nazis had transferred it. In all, nearly 337 metric tons of gold (approximately $379 million in 1946 gold values) were turned over to the TGC by the Allied forces or recovered by the Allies from neutral nations such as Sweden, Switzerland, Spain, and Portugal. The TGC was then charged with accepting and adjudicating claims against this gold pool and with making subsequent redistributions to claimant countries.
Recognized claims against the monetary gold pool, as determined by the TGC, greatly exceeded the amount of monetary gold actually recovered. Therefore, in accordance with the terms of the 1946 Paris Agreement (signed by all claimants), the TGC established a proportional redistribution system under which each country would receive approximately 65% of its recognized claim. A total of 329 metric tons has been distributed to 10 claimant countries in "preliminary" and "quasifinal distributions."
Most of the gold in the pool was redistributed to claimant countries in the 1940s and 1950s in the form of "quasifinal" payments. But the last country to receive a payment was Albania, only a few weeks ago, on October 29, 1996. With the completion of the Albania distribution, a total of 5.6 metric tons of monetary gold (worth about $68 million USD at today's gold prices) now remains in the TGC's accounts at the New York Federal Reserve and at the Bank of England.
In a letter to President Clinton dated September 26, 1996, World Jewish Congress president Edgar Bronfman asked for the support of President Clinton in asking the appropriate governments to "refrain from distributing (the approximately $68 million) as has been intended ... and to make the funds available to the World Jewish Restitution Organization for the benefit of Holocaust survivors and Nazi victims." President Clinton responded that he had asked me to "look into the matter thoroughly and consider (Mr. Bronfman's) views."
This remaining monetary gold represents the sum of the final payments to be distributed to the claimant countries. As I mentioned earlier, even after this distribution is made, the claimants will still have received only about 65% of their recognized claims.
The Allied powers negotiated separate treaties with each neutral country that held Nazi assets at the conclusion of the war. The 1946 Washington Agreement was negotiated by the Allies with the Swiss Government. The Washington Agreement dealt primarily with the issues of monetary gold and external German assets.
The Swiss Government disputed the Allied claim to the monetary gold received by its National Bank from the German Reichsbank. Nevertheless, it agreed to a settlement under which the Swiss agreed to transfer 250 million Swiss francs (approximately $60 million in 1946 values) to the Allies immediately, payable on demand in gold.
We understand that the Swiss gold placed in the TGC's account at the Federal Reserve Bank in New York was merely transferred from the Swiss Government's already established account with the Fed. All of this gold consisted of U.S. assay bars refined in the United States.
The Swiss Government also disputed the Allies' claim to all German assets in Switzerland, but agreed to liquidate these assets, retaining 50% and returning 50% to the Allies. Negotiations on how this was to be carried out appear to have been protracted and intermittent. In a 1952 agreement between the U.S., U.K., France, and Switzerland, the Swiss agreed to transfer to the Allies a total 1952 value of approximately $34 million for German assets liquidated by Switzerland. These funds were duly disbursed for reparations and refugee relief.
Mr. Chairman, I now turn to the subject of dormant accounts and heirless assets, which was only tangentially addressed in the Washington Agreement. In a side letter to the 1946 Washington agreement, the head of the Swiss delegation stated that his Government would "examine sympathetically" possibilities for making available for "relief and rehabilitation" proceeds of property found in Switzerland which belonged to (Nazi) victims . . . who have died without heirs."
Although attempts to revisit this issue have been made ever since, we must acknowledge the frustration of Holocaust survivors and their heirs that this issue is still with us 50 years after the end of the War. As you will hear in the course of this hearing, there are many tragic accounts where these survivors or their heirs have been stymied in their efforts to obtain information about dormant accounts or other assets in Switzerland. Many have legitimately questioned why it has taken nearly 50 years to obtain a comprehensive and transparent accounting of this issue.
The Swiss themselves have periodically revisited the issue. In 1962, a Swiss Federal Decree required banks, law offices, trustees, and others to comb through records to discover dormant accounts belonging to foreign or stateless persons who were deemed victims of racist, religious, or political persecution. The decree required businesses to examine these cases regardless of whether or not the deceased client was from Germany or any other country in Europe. As a result, a total of nearly SFr 9.5 million (an approximate 1962 value of $2.4 million) was reported. Most of this money, about threefourths, was transferred to the rightful heirs. According to our embassy in Bern, in 1975, of the remaining heirless assets, twothirds were given to the Swiss Federation of Jewish communities and onethird to the Swiss Central Agency for Refugee Assistance.
The current investigation by the Swiss Bankers Association, begun in 1995, is the most recent attempt to determine the extent of remaining dormant accounts and heirless assets. At a February 7 press conference this year, the Swiss Bankers Association (SBA) announced the results of this investigation. Approximately $32 million in 775 additional dormant accounts opened prior to 1945 had been found, though not all were of European origin. The World Jewish Congress (WJC) decried the lack of transparency and called the effort inadequate.
The resulting controversy has led Swiss public and private institutions to launch investigations to clarify their country's role in handling Nazi German assets. In our conversations with the Swiss in Bern through Ambassador Madeleine Kunin and her very dedicated staff and with the Swiss embassy here in Washington, the Administration has stressed the importance of responding to these inquiries about Swiss actions after the war as rapidly as possible and with thoroughness and transparency.
A May 2, 1996, agreement among the Swiss Bankers Association (SBA), World Jewish Congress, and World Jewish Restitution Organization (WJRO) established an Independent Commission of Eminent Persons to review the investigations of Swiss Banks into dormant accounts from the Nazi era. As you know, the distinguished former chairman of our Federal Reserve, Mr. Paul Volcker, has agreed to chair this commission. You will be hearing from him later today, so I will leave to him the task of providing details on its activities.
The Commission will also have some oversight over the efforts of the Swiss Banking Ombudsman who is responsible for conducting individual searches for dormant accounts. He reviews claims by Holocaust survivors and heirs for dormant accounts and other assets in Swiss Banks. On November 12, the Ombudsman announced that he has so far found "matches" in 11 cases representing 1.6 million Swiss Francs. Of those, only 11,000 SFr belonged to Holocaust victims.
The Swiss Government has taken many important steps in recent months demonstrating their determination to have a through, complete, honest, and transparent accounting of their role and that of their financial institutions in this entire matter. They have established an ad hoc task force headed by the Deputy Secretary General of the Swiss Foreign Ministry, Thomas Borer, a talented and dedicated man with whom I have met at length. You will be hearing from Mr. Borer later today. The role of his Task Force is to coordinate and expedite Swiss Government efforts to shed light on the whole financial relationship of Switzerland (government, private persons, and institutions) to Nazi Germany from 1933 forward.
As a result of this internal government effort, both houses of the Swiss Parliament have passed legislation establishing a Historical Commission to examine the fate of assets transferred to Switzerland as a result of the Nazi regime. A conference version has been accepted and is expected to be passed December 13. It takes the unprecedented step of waiving Swiss bank secrecy laws for a period of five years to remove all obstacles for a thorough and transparent review by the Commission. The Swiss have indicated a three-to-five-year time frame for this study, with the release of interim reports which will be submitted to Parliament. Both here in Washington and through the U.S. embassy in Bern, we are having very constructive exchanges with the Swiss Government. We are encouraged by their recent efforts to speed up the process and by indications that they plan to include prominent international persons as members of the commission and possibly as chair of their Historical Commission.
According to our embassy in Bern, Swiss Federal Councilor Cotti has undertaken several important measures to speed up the process: The legislation is being passed on an urgent basis, making it possible for historians and experts to be named and for the Historical Commission to begin work as soon as final legislation is passed. This is expected shortly.
Foreign Minister Cotti also announced the immediate creation of an ad hoc Commission in order to look into the agreements with Poland and other Eastern European countries in the late 1940s and 1950s. A report by this commission is expected any day now. This will help resolve whether dormant accounts were used to satisfy Swiss business claims against central and eastern European countries which nationalized that property during the Communist era.
The Swiss Government has also offered to make their historians and experts available to us in our analogous effort if and when necessary.
Mr. Chairman, the American people and the Administration share your committee's commitment to answering all outstanding questions, to see that justice is done, and to do what we can to aid the victims of the Holocaust and their heirs. We support the Swiss Government's decision to reexamine its role during and after the War and we continue to encourage them to do so as swiftly as possible with the widest possible scope and transparency.
I am impressed with the dedication and deep interest that the members of our interagency review group bring to this effort as well. Progress is being made in our investigations. I am deeply aware of the need to provide accurate information rapidly and pledge to stay in contact with you and members of your staff to keep you advised of our investigations.
My sincere thanks to you and the members of your committee for the opportunity to address the Congress and the American public on this issue
[end of document]
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