X : : in RE: HOLOCAUST VICTIM : Case No
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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ------------------------------------------------------X : : IN RE: HOLOCAUST VICTIM : Case No. CV-96-4849 ASSETS LITIGATION : (ERK)(MDG) (Consolidated : with CV-99-5161 and : CV-97-461) : -------------------------------------------------------: : MEMORANDUM & ORDER : This Document Relates to: All Cases : : : ------------------------------------------------------- X KORMAN, Chief Judge: On August 2, 2000, I approved the historic settlement in this case. See In re Holocaust Victim Assets Litig., 105 F. Supp. 2d 139 (E.D.N.Y. 2000). On July 26, 2001, when the Second Circuit affirmed my decision, the settlement became final. See In re Holocaust Victim Assets Litig., 14 Fed. Appx. 132 (2d Cir. 2001). Since then, we have distributed the following sums from the settlement fund: $150,589,699 to 1,934 claimants in the Deposited Assets Class in connection with 1,802 bank accounts found by the Claims Resolution Tribunal (“CRT”) to have belonged to victims of the Holocaust; $214,483,050 to 148,609 surviving members of the Slave Labor Class I; $45,000 to 45 members of the Slave Labor Class II; $7,804,050 to 2,898 surviving members of the Refugee Class; and $205,000,000 to needy survivors of the Holocaust through application of the cy pres doctrine to the Looted Assets Class. Indeed, we have succeeded on a great many fronts. What compels me to write is that over the past year-and-a-half, the bank defendants have filed a series of frivolous and offensive objections to the distribution process, and most recently to Special Master Judah Gribetz’s Interim Report on Distribution and Recommendation for Allocation of Excess 1 and Possible Unclaimed Residual Funds (hereafter “Interim Report”). These objections bring to mind the theory that, “if you tell a lie big enough and keep repeating it, people will eventually come to believe it.” The “Big Lie” for the Swiss banks is that during the Nazi era and its wake, the banks never engaged in substantial wrongdoing. The banks have repeatedly insisted that they never engaged in “systematic document destruction” and that they should not be assigned blame for any difficulty we have in distribution. See Letter from Roger Witten to Michael Bradfield, dated April 18, 2003; Letter from Roger Witten to Judge Edward R. Korman, dated May 16, 2002; Response of Defendants UBS AG and Credit Suisse Group to Special Master’s Interim Report and to Declaration of Burt Neuborne, dated December 16, 2003 (hereafter “Response”). They claim that during the Nazi era, they did not engage in widespread forced transfers of customers’ assets to the Nazis, as “[i]n the vast majority of cases, the circumstances of closure are just unknown.” Witten Letter, dated May 16, 2002, at 3. And they claim that the allegations that they engaged in massive destruction of Nazi era bank records in the post-war era “are incorrect and could be characterized as malicious in light of specific conclusions to the contrary in the ICEP and Bergier Reports.” Response, at 14. They continue: “As we have previously and repeatedly advised the Court and its Special Masters, the ICEP Report and the Bergier Report confirm that the banks never engaged in systematic document destruction and certainly did not do so in any effort aimed at hiding assets belonging to victims of Nazi persecution.” Id. The bank defendants’ statements are not merely incorrect; they are detrimental to the process of justice. These statements continually distort and obscure the truth, and now that they form the basis of the bank defendants’ response to the Special Master’s Interim Report, I am forced to address them. Simply put, the Swiss banks’ objections to the Interim Report are based on an egregious mischaracterization of historical accounts. In Part I, I turn to these accounts to set the record straight. In Part II, I address the banks’ claim that the CRT presumptions are inappropriate because the banks never 2 engaged in widespread document destruction or any other systematically deceptive behavior toward victims of Nazi persecution. In Part III, I address banks’ objection to the publication of dormant accounts not previously designated as “probably” related to the Holocaust and their objection to providing the CRT with unfettered access to the records of all dormant accounts of which we possess records through a consolidated Total Accounts Database (“TAD”), objections premised on the same mischaracterization of historical accounts. Part I: Decades of improper behavior by the Swiss banks In the mid-1990s, the treatment of Holocaust victims by Switzerland and its financial industry emerged as a source of increasing controversy. The Swiss Parliament and the Federal Council responded by establishing the Independent Commission of Experts Switzerland – Second World War (“ICE” or “Bergier Commission”). The Swiss Bankers Association (“SBA”), the World Jewish Restitution Organization and the World Jewish Congress established the Independent Committee of Eminent Persons (“ICEP” or “Volcker Committee”). The Bergier Commission “was mandated to conduct a historical investigation into the contentious events and incriminating evidence” of Switzerland’s conduct during the Second World War and the post-war period. See Independent Commission of Experts Switzerland – Second World War, Final Report, at 5 (Zurich: Pendo Verlag GmbH 2002) (hereafter “Bergier Report”). It employed historians, researchers and economists in an effort to “‘obtain the historical truth’ and to examine and report on ‘the role of Switzerland, particularly that of the Swiss financial center, as well as on the manner in which Switzerland dealt with this period of its history.’” Interim Report, at 36 n.53 (quoting Swiss Federal Council Decree, December 19, 1996, “Historical and Legal Investigation into the Fate of 3 Assets which Reached Switzerland as a Result of the National-Socialist Regime: Appointment of the Independent Commission of Experts,” available at www.uek.ch). The Volcker Committee pursued a more focused objective, “conduct[ing] what is likely the most extensive audit in history, employing five of the largest accounting firms in the world at a cost of hundreds of millions of dollars to defendants.” In re Holocaust Victim Assets Litig., 105 F. Supp. 2d at 151. Its auditors had two major goals: “(a) to identify accounts in Swiss banks of victims of Nazi persecution that have lain dormant since World War II or have otherwise not been made available to those victims or their heirs; and (b) to assess the treatment of the accounts of victims of Nazi persecution by Swiss banks.” Independent Committee of Eminent Persons, Report on Dormant Accounts of Victims of Nazi Persecution in Swiss Banks, 1-2 (Berne: Stæmpfli Publishers Ltd. 1999) (hereafter “Volcker Report”). The investigations faced challenging odds. “There were approximately 6,858,116 accounts that were [open or] opened in Swiss banks between 1933-45. Of these, no records existed for approximately 2,757,950 accounts, ‘an unfillable gap . that can now never be known or analyzed for their relationship to victims of Nazi persecution.’” In re Holocaust Victim Assets Litig., 105 F. Supp. 2d at 155 (quoting Volcker Report, Annex 4, ¶ 5). Nonetheless, the Volcker Committee, which released its findings on December 6, 1999, succeeded in initially identifying nearly 54,000 accounts that it believed either “probably” or “possibly” belonged to victims of Nazi persecution. The number of accounts was subsequently reduced to 36,000 by a “scrubbing” process that I discuss later. Whatever the number, the Volcker Committee’s estimates were clearly conservative. Indeed, the Bergier Commission recognized that the Volcker Committee’s findings “constitute[d] only part of the total.” Bergier Report, at 446. This is why, in my order approving the settlement in this case, I wrote: 4 A fair and efficient claims process in connection with the Deposited Assets Class must build on the fact that the Volcker Committee’s auditors, despite the massive destruction of relevant records over the past 60 years, were able to identify the approximately 54,000 Swiss bank accounts [then deemed probably or possibly belonging to Nazi victims]. In re Holocaust Victim Assets Litig., 105 F. Supp. 2d at 154 (emphasis added). The words “build on” were not chosen lightly. I recognized then, as I do today, that the Volcker Committee had only begun to identify and reveal the scope of the Deposited Assets Class. The Bergier Commission, which announced its final conclusions on March 22, 2002, helped complete the historic picture. A deep understanding of its findings is necessary to comprehend why the defendants’ recent submissions are both baseless and deceptive. The Nazi era and post-war actions by the Swiss banks are perhaps best summarized by the concise statement of Bergier Commission member Helen Junz. In a monograph prepared for Special Master Bradfield and appended hereto, she wrote: “[T]he Swiss banks acted with an eye to their own bottom line.” Helen B. Junz, Bergier Commission: Analysis of Swiss Bank Behavior, at 2. “[T]he banks systematically put aside the interests of the clients they had so ardently solicited with assurances that their assets would be kept safe for them and theirs, in favor of business interests they perceived at that moment to be more promising.” Id. Perceived economic self-interest not only dominated the banks’ actions during the war; it drove the banks to act against their clients’ interests for decades thereafter, leading to the dormancy and elimination of an unknowable number of accounts once held by victims of Nazi persecution. A. The Nazi era In the 1930s, as the threat of National Socialism rose, many Europeans began to turn to Swiss financial institutions for asset protection. Known for stability and secrecy, the banks purported to provide 5 a safe haven for customers’ savings. “The greatest influx of capital [during this period] came from France,” as the French began to fear increased taxes and changing exchange rates.