Another year has passed, the eleventh since the celebrated Holocaust-related agreement was forged between a consortium of Swiss banks and attorneys representing Holocaust victims, with the “endorsement” of the World Jewish Restitution Organization (perhaps the only major Jewish organization in the known world that cleverly doesn't host a website).
The $1.25 billion settlement was touted as a way to avoid lengthy and unproductive litigation that would leave masses of claimants out in the cold. The largest portion of the settlement ($800 million, or two thirds of the total) was allocated to cover claims for “Deposited Assets” – looted and dormant bank accounts owned by victims of the Holocaust. The process has been overseen throughout by U.S. District Court Judge Edward Korman.
The Deposited Asset claims process has proceeded achingly slowly, now largely forgotten and out of the public eye. As noted in a previous post, a QUARTER BILLION DOLLARS (a third of the funds originally earmarked for “Deposited Assets”) remain unspent and undistributed today.
The recent Conference on Holocaust Era Assets in Prague expressed unprecedented concern over the rising incidence of survivor poverty – some literally “out in the cold” –and carried heartfelt calls for action from Nobel Laureate Elie Wiesel and former U.S. envoy Stuart Eizenstat. In this context, the pool of Swiss “Deposited Assets” funds sitting unused raises troubling questions about the course of “justice” envisioned by the Court.
Let me share a few reflections.
The process to find legal claimants and return family assets from Swiss accounts stalled out a long time ago. When approved claims slowed to a trickle, Judge Korman in 2003 felt compelled to seek recommendations from his court-appointed advisors and then the public on how anticipated “residual” funds might best be used. The resulting crush of interest groups and organizations seeking funds for their projects – many only tenuously connected, if at all, with the welfare needs of Holocaust survivors – threatened to obscure and marginalize the very people for whom the fight for justice was supposedly waged. Korman soon put consideration of “residual fund” schemes on hold.
Over the years, the administrators of the claims process have adopted a series of confusing and generally unsuccessful mid-course corrections to try to boost payouts, including the creation of a special category of fixed $5000 payments for “plausible undocumented claims,” an unsatisfactory (and for some survivors, insulting) catch-all humanitarian-type payment not anticipated when the claims process was launched.
The quest for looser claims rules unleashed controversy. In 2002, a team of high-profile independent jurists assigned to make decisions about individual claims resigned in protest over new, streamlined payout rules, which they felt threatened the integrity of the process. (more here)
Still more public debate erupted over the Court’s decision to allocate 75% of over $200 million in so-called “Looted Assets” – another piece of the overall settlement – to programs serving needy survivors in the Former Soviet Union, leaving little left over for more numerous survivors living in poverty in the United States and elsewhere. The Judge ruled against formal objections, but the episode left a bitter taste with many in the Jewish community.
In 2006, a new controversy erupted over the request by Burt Neuborne, appointed by the Court to serve as “Lead Settlement Counsel,” to be paid substantial attorney’s fees of almost $5 million out of the settlement fund. The request was roundly decried by survivors, who felt it spotlighted what was wrong with the whole process. Neuborne had misled them, many charged, and had not represented – and at times had worked against – their interests. In the end, Neuborne’s fee was approved but substantially reduced. The issue erupted again in early 2008 when a tone-deaf Neuborne approached the Court to try to collect interest that had accrued during the initial controversy.
The claims process has continued to crawl along. During the second half of 2008, an additional 161 claimants received awards, years after their claims were first filed.
By the end of 2008, a new scheme was floated: recalculate the awards already granted to several thousand claimants and make supplemental payments to them, thereby using the remaining funds. HSF and the State of Israel have both filed formal objections to that recommendation. The idea remains under consideration by the Court.
Just last month, a bewildering controversy over claim awards came to light, involving an heir who received an award payment but is now being asked to return the funds because the claims administrators believe it was invalid. Perhaps it is surprising that this kind of thing isn’t more common.
The Swiss bank claims process has had to navigate tricky legal and political waters all along. But has justice been served? Is anyone else even asking that question anymore? With thousands of destitute survivors in the U.S., Israel and Europe, it is not an academic exercise.
(Postscript: There is a side story to tell about some of the individuals who were instrumental in the original agreement eleven years ago. I will post separately on that.)
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