Volcker opens rift over Swiss accounts Chairman opposes class action suit

BONN, GERMANY — BONN, Germany -- Two days after Swiss banks released a list of dormant accounts from the Nazi era, an array of divisions developed yesterday among potential claimants and investigators over how to keep pressing the search for assets belonging to Holocaust victims.

The first open rift was touched off by Paul A. Volcker, head of an independent investigative commission set up by major Jewish organizations and the Swiss banks themselves. The commission was instrumental in obtaining the release of the list of dormant accounts.


In a nine-page letter filed with a federal court in Brooklyn and obtained here, Volcker objected to the efforts of lawyers who are pursuing a class action suit in New York on behalf of many Jews who maintain that looted and other assets belonging to Holocaust victims are still languishing in Swiss bank vaults.

Volcker said he was afraid that Swiss bankers and confidential sources might stop cooperating with his commission's inquiry into dormant accounts if the lawsuit resulted in U.S. legal orders to disclose documents and sources.


After Volcker's letter was filed, previously private differences surfaced within the commission, with Israel Singer, a prominent member, saying he did not support Volcker's opposition to part of the class action suit that relates to dormant accounts in Swiss banks.

"I believe in the Volcker process," said Singer, who is secretary general of the World Jewish Congress. "I have confidence in Chairman Volcker." But, he said: "Mr. Volcker has a personal view. We don't agree with that view."

In his letter, addressed to the judge and dated July 24, Volcker, a former chairman of the U.S. Federal Reserve, said the class action suit could have a "strongly adverse impact" on his commission's inquiries, "potentially to the point of ineffectiveness."

Judge Edward Korman is to hear arguments at the U.S. District Court in Brooklyn Thursday to decide whether to uphold a demand by Switzerland's three leading banks that the class action suit be put on ice. Whatever court ruling emerges could seriously affect whether Swiss banks are freed from additional and costly legal pressure in the United States.

Over the last 50 years, Switzerland's banks, shielded by strict privacy rules, have only grudgingly acknowledged their holdings dormant accounts. With the newest list, published in 28 newspapers worldwide and on the Internet, the banks have acknowledged discovering 1,756 accounts, with assets having a current value of around $42 million, that have been dormant since the end of World War II.

The names on the accounts are by no means exclusively Jewish. Some belong to German companies, and others appear to be the same names as those of high-ranking Nazis, according to the Simon Wiesenthal Center in Los Angeles.

The list was published two weeks after Volcker's commission completed plans to send in auditors from three international auditing companies -- Arthur Andersen, KPMG and Price Waterhouse -- to begin scrutinizing Swiss bank records dating back to the Nazi era.

Singer said his opposition to the letter was in line with statements by Edgar Bronfman, the president of the World Jewish Congress, who had insisted that "every avenue of relief at our disposal must be pursued."


"How could we ask Judge Korman to do anything?" Singer said. "It would be as if we announced in the newspapers that we had closed our interests."

Volcker said, "All I can say is that I felt it was appropriate as the chairman to represent the situation as I saw it."

Asked if a unanimous decision had been taken among the 12-member commission to send the letter, he said: "I don't think there was any decision per se. There was some discussion. In the end I decided to write it in my capacity as chairman."

In the letter, Volcker insisted that the auditing mechanism established by his commission meant that "we are as well positioned as possible to develop a record of the fate of Holocaust victim assets deposited in Swiss banks."


The full list of names published by the Swiss Bankers Association is available from The Sun's Web site Sunspot at http: //


Pub Date: 7/26/97