Swiss Bank Claimants Deserve Better


By Yisroel Schulman, Phyllis Brochstein and Laura Davis

Published August 15, 2007, issue of August 17, 2007.
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In November 2000 a group of Swiss banks settled a class-action lawsuit by agreeing to pay $1.25 billion to Holocaust victims, including $800 million to those who deposited funds in the banks prior to World War II and did not receive them afterward. The Zurich-based Claims Resolution Tribunal, or CRT, was appointed to administer the claims.

It has not been up to the task. Indeed, the CRT’s failure to respect its own rules has made the entire process seriously flawed. In the processing of claims, the CRT has been neither equitable nor expeditious — nor, for that matter, consistent with the protections of due process of law that its rules were designed to ensure.

The CRT’s own statistics reveal that since it began processing claims in February 2001, only $436 million — less than 55% — of the $800 million has been “distributed or allocated,” and fewer than 2,200 awards account for $352 million, more than 80% of the $436 million total.

According to the CRT, these awards were based upon “actual documentary evidence” of account owners or their heirs. Of the remaining $83 million in awards already distributed or allocated, $65 million represents minimal payments of $5,000 to 13,000 account owners or their heirs as “humanitarian” awards because, in the CRT’s opinion, they had “plausible undocumented claims,” and $18 million was paid under a previous process.

The CRT’s published rules appropriately established a very relaxed standard of proof, called “plausibility,” whereby each claimant is required to demonstrate only that it is “plausible in light of all the circumstances” that he or she is entitled to the claimed account. In addition, the rules applied a set of presumptions designed to make up for claimants’ lack of documentation resulting, in part, from the mass destruction of documents by the Swiss banks, as well as from the war and the passage of time.

Under these rules, the CRT must determine whether the account owner received the account proceeds prior to the claimant’s submission of his or her claim. For example, by applying one of the above-noted presumptions, an account owner would be presumed not to have received the proceeds of the account where it was closed after January 20, 1939, the imposition date of certain Swiss visa requirements, or after Nazi occupation of the account owner’s country of residence.

Despite the above presumption, we are aware of many situations in which claims were denied by the CRT even though the particular accounts were closed after January 20, 1939, but prior to Nazi occupation of the account owner’s country of residence.

To reach these decisions, the CRT simply eliminated the word “or” from the presumption and thus inappropriately concluded that the account owners had previously received the proceeds of the account.

Furthermore, last year we were informed by the Honorable Edward Korman, the Federal District Court judge who presided over the 2000 settlement, and CRT Special Master Judah Gribetz that the Swiss visa portion of the presumption had been retroactively rescinded sometime in 2004 without public notice.

Moreover, serious failings in the CRT process, including the application of widespread inconsistencies and errors in the application of the CRT’s rules, have effectively negated the liberal plausibility standard proof and instead imposed on claimants an often insurmountable burden of proof, leading to the conclusion (in overcoming the practical presumption) that they are not entitled to the proceeds of claimed accounts.

In addition, unauthorized and inconsistently applied rules have resulted in conflicting decisions that cannot be reconciled. For example, use of the date of an alliance with Nazi Germany instead of the subsequent occupation date, or use of the date of occupation of the country of origin instead of the country of residence, have resulted in awards to some and denials to others for claims involving similar facts.

Equally troubling are the many so-called “no match” decisions involving an account owner and claimant’s relative with identical names. In too many of these cases, the CRT has refused to provide supporting evidence for alleged discrepancies in identifying information.

After spending more than six years and tens of millions of dollars — funds, it must be noted, that were taken out of the $1.25 billion Swiss bank settlement — the CRT has paid out awards to only about 10% of claimants. More than 24,000 claims have been denied. Rules and presumptions relied upon by claimants in good faith have been retroactively rescinded without notice. And more than 45% of the funds intended for Holocaust victims who never got back the monies they deposited in Swiss banks have not been distributed as intended.

After so many years of being deprived of their own property, survivors and their heirs deserve better.

Yisroel Schulman is president of the New York Legal Assistance Group. Laura Davis and Phyllis Brochstein are senior attorneys at Nylag.

This article originally appeared online and in our August 17 print edition with a different headline. We have changed that headline to more accurately reflect the content of this opinion piece.

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