U.S. chides Swiss handling of gold loot 'Hard-hitting' report is in works over storing of assets seized by Nazis

March 29, 1997|By KNIGHT-RIDDER NEWS SERVICE

WASHINGTON -- A U.S. government report, to be released next month, strongly criticizes Switzerland for its handling of gold and other assets looted by the Nazis during World War II, according to sources involved in preparing the report.

The report, written by the State Department's chief historian, William Slany, represents the government's first official response mounting public concern by Jewish groups and U.S. lawmakers about the Swiss role in the disposition of Nazi assets.

"It's a hard-hitting report," one source said. "The Swiss will not like it. It's very tough on Switzerland, in particular. The State Department does not customarily use strong language with friendly governments, but I think it will be seen as powerful language."

Another source called the report "a clear indictment of Swiss wartime policies, demonstrating the extent to which the Swiss financial institutions abused that country's official neutral status to benefit the Axis powers."

The still-unfinished report represents the work of 11 federal agencies, which have been poring through hundreds of thousands of recently declassified documents at the National Archives.

The study was begun after President Clinton asked Commerce Undersecretary Stuart Eizenstat to ascertain what U.S. officials knew about Swiss handling of gold looted by Nazi occupation forces.

The U.S. government report focuses on a May 1946 accord, signed in Washington, that was intended to eliminate German assets in Switzerland that might be used to wage a future war, according to the sources.

Under the accord, Switzerland paid 250 million Swiss francs ($58 million) in gold to the Tripartite Gold Commission to compensate European central banks for gold looted by the Germans during the war.

But documents show that Swiss banks handled between $400 million and $800 million in gold looted by the Nazis from central banks across Europe, the sources said.

In addition, Jewish groups say Swiss banks still may have up to $7 billion in assets belonging to Jews, most of whom were murdered during the Holocaust.

Responding to international pressure, the Swiss government proposed last month to set up a $4.7 billion fund to benefit Holocaust victims.

No plea of ignorance

According to a 1946 State Department document, on April 17, 1946, the Allied delegation to the Washington accord said that Switzerland "must accept the principle of turning over to the Allies looted gold which the Swiss had accepted during the war" and that "Switzerland could not plead that she was ignorant of the looting tactics of the Germans."

Three days later, according to the document, a copy of which was obtained by the Philadelphia Inquirer, the Swiss delegation replied that Switzerland had no "legal or moral obligation to restore gold to the Allied countries."

Before signing the accord, the document says, the Swiss delegation "took the position that Switzerland could not be held liable to restore the entire amount of looted gold which was transferred from Germany to Switzerland, since a portion of this amount was merely deposited in Switzerland and subsequently transferred from Switzerland to third countries pursuant to orders of the Reichsbank, as depositor."

The document adds: "The Swiss admitted, however, that they had purchased $88 million of gold traceable originally to Belgium from Germany during the war. But in no event would they concede that they were liable to restore this amount of gold to the Allies."

Switzerland's posture during negotiations for the May 1946 accord "left a very bad taste in people's mouths, because the perception was that Switzerland was simply evading Allied requests for accountability and hiding behind what they considered to be their main defense as a neutral country," one source said.

"The evidence is there, and it's persuasive, as to international agreements and the extent to which the Swiss were reluctant to respect them and to abide by them," the source added.

Another source said the report was "somewhat critical of our own government" for its behavior during postwar negotiations surrounding the looted Nazi assets.

Focus on one bank

One aspect of the report concerns the wartime activities of the Basel-based Bank for International Settlements (BIS), according to the sources. The report probes the role of the BIS in laundering "nonmonetary" gold, including jewelry and dental gold from death-camp victims, the sources said.

By 1944, Axis bankers dominated its board, while its president from 1940 to 1945 was Thomas H. McKittrick, an American who later became a vice president of Chase National Bank in New York.

In part because German Finance Minister Walther Funk served on its wartime board of directors, "the BIS cooperated with the German Reichsbank's efforts to launder gold stolen from the mouths of death-camp victims," Washington-based author Christopher Simpson wrote in his 1995 book, "The Splendid Blond Beast: Money, Law and Genocide in the 20th Century."

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