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. Last Updated: 07/27/2016

Swiss Banks Reach Deal With Jews

NEW YORK -- More than half a century after the end of World War II, Swiss banks agreed to pay $1.25 billion to Holocaust survivors as restitution for lost assets, money some said should go first to the aging and ill.

"We've sought to get the funds as rapidly as possible ... to get the money to those who are in the last days of their lives," said Elan Steinberg, executive director of the World Jewish Congress.

The agreement announced Wednesday night in New York calls for the money to be paid out by the two largest Swiss commercial banks -- UBS AG and the Credit Suisse -- against whom most of the claims have been filed. The settlement will cover all claims against them, plus all other Swiss banks, the Swiss government and Swiss industry.

The banks said they would continue to cooperate with former U.S. Federal Reserve Chairman Paul Volcker's committee that is trying to identify dormant accounts.

In June, Jewish leaders rejected an offer by the banks to pay $600 million to settle the claims as insufficient.

A number of cities and states in the United States had threatened to impose sanctions on UBS AG and the Credit Suisse group if they did not agree to an acceptable settlement.

In response to the $1.25 billion settlement, New York City and state on Thursday canceled plans for the sanctions, which were scheduled to start Sept. 1.

"It is unfortunate that it was necessary to threaten sanctions 53 years after World War II to bring justice to the survivors of the Holocaust," said New York City Comptroller Alan Hevesi, who heads a monitoring panel assessing Swiss efforts to return the wartime deposits.

Mel Weiss, one of the principal negotiators of the settlement reached Wednesday with the help of a federal judge in Brooklyn, said the threat of sanctions was a main reason for the banks to settle now.

"The actions of Hevesi's group played an important part in bringing this resolution," he said.

Hevesi's network of state and local government finance officials also included the state treasurers of California and Pennsylvania.

For years, Swiss banks told Holocaust survivors they could not find the accounts or demanded death certificates from relatives of victims.

One of them, survivor Gizella Weisshaus, originally sued the banks on Oct. 2, 1996. Litigation grew into class-action suits representing 31,500 plaintiffs worldwide after Swiss bank guard Christoph Meili rescued Holocaust-era documents from a shredder room at Union Bank of Switzerland in Zurich the following January.

Meili said he was inspired after seeing the film "Schindler's List," which detailed a German industrialist's rescue of Jews.

"I am happy today," Meili, who now lives in New Jersey, said at the courthouse. "When I saw the documents, I knew I had to do something."

Among those who shipped their money to a Swiss bank as the threat of war grew was Joseph Sapir, who expected to retrieve it later. Later never arrived for him. He died in the Maidanek concentration camp in 1943.

His daughter reached an individual settlement in May with Credit Suisse, ending her participation in the class-action lawsuit representing tens of thousands of Holocaust victims who deposited money in Swiss banks.

Still, Estelle Sapir was among those celebrating the agreement Wednesday at the federal courthouse.

"This is not charity from the Swiss," she said. "My father deposited money there."

The first payment of $250 million will be made 90 days after U.S. District Court Judge Edward Korman grants his approval. Korman did not indicate when that would be. The next payments, of $333 million, will be paid on the first, second and third anniversary of Korman's approval.

The judge and the plaintiffs' lawyers will develop a distribution plan to determine how the money will reach the plaintiffs and others.

"The settlement finally puts to rest some of the sad and ugly past of the Swiss," said Abraham Foxman, national director of the Anti-Defamation League of B'nai B'rith.

Attorney Ed Fagan, who brought the original lawsuit on behalf of Weisshaus, said the process of parceling out the money will be complicated.

Although more than 31,000 survivors have been identified as plaintiffs in the lawsuit, more could come forward to seek restitution, making it impossible to predict how much each beneficiary will get.

In Israel, leaders hailed the agreement with the Swiss banks and vowed to keep going after other countries and companies that have held back assets of Holocaust survivors.

"This is the beginning," said Bobby Brown, Israeli Prime Minister Benjamin Netanyahu's adviser on world Jewish affairs.

"What has happened now with the Swiss puts on notice every country and company that looted Jewish assets. The time has come to look back and have the courage to admit wrong and to try to find justice where none existed before," Brown said.

It was a small article appearing in the Israeli financial daily Globes in 1995 that first caught the attention of the Israeli government and Jewish leaders. The paper said an unknown amount of funds deposited in Swiss banks by Jews killed in the Holocaust were being hidden by the banks.

The late Israeli Prime Minister Yitzhak Rabin ordered an investigation into the report, opening the floodgates to a deluge of information on seized property, looted gold and unpaid insurance policies.

With Wednesday's out-of-court settlement in New York complete pending the judge's approval, officials can now turn their attention to other areas.

Suits are currently pending in the United States against 16 European insurance companies and two German banks.

Israel also has been actively seeking, with some success, the return of Jewish-owned property across Eastern Europe. Last week, Romania's premier agreed to back legislation in his country to return seized property and assets.