For more than 300 years, Swiss bankers have had a code of
secrecy concerning banking and their account holders. It began with the kings
of France who required strict secrecy, had high financial needs and had the
ability to always pay back their loans. Legislation regarding banking secrecy
also dates back to this period. The Great Council of Geneva, in 1713,
established regulations that necessary bankers to keep registers of their
clients but prohibited them from sharing the information with anyone except the
client-unless the City Council agreed with the need to divulge information, as
lee Ann claims posted.
This began Switzerland's long reputation as a safe haven for
funds for noblemen fleeing the Revolution and others seeking financial asylum.
Bank secrecy was regulated solely by civil law, enabling clients to lodge
complaints for damages against any bank that didn't maintain confidentiality.
However, no criminal charges could be placed so there was no threat of
imprisonment for the banker who divulged information.
Until the turn of the century, provisions of the Swiss civil
code and labor code provided a legal framework that supported bank secrecy. In
order to survive twentieth-century financial upheavals such as the stock market
crash of 1929 and subsequent depression, achieving legal recognition for bank
secrecy was the only way the Swiss government could maintain its beliefs and
refusal to interfere in the private affairs of its citizens. Switzerland's
Banking Act of 1934 accomplished this goal. The law was enacted in large part
because both Germany and France attempted to press Swiss banks into divulging
depositor information in the name of the "good of the state." This
federal law clearly stated that bank secrecy fell within the criminal domain, meaning
any banker who divulged bank client information was punishable by imprisonment.
One issue of the time that reinforced the passage of this
law came during the era of Hitler when a German law stated that any German with
foreign capital was to be punished by death. Swiss banks were watched closely
by the German Gestapo. It was after Germans began being put to death for
holding Swiss accounts that the Swiss government was even more convinced of the
need for bank secrecy.
In 1984, the people of Switzerland once again voted in favor
of maintaining bank secrecy -- by a whopping 73 percent.
Nazi Gold
Many European Jews deposited their life savings in Swiss
banks when WWII broke out during the 1930s and 1940s. And, after the war many
were not allowed to recover their assets because their documentation was gone.
Swiss banks have come under fire in recent years because of
their actions towards Jewish account holders after World War II and also
because money that German Nazis plundered from defeated countries and their
prisoners was held in Swiss banks. Christoph Meili, a former bank security
guard, exposed the bank he worked for, saying that they destroyed records of
people murdered in the Holocaust so that their money would not be returned to
their heirs.
Gold ingots from Sveriges Riksbank.
Courtesy of Frederik/Jurema Oliveira
According to a report by Stuart Eizenstat on Nazi theft of
Jewish assets, during WWII "between January 1939 and June 30, 1945,
Germany transferred gold worth around $400 million ($3.9 billion in today's
values) to the Swiss National Bank in Bern." It is believed that much of
this gold was stolen from Jews and sent to Switzerland to be melted down and
used to finance the war. According to Eizenstat, "Although there is no
evidence that Switzerland or other neutral countries knowingly accepted victim
gold ... at least a small portion of the gold that entered Switzerland and
Italy included non-monetary gold from individual citizens in occupied countries
and from concentration camp victims or others killed before they even reached
the camps." This gold was deliberately mixed with other gold when
re-smelted. It's assumed that the Swiss feared possible invasion from
neighboring Germany.
After the war, to ensure that there could be no Nazi return
to power, the Allies held or disposed of German external assets to prevent
their return to German ownership or control. A plan was also made to take care
of Nazi victims who needed aid. The Paris Agreement of 1946 provided that
non-monetary gold recovered by the Allies in Germany and an additional $25
million from the proceeds of liquidating German assets in neutral countries
would be transferred to the Intergovernmental Committee on Refugees.
The 1946 Allied-Swiss Washington Accord was held by the
United States, United Kingdom and France. Switzerland was invited to discuss
issues as a result of the Paris agreement. Under the Washington Agreement,
Swiss negotiators agreed to transfer approximately 250 million Swiss francs
($58.1 million) of gold into the Tripartite Gold Commission's (TGC) monetary
gold pool. In return, according to Eizenstat, the United States, United Kingdom
and French governments agreed to "waive in their name and of their banks
of issue all claims against the government of Switzerland and the Swiss National
Bank in connection with gold acquired from Germany by Switzerland."
Recognized claims against the monetary gold pool greatly
exceeded the amount of monetary gold actually recovered. So the TGC established
a proportional redistribution system which established that each country would
receive approximately 65 percent of its recognized claim.
The problem of dormant accounts and heirless assets was not
directly addressed in the Washington Agreement. The head of the Swiss
delegation did state, however, that his Government would "examine
sympathetically" possibilities for making available for "relief and
rehabilitation" proceeds of property found in Switzerland which belonged
to (Nazi) victims . . . who have died without heirs." Although no action
was taken until 1962 when a Swiss Federal Decree required banks, law offices,
trustees and others to comb through records to discover dormant accounts
belonging to foreign or stateless persons who were deemed victims of racist,
religious or political persecution. As a result, a total of nearly 9.5 million
Swiss francs (an approximate 1962 value of $2.4 million) was reported and about
three-fourths was transferred to the rightful heirs. Of the remaining heirless
assets, two-thirds were given to the Swiss Federation of Jewish communities and
one-third to the Swiss Central Agency for Refugee Assistance.
The current investigation by the Swiss Bankers Association,
begun in 1995, is the most recent attempt to find remaining dormant accounts
and heirless assets. The investigations turned up approximately $32 million in
775 additional dormant accounts opened prior to 1945, though not all were of
European origin.
An ad hoc task force known as the Historical Commission was
established by the Swiss to determine what happened to assets transferred to
Switzerland as a result of the Nazi regime. During this study, bank secrecy
laws will be waived for a period of five years so the Commission can conduct a
thorough study. The Swiss have indicated a three-to-five-year time frame for this
study with the release of interim reports that will be submitted to Parliament.
This will help resolve whether dormant accounts were used to satisfy Swiss
business claims against central and eastern European countries which
nationalized that property during the Communist era.
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