The Holocaust In The Dock

AS A MORAL ISSUE, THE CASE SEEMS SO clear-cut. On one side, the Nazis and their accomplices, the Swiss banks. On the other, Holocaust survivors whose money and property were stolen by the Germans and laundered through Switzerland, or whose bank accounts the Swiss may have plundered. Thus have the lines been drawn for a year, as new revelations forced Switzerland to confront the darker side of its "neutrality" during World War II. But the Swiss have admitted their complicity oh so slowly-and that has enraged many Jews. "The victims," said World Jewish Congress chairman Edgar Bronfman, "aren't getting any younger." Finally, after months of mounting public pressure, Switzerland moved last week to salvage its reputation. Three big Swiss banks established a $70 million Holocaust fund for survivors.

At long last, a measure of justice, right? Don't count on it. A moral reckoning for the evils done in the 1940s may be no match for U.S. tort law in the 1990s. NEWSWEEK has learned that a feud has erupted between lawyers for the survivors-a fight over who gets the cash and how-that could tie up the fund for years to come. One of the attorneys who filed a class-action suit representing Holocaust victims in the ease, Michael Hausfeld, is demanding that the U.S. District Court in Washington, D.C., assume control of all disbursements from the Swiss fund. His rationale: the Swiss are annoyingly vague about whether money from the fund will actually make it into the pockets of aggrieved Holocaust victims. There is, Hausfeld says, "no guidance as to where these sums of money are to go, how they get there or when."

He may be right. The irony, however, is that this legalistic squabbling may just defeat the fund's original purpose-to get money quickly to aging survivors. A Swiss government spokesman, David Vogelsanger, agrees that it is not clear who will get the money, but he says Bern will never give up control. Hausfeld's motion also took the World Jewish Congress, which pushed for the fund, completely by surprise. Edward Fagan, an attorney who filed a separate class-action suit for survivors, says the move "is going to unnecessarily complicate things when it took such a long time beating the hell out of the Swiss banks to get them to this point."

Playing the spoiler isn't new to Hausfeld, a Washington legal bigfoot who has taken on some of America's biggest corporations. Last fall he won an unprecedented $176 million settlement against Texaco in a racial-discrimination suit. It's also no surprise that Hausfeld's main supporter is the Los Angeles-based Simon Wiesenthal Center-founded by the famed Nazi hunter-which has engaged in a low-boil rivalry with the New York-based World Jewish Congress for years. "The Wiesenthal Center appears very anxious to achieve a certain amount of recognition," says Fagan. Vogelsanger says, "Fagan and Hausfeld represent different interests here."

The truth is, there are a lot of competing interests in the Swiss-Nazi case, and even the former Allied powers are suddenly re-examining their part in profiting from the Holocaust. Indeed, the ease is leading in directions that even embarrass Washington--like the two tons of looted gold, recovered by the Allies after the war, found sitting in the New York Federal Reserve Bank (it has just been announced that some of this might also go to victims). It is equally difficult to sort out who has a right to damages. For months, thousands of Holocaust survivors have been calling Fagan and Hausfeld, and each lawyer is seeking an edge.

Fagan says the fund is just a good-will gesture. He fears that Hausfeld's pre-emptive strike against the Swiss will confuse things by lumping the fund together with separate legal claims. Now Hausfeld wants his case consolidated with Fagan's--and Fagan doesn't. Rabbi Marvin Hier, head of the Wiesenthal Center, insists there is no rivalry with the World Jewish Congress; he says Hausfeld's injunction is only intended to force the Swiss banks' hand. See you in court.

Join the Discussion