California Imposes Sanctions Against Swiss Banks

Getting a jump on other states, California Treasurer Matt Fong ordered an immediate halt on all financial dealings with three major Swiss banks doing business in the United States.
July 9, 1998

CaliforniaTreasurer Matt Fong

California has taken the lead in slapping newsanctions on Swiss banks to penalize them for alleged foot-draggingin settling the claims of Holocaust survivors.

Getting a jump on other states, CaliforniaTreasurer Matt Fong ordered an immediate halt on all financialdealings with three major Swiss banks doing business in the UnitedStates.

Fong announced the action in a phone newsconference immediately after emerging from a meeting in New York withother state and local finance officials.

“I am troubled by the slow pace set by thebanks… it is time they opened their moral ledgers, not just theirfinancial ledgers,” Fong said.

Over a previous 17-month period, California madeshort-term investments of more than $2 billion in the Swiss BankCorp., Union Bank of Switzerland and Credit Suisse, Fong said.

These investments have since been liquidated andno new ones will be made “as long as I am treasurer,” Fong said. Fongis the Republican candidate for the U.S. Senate seat held by BarbaraBoxer, the Democratic incumbent, in the November elections.

Fong had imposed similar sanctions a year ago, butlifted them four months later. At the time, he complained of lack ofsupport for his initiative from the Jewish community, singling outthe Anti-Defamation League.

Other states participating in the New York meetingalso pledged sanctions against the banks, but at a slower pace thanCalifornia.

The sanctions were criticized as counterproductiveby the U.S. State Department. The Swiss government said it might backthe banks in possible legal countermeasures and take its case to theWorld Trade Organization.

In a related development, the California StateAssembly Insurance Commission unanimously approved a bill, authoredby Sen. Tom Hayden, to set up a four-year, $16 million research fundto help recover unpaid insurance claims for some 20,000 Holocaustsurvivors, or descendants of Holocaust victims, living inCalifornia.

Holocaust Survivors Sue Swiss Banks

Four Holocaust survivors from Los Angeles havefiled a lawsuit against leading Swiss banks, charging them withunfair competition under California law.

Three of the plaintiffs are Jewish women, while afourth woman is a member of the Romani people, popularly known asgypsies.

The suit, filed last week in state Superior Courtin San Francisco, accuses three Swiss banks of “knowingly acceptingfor deposit and concealing the existence of slave labor profits andassets looted by the Nazis.”

The profits derived from these practices gave theSwiss banks “an unfair competitive advantage over other banking andfinancial institutions operating in California, in violation of theUnfair Competition Act,” the suit alleges.

The Romani plaintiff, Liliane Schmidt-Escobar, wasborn in Germany and, with her large family, was deported to Auschwitzin 1943. She survived this and three other concentration camps, saidattorney Barry A. Fisher, who has represented Romani clients in manyother cases.

The three Jewish plaintiffs are Irene Markovivova,Dr. Barbara Schwartz-Lee and Lia Atschul Fishman.

Fisher is one of 18 lawyers from nine differentcities listed in the court brief. Named as defendants are the SwissBank Corp., Credit Suisse and Union Bank of Switzerland.

The same banks are cited in a multibillion-dollarclass action suit filed in New York, and are subject to sanctions bystate and local finance officials in California and other states. —Tom Tugend,Contributing Editor

Roth Resigns Under Fire

By James D. Besser,

Washington Correspondent

The U.S. Holocaust Memorial Museum in Washingtonhas suffered another embarrassing public relations setback, whichsupporters say could leave the institution more vulnerable topolitical control.

John K. Roth, the Claremont McKenna Collegephilosopher whose appointment as head of a new academic arm of themuseum generated ferocious attacks from the right and unease amongsome mainstream Jewish leaders, resigned from the post on Mondaybefore taking up his duties.

That represented a big victory for critics whocharged that Roth, in a number of articles and essays, had madecasual comparisons between current events and the Holocaust, and thathe had maligned Israel.

But supporters say that the successful campaignagainst Roth will damage the academic credibility of the museum andlead to a new susceptibility to political pressure that will make itharder to attract serious scholars to the institution.

In his resignation letter to acting museumdirector Sara Bloomfield, Roth wrote, “As I continue to reject thedistorted allegations that some interpreters of my scholarship andbeliefs are making, I have decided that my happiness and well-being– family, professional and personal — will be served best by myremaining at Claremont McKenna College.”

Council sources said this week that Roth wassurprised and dismayed by the vehemence of the campaign against him,and that he was swayed largely by personal and familyconsiderations.

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