The price of pain

The co-author of a book on Holocaust reparations talks about blood money, the importance of apologizing and the slavery reparations movement.

Published July 15, 2002 9:06PM (EDT)

In 1995, Rabbi Israel Singer, the fiery secretary general of the World Jewish Congress, launched the now-famous campaign for Holocaust restitution. Singer, along with billionaire Edgar Bronfman, started pressuring Swiss banks -- many of which hoarded the dormant accounts of Holocaust victims, feeding billions of dollars into the Swiss economy -- to release those funds to the survivors. But Singer, whose Austrian Jewish parents were once forced by the Nazis to scrub the streets of Vienna, had a much grander plan. As John Authers and Richard Wolffe explain in "The Victim's Fortune," their intricate account of the global fight for the repayment of Holocaust debts, Singer "hoped the battle with those who had profited in Switzerland would lead to a historical reckoning for Holocaust crimes throughout Europe."

Along with American lawyers and politicians who brought class-action lawsuits and threatened economic sanctions, Singer largely succeeded. Grudgingly, Swiss, German and Italian companies reopened their books and faced ugly pasts. Some insurance companies had refused to pay out policies to survivors' heirs. Banks used victims' cash to trade in the stock market. Companies such as DaimlerChrysler and Volkswagen had profited from slave labor. None of them wanted to pay; fewer would ever issue a formal apology.

And, ultimately, despite the billion-dollar agreements and promised compensation that resulted from the campaign, many survivors ended up profoundly unhappy with the process. As coauthor Richard Wolffe, the Washington deputy bureau chief for the Financial Times, explained in a recent interview, the belief that victims should be paid for their suffering is a modern and complicated one. What does a $7,500 check really do for a Holocaust survivor?

The conclusion of the obviously painful process of getting the companies to pay wasn't the end of the survivors' suffering either. Many of them still haven't seen a dime, and infighting among Jewish groups about what to do with the millions, maybe billions of dollars left over still plagues the campaign. Authers' and Wolffe's book raises another haunting question: Who is entitled to speak for a victim?

Wolffe spoke to Salon from Washington about whether some survivors will ever get a check, how some of the money has gone to corrupt causes and what the Holocaust debts crusade means for future reparations cases.

Before the lawsuits of the '90s, why do you think Holocaust reparations hadn't become a big issue?

Individuals had gone after their own accounts and their families' life insurance policies without much success. The compensation agreements that had happened before were individual offers and either they were pretty low, or, as in most cases, the banks or the insurance companies or the institutions stonewalled. They said, "Show us a death certificate," which of course the concentration camps didn't issue. The companies just wanted to push the whole issue aside.

Where there had been historical studies, they really significantly downplayed or underestimated the amount of money that was at stake or hidden or kept aside. A lot of people had simply been told to go away. Most importantly, there wasn't the political willpower to do something. The Western governments were more interested in fighting the Cold War and didn't really push it so hard. Even on the official war crimes stuff -- Nuremberg -- a lot of the charges were dropped. For instance, one of the key things in the book is about German industry. A lot of German industrialists were classified as war criminals and the charges were dropped.


Because the West was more interested in building up the German economy and using it as a buffer against the Soviet bloc. And they also had this myth that the German economy had been razed to the ground, when actually a lot of it survived and prospered and was in a good position to benefit from the Cold War. So it suited a lot of people [to leave the compensation issue alone]. Also, it suited the American Jewish community, which was the prime mover behind the [Holocaust compensations fight]. The American Jewish community was more interested in Israel and issues of survival.

The final thing is that the Holocaust survivors themselves were not as visible a presence in the immediate years after the war. It really took until the '70s for people to start thinking of the war in terms of the Holocaust. It was at that moment, when a "new" generation burst on the scene -- the children of the survivors and the children of the war criminals -- and started to revisit the war years, that the Holocaust raised itself in people's consciousness.

Once the American Jewish community scored some big successes with things like the campaign to free Soviet Jewry in the '80s, they showed they could flex their muscles. Then, the end of the Cold War allowed this whole new kind of international politics through the '90s where the U.S. government was prepared to take a leading role.

So how instrumental do you think the Clinton administration was? Do you think it would have been different had this been attempted during another administration?

They were very influential. I wouldn't overstate it, in the sense that they weren't the only political figures to get involved or to exert crucial power. But there's no question that if Edgar Bronfman [president of the World Jewish Congress] hadn't had such a good relationship with the Clinton White House, and with the first lady in particular, then the whole weight of the U.S. government would not have been brought to bear on this issue. In particular, they opened up this big historical investigation, and they ended up mediating and brokering several deals, especially the German deal. Also, there was the whole Clinton administration's focus on human rights and corporate responsibility and the global economy.

But just as important, if maybe more important, were the state and local officials who exerted a tremendous amount of direct pressure. In the Swiss case, the U.S. government role sort of collapsed. The administration mediation failed. But these kind of obscure regulators and officials at the state and local level were the ones who really worried the companies and forced them in many ways to pay up.

So you're talking about people like New York City Comptroller Alan Hevesi?

Alan Hevesi, right, and the New York state banking people. You're seeing something similar in the insurance cases right now where state insurance regulators are the ones who have the power to really worry the companies. That brings them to the negotiating table. You have to remember: None of these companies want to pay. None of them said, "You're right. We did something wrong. We've never faced up to this -- here's the money." There needs to be that pressure.

How much did the 1999 New York City boycott of Swiss banks suspected of holding the assets of Holocaust victims affect their decision to face up to this?

Oh, it really worried them. The Clinton administration always said that it didn't support sanctions, but privately, they were very pleased that someone was out there threatening sanctions. They didn't want them to go ahead but the threat of sanctions was very, very effective. And that's what we're seeing all the way through with this.

If a European company has a presence in America, or maybe is looking for a presence in America, these kinds of things make them go haywire. It's a very effective way to make them face up to something. It puts a value on these historical human rights issues because they can see that it will cost them something. And that's also what those class-action lawsuits do.

One of the biggest things for me in the book is: How do you put a price on suffering? These kind of sanctions help to do so. It's not a perfect way, but it does give the company a way of saying, "This is how much it's worth to us."

This was a problem within the Jewish community as well. Before the '90s, some of the survivors saw reparations from Germany as blood money.

Yes, and in the '90s, in the German case, the big difference is really between the different kind of survivors -- between the Jews and the non-Jews. That was really emotional and really quite ugly because many on the Jewish side, including the Jewish lawyers, said there was a conflict between these two different groups of victims. The Germans just thought they were all victims. That caused a tremendous amount of racial and ethnic stereotyping. On the Jewish side, they felt that Central and Eastern Europeans who were also victims had been anti-Semitic and on the side of the Germans at one time. That was deeply insulting to some of the Central and Eastern Europeans, some of whom were Jewish themselves.

Then you scroll forward to where we are currently; there is a big difference of opinion in how a lot of the money should be spent. And whether it should go to Israel or not. It's not just in the German case; it really affects the debate about what to do with the money that's left over. There's going to be millions, maybe billions, left over from this process because survivors can't be traced or they're dead. There's a big battle yet to come about how to spend that money. Should it go to Israeli projects? Should it go to needy victims who have been paid once but could do with more? Should it go to memorials or monuments or education? And who spends the money?

Who is controlling the money at this point?

It depends on the settlement. In the Swiss case, it's really in the control of a U.S. judge in New York, Judge Korman. The Germans, on the other hand, didn't want any of their taxpayers' money or corporate money to be in the control of a U.S. court, so it's in the hands of a German foundation which has some American and Jewish representation on that. There's a big pool of money from the insurance funds that hasn't been released; it's in limbo. The French government is holding on to its own cash. Some of it is earmarked for international organizations like the World Jewish Congress or the Claims Conference, but a lot of it is still to be disbursed. It's not as if the judge is going to hold onto this money if it's not spent by the end of this process. Those are really difficult problems to address. It took them something like three years to come up with a plan for simply how to divide up the Swiss money between the different groups of victims, and many people were not happy with that.

It's costing so much and yet some people haven't been paid, right?

Yes, the people who have really profited are the researchers and accountants who've done a lot of work looking through the archives. The Swiss audit cost around $600 million alone. It's the most expensive audit in history -- going to companies like Arthur Andersen, who are really deserving, and others. The insurance case [which addresses the issue of unpaid insurance policies of Holocaust victims], for instance, is still rumbling on. Lawrence Eagleburger, the International Commission on Holocaust Era Insurance Claims chairman, is drawing a salary of $360,000 a year. He's made a million dollars since he's started his work and, frankly, very few people have been paid.

At the end of the book, you say that the survivors have ended up being the unhappiest in all this. Is it possible that some of them will not get any money at all?

They're unhappy for two reasons. For start, a lot of people have been frustrated. They thought they had really good claims. I was talking to one survivor the other day with an insurance claim. Remarkably, she still has the paperwork of her father paying a premium to a life insurance company. It's really rare for that kind of document to survive. The insurance company says, "Well, I'm sorry, we don't have our records of this policy, so it didn't exist."

But the bigger issue is that money was at the center of all of this. People were looking for money compensation all along; without the money, it would have just been an apology, and people would have thought that that was insufficient. But when they received the money, people were ultimately extremely disappointed. I think it's something about money and suffering.

In some cases, it's because the money is really pretty limited. The German compensation deal was $5 billion. That's a lot of money, but when you divide it up by several hundred thousand people, the maximum pay out for the concentration camp victims was $7,500. Maybe any sum of money would be unsatisfactory. I just think there's something about the process of compensation that we kind of expect in today's society. We expect to be paid for our suffering. But for something like this, and maybe for all kinds of suffering, when you actually get the money, it's a severe disappointment.

Do you think that if the corporations or governments had issued a formal apology that it would be different? Maybe if they hadn't put up such a fight?

It would have made a huge difference. Absolutely. In Germany, there was a public statement by the German president and that really helped survivors a lot. Ultimately, the survivors were more interested in the fight and the struggle to get their story retold and their suffering understood. That kind of recognition was the most important thing for them.

Many countries didn't want to issue an apology. The Swiss government never got involved and that's deeply disappointing for the survivors. It's disappointing from an observer's point of view that there was no reconciliation. A public apology does help to educate people again.

Do you think that bringing this issue to light and reinvigorating interest in this issue was the main thing that motivated Israel Singer, the feisty secretary general of the World Jewish Congress, whose efforts, along with Edgar Bronfman's, were largely responsible for this whole thing?

I think so. He certainly wanted the money because that got people to take him seriously. But definitely the fight was a big part of it. This is a guy who learned his political skills in the civil rights movement and the whole Holocaust compensation process was another civil rights march. His particular desire was to confront people and he's very confrontational. He wanted to get people worked up, angry, passionate. And yes, he wanted a resolution. He wanted one more round of compensation. It's almost like the last war crimes trials -- there's only that tiny window left before the last survivor dies. And he knew this was his moment. Some people said he was in it for himself and he wanted the money. One thing was for sure: An organization run by Edgar Bronfman, with all of his billions of dollars, doesn't really need the money.

Does it hurt the cause that Jewish organizations want to see the money go to "world Jewry" rather than just to the survivors?

It is hurting the cause. It's a bit like the victims' families of Sept. 11. They have a huge amount of public sympathy, they have the most important claim to this money and they also have a lot of political power because of that public sympathy. You ignore their voices at your peril. Rather arrogantly, these Jewish organizations claim to represent world Jewry --

And all 6 million who died.

Yes. Bronfman famously said he was there representing the people who died. Well, I mean, for a start, there's the old joke that you put 10 Jews in a room and you hear 30 opinions. There is very little agreement among Jewish groups around the world about what to do with this kind of thing. And to say you're speaking for people who died -- many survivors think that's incredibly distasteful.

On the other hand, no one else is doing it. They're filling a vacuum. And without them, you're in the situation that the African-American [reparations] community's in -- without a political voice or political leadership. But they're not democratic, it's not as if someone said to them -- "you represent us." That is a problem, a big problem.

Should all the money go to the people who survived to the present day? Many survivors obviously have died of natural causes since the war. Maybe these Jewish groups, if it's spent in the right way, will spend the money on the kind of reconciliation projects that I mentioned -- on education and museums. Maybe.

But what kind of things could it be going to?

In the insurance case, for example, Generali, an Italian company, paid a lot of money to a foundation in Israel. The money was diverted into pet projects and, frankly, it was used for corrupt causes such as dental care for the ultra-Orthodox in Israel. It's horrific. Rather than to Holocaust survivors in Israel of which there are many. So some of these Jewish groups have appalling records and some of these newly created foundations have been hijacked by people with vested interests.

Have American and Israeli survivors been better compensated than other survivors? Has there been a disparity there?

That was one of the most emotional disputes. The German companies wanted to pay the survivors in Eastern Europe much less than American survivors because they said the cost of living is so much higher in America and so much lower in Eastern Europe that to pay them the same was a waste in resources. Pretty early on, the Jewish groups established that this is a very important issue and survivors everywhere should be treated equally. So the $7,500 obviously means a whole lot more to someone in Central or Eastern Europe because it goes so much further.

Also, a lot of the Jews in Eastern Europe never received any compensation because the West wouldn't allow any transfer of funds to the East during the Cold War. And you would have had to be suicidal to go to the Communist authority and said, "I owned a factory," or "I had a Swiss bank account," you know, "I'm a capitalist, please give me compensation." So these people are often receiving compensation for the first time. All of these people are elderly and have very few resources but when you go to Eastern Europe the level of need is much greater than it is in general in America. But the amounts going, in theory, are equal. When this process settles down, a lot of the extra funds, the funds left over, are going to go to some of these survivors, really the forgotten survivors in the former Soviet countries.

Do you think that there will be survivors who will not get money?

No. I think everyone who makes a claim will get money of some kind. It may be a pittance compared to what they've lost, maybe insultingly small levels. One principle that the Germans established was that if people had received any level of compensation in the past for property or insurance policies, no matter how small, they couldn't claim again. A lot of survivors will feel very disappointed and frustrated with that. The kind of payment they accepted in the '60s -- combined for their suffering, for their years in the camps and for all the property they'd lost -- may have been very, very small even then, but that was all that was on offer. The principle was established that if you had money at all at any stage at all for that kind of claim, then that's tough.

How does it work for survivors' heirs?

It depends on the issue. In the case of insurance, you're talking about heirs, because the policies were insuring the lives of people who died in the camps. Swiss bank accounts, the same, really.

Where it's confined to living survivors is German slave and forced labor. So in that case, the families get nothing. There's a huge practical difficulty in tracing families because you get multiple claims from the same family for the same victim. There are big disputes over the names of the individuals. For example, there are dozens of variations of the name Isaac. In some cases, the companies like to raise the issue of family members who lie about the existence of other family members. They like to say it's all fraudulent because Auntie Eden never told us that another sibling had claimed 20 years ago. There are these family complications that make the whole heir question very difficult. And expensive.

Particularly with Switzerland and France, people had to look at their historical records once again. It challenged the Swiss' sense of themselves as a neutral country. Did that have a significant effect on how they treated this issue? It wasn't just about money it seems.

Their first reaction was always hostile. They always said, go away you horrible Americans, who the hell do you think you are telling us what to do? But it ultimately led, after the emotions died down, to most of these countries opening up historical commissions. They looked again at their own war record and many of them were shocked at what they found. That was certainly true in France's and Switzerland's cases.

The reactions of a lot of these executives -- who are not war criminals themselves -- may have been at best insensitive and at worst a coverup, but many of them thought that they were acting out of good intentions. When they found out what had happened, when they discovered the real record, they were shocked to find that their own bank had spent victims' money and knowingly, in some cases, traded the bank account cash on the stock market. It was a shock to many of these countries and it was ultimately really healthy -- the process of confronting the past. They didn't like it, they didn't want to do it, they had to be dragged kicking and screaming, but what they discovered is a real eye-opener to successive generations. In France, there are a lot of records that were still out there that people never looked at.

In the case of France, some of the French Jewish leaders felt that the Americans were debasing the Holocaust by going after reparations this way. That issue has come up, and maybe most famously with Norman Finkelstein.

Do you believe that as Jews they really felt that way or do you attribute it more to anti-American sentiment?

It was both. The French Jewish community is very substantial, and it's also very French. Very proud and independent and all the rest of it. However, they also were both horrified and inspired by what people like Israel Singer were doing. They were inspired in the sense that it made them more confident, more ready to stand up and be vocal. And they were also horrified because they thought they were caught in the middle between anti-Semitism at home and anti-Americanism and that they would be associated with the Americans ... which is almost worse than being associated with Jewish people. Anti-Americanism is a very strong trait in French politics.

Having said that, they were very, very smart. They played a good cop, bad cop routine: "You better work with us or we will unleash our American cousins on you." And to the American side, they were saying, "Hold on, we're the ones that are going to suffer anti-Semitism, we're the ones caught in the middle here, you back off." So they just about held it together. They played it very cleverly. I have a lot of admiration for those people and as you know from recent news reports, anti-Semitism is alive and well in France and the French government's reaction to it isn't always reassuring for the French Jewish community.

Do you think that this whole issue revived anti-Semitism in Europe? You do say in the book that anti-Semitic cartoons popped up in Switzerland.

I'm European and I'm Jewish as well, and I have to say, if you say "Jew" to many people in Europe ... "Jew" is used as a term of abuse, to mean someone who is miserly and obsessed with money. I had that growing up. So the idea that Jews would go out campaigning for money does reinforce the very worst stereotypes and racial insults.

However, the American Jewish community is right in many ways: By being confident and being brash, if you will, you actually flush the ugly sentiments out into the open. It's only when they're in the open that you can really confront them. And that's the civil rights message that Israel Singer brought: Anti-Semites cause anti-Semitism. It's not Jews that cause anti-Semitism. You only know you're confronting an anti-Semite when you go out there in public and you hear this stuff. There's a lot of political correctness in Europe where people know that it's wrong or they speak in code or speak amongst themselves about their anti-Semitic feelings. This whole campaign certainly did flush out some of the worst of it. I don't think it ever could get rid of it. But at least people know what they were up against.

Having said that, the Jewish communities in Europe are by and large much smaller and don't have the same political power [that American Jews do]. The pressure to assimilate is much greater. I don't think it's possible to do what the American Jews have done, which is to become very vocal, very public. The role models aren't there. The public Jewish figures are very few and far between. In American life, they're everywhere. But ultimately it was a very healthy process and it has made a lot of the European Jewish community much more self-confident.

Do the Holocaust compensation agreements serve as a model for African-American reparations?

One of the problems with African-American slavery reparations is that there are no living plaintiffs. That's a legal problem as well as a practical problem. But as I understand it, many of the lawyers in the reparations cases are broadening it way beyond slavery to include segregation-era claims and even internationally, now, to include apartheid in South Africa, to make it a melting pot of racial claims. That's useful because they have some living plaintiffs there and it increases the pressure on some of these corporations and the pool of corporations that are likely to pay.

I know from speaking to some of the African-American lawyers involved that they really are deeply encouraged by what they saw in the Holocaust cases. It's all part of this modern idea of the necessity of compensation. We're seeing that with Pan Am 103, the Lockerbie bombing, where compensation figures are huge. They're seen as being central in terms of bringing some kind of closure to the legal process and the suffering that these victims' families have endured.

It's an essential part of modern life in a way that I don't think it was 20 to 30 years ago. That's one reason why many of the Holocaust victims didn't want to accept money when it was offered by Germany the first time around. They thought that it would be absolving them of their guilt, they thought it was blood money, they didn't want anything to do with it. Now the consensus among people who've suffered this kind of thing is you have to pay money. Without the money there's no sincere apology.

But what do you think is one of the main differences between Holocaust settlements and slave reparations in terms of the possibility of success? In many ways, they seem worlds apart.

Politics. For a start, the African-American political groups are not as well organized and they don't have the same kind of access to Washington that Jewish groups have. They've come to this issue later, and obviously the history is just much more complicated. They definitely don't have access to this White House in the same way that Jewish groups had access to the Clinton White House. In fact, I don't think the Jewish groups have the same kind of access to the Bush Oval Office as they did to the Clinton Oval Office. The politics is really important.

Having said all that, state and local officials can play a big role here. Some of the changes in local and state legislation that were brought about for Holocaust survivors have equal application to the slavery cases. For instance, in California they've changed insurance legislation to allow claims including slavery and it was prompted by the Holocaust issue. But it adds to the power of insurance regulators in the state to review the historical record and say, unless insurers have dealt with their past and with these human rights claims, they may not have the license to trade in their state. That's a huge club to hold over these companies' heads. Although the African-American groups don't have the same power in Washington, I can see them exerting more important power at the local levels.

Since you've published the book, have there been any significant developments in the Holocaust cases?

Not significant, but there have been some interesting ones. The U.S. judge in the Swiss case fired the panel of people who were dealing with claims in the Swiss case. They won a quarter billion settlement in August 1998 and only something like $16 million has been paid out. The insurance case is still going slowly, Lawrence Eagleburger is still spending lots of money.

Why do you think he has handled this so poorly?

I don't just blame him. They've lost sight of what they wanted to do, which was to help the victims' families quickly. They've gotten bogged down in their own politics, their own bureaucratic mess, their own personal rivalries. They used to fly first class and stay in luxury hotels, and fly dozens of delegates around the world. His basic attitude was -- it's the companies' money, not the victims'. Well, up to a point, that's true, but if the companies don't spend it on administration costs then they're going to spend on the victims.

Also, he wasn't muscular enough in terms of knocking heads together. The companies on the other side are just stonewalling. Basically it's only this Italian company, Generali, that has really stepped up to the plate. The others are dragging their heels. And on the victims' side, there hasn't been a political leadership as there was with Israel Singer. They've ended up bickering between the Israelis and the Americans and the Europeans. I just think they've all lost sight of what they wanted to do -- which was to look after the survivors and the families and get this settled quickly.

Does the amount of money that these companies and banks have to pay affect their bottom lines at all?

Minimally, it does. Generally, these companies don't have budgets for this kind of thing so it does affect their bottom line, but it actually affects them more in terms of their public image and the management time they have to spend dealing with it. People just don't know anything about many of these companies, and suddenly they hear them in the context of the Holocaust and they think of them as war criminals. And I think you're going to see something very similar with slavery reparations. Who knew of Aetna? I suspect that many of Aetna's customers don't even know that they're insured by Aetna.

Have any of the businesses suffered? Would you even be able to quantify the impact?

Let me put it like this. Allianz, which is this big German insurer, is one of the highest-profile companies involved with both the insurance case and the German settlement. Now, is it a coincidence that Allianz advertises enormously on American TV, not using its American brands but using its German corporate name, Allianz? There's awareness at corporate headquarters that the name Allianz has been dragged through the mud and, particularly among Americans, they need to rehabilitate themselves. And Allianz isn't going to rehabilitate itself by explicitly saying, look, we paid lots of money for the war. So that has had an impact and that's obviously costly for them. In that sense, they've suffered.

Another point of suffering -- even though the stock market just isn't the same anymore -- is that mergers and acquisitions were the big problem that European companies faced through the '90s. For example, they would try to buy an American company and their deals were being held up by state and local regulators because of the Holocaust issue.

Next time around, they might face the same thing again. It might make them reluctant to come into America. They believed that this was a global economy and corporations were free to what the hell they liked. That's quite a positive thing. The global economy has allowed people to look at the human rights issues and say, you have to have a clean house wherever you trade in the world.

By Suzy Hansen

Suzy Hansen, a former editor at Salon, is an editor at the New York Observer.

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