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|Swiss Banks Say They Offered $600 Million in U.S.
Zurich, June 19 (Bloomberg) -- Union Bank of Switzerland, Credit Suisse and Swiss Bank Corp. infuriated U.S. Jewish groups and lawyers by disclosing they offered to settle a lawsuit brought by Holocaust survivors by paying litigants $600 million.
A lawyer for the plaintiffs called the settlement talks a ``sham'' after Switzerland's three largest banks made their offer public in response to reports this week that Jewish organizations will boycott negotiations on an out-of-court settlement because the amount offered by was far less than what could be accepted.
Holocaust survivors in the U.S. who claim the banks are hoarding assets belonging to victims of Hitler's genocide filed three lawsuits in 1996 and 1997, one of which demanded $20 billion. The lawsuits were rolled into one last year, dropping the amount sought. While U.S. District Judge Edward Korman in Brooklyn, New York, is still considering whether to hear the case, out-of-court negotiations began in March.
The banks view this offer to be at the upper limit of what can be justified, based on the facts and circumstances,'' the three banks said in a statement, adding: ``The World Jewish Congress and the plaintiffs' lawyers are seriously jeopardizing the settlement negotiations.''
The statement said the banks ``re-emphasized that they would not entertain unfounded and excessive demands for payments above this amount.''
World Jewish Congress Secretary General Elan Steinberg said WJC representatives will meet with other people taking part in the negotiations to ``determine the future structure of the negotiation process.''
Melvyn Weiss, a lawyer and member of the negotiating team for the plaintiffs, said the talks were a ``sham'' conducted by the banks to help Union Bank of Switzerland and Swiss Bank Corp. get U.S. approval for their planned $33 billion merger. The Federal Reserve Board last week gave approval for the merger.
We were bitterly disappointed with the Swiss banks' approach to this negotiation up until now,'' Weiss said. ``This was all a sham negotiation that was designed to permit them to get their merger through.''
Representatives of Jewish groups told journalists recently that the banks were offering about $500 million. Neue Zuercher Zeitung, a Zurich newspaper, cited the WJC and other lawyers for the plaintiffs as calling the offer ``highly shabby.''
Other lawyers representing the plaintiffs said they are preparing other ways of putting pressure on the banks.
We have available all the tools that include the press and various political efforts,'' said Morris Ratner, a partner in the law firm of Leiff, Cabraser, Heimann & Bernstein. He said a boycott of the banks was a ``distinct possibility.''
Ed Fagan, from the firm Fagan & Associates, said he expects a statement from New York City Comptroller Alan Hevesi on July 1, which may call for a boycott of Swiss banks.
Hevesi couldn't immediately be reached for comment.
The banks said today the $600 million offered will include $70 million already paid into a Swiss Humanitarian Fund for survivors of the Holocaust. They will also pay out any amounts found in dormant accounts by the Volcker Committee, which is searching Swiss banks for accounts belonging to Holocaust victims and their heirs.
Bank Shares Rise
Shares in UBS, Credit Suisse and SBC rose on the Swiss Exchange today. Investors said the state of negotiations won't prevent them from buying further shares in the banks.
This is a good starting point and it's a fair price,'' Thomas Lusetti, a fund manager at Coutts Bank AG, said of the offer. ``The banks may end up paying a little more, but it wouldn't matter.''
Still, Lusetti, whose portfolio contains shares in all three banks, said there is now the risk the talks won't be settled any time soon.
There's a real danger that the two sides won't agree. In that case, the whole thing could drag on until 2000 and beyond.''
German Banks Sued
The lawsuit is one of several stemming from the Nazis' campaigns against Jews and other groups before and during World War II. Survivors this month filed an $18 billion lawsuit against Germany's Deutsche Bank AG and Dresdner Bank AG, saying they want to recover looted assets the banks allegedly accepted from the Nazis and concealed, transferred or laundered.
Four European insurers, including Swiss-based Zurich Insurance Co., last month agreed with U.S. authorities and Jewish groups to resolve claims that the companies did not honor insurance policies that were taken out before and during the war by people later driven out or killed by the Nazis.
Lawyers for the U.S. plaintiffs have said they are also preparing lawsuits against the Swiss National Bank because of its gold dealings with Nazi Germany. SNB Vice President Jean-Pierre Roth said Thursday the central bank will ``vigorously oppose'' any lawsuit and will not take part in negotiations towards an out- of-court settlement.
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