Report of the Independent Committee of Eminent Persons (Volcker Committee)*

(November 24, 1999)


The special circumstances attaching to the neutrality of Switzerland and the nature of Swiss banking is thought to have attracted a large amount of capital to the country on the part of those seeking its safety, especially among those subject to Nazi persecution. Given the dimensions of the Holocaust, Switzerland and Swiss banks have been subject to careful scrutiny to see if a full and complete restitution was made to the owners of that capital. It was felt that past efforts on behalf of the Swiss have fallen short of that goal. The latest efforts of behalf of those who believe that such an accounting has not been made have resulted in the formation of the Independent Committee of Eminent Persons. The Committee can into existence following a Memorandum of Understanding dated May 2, 1996, between the World Jewish Restitution Organization, the World Jewish Congress and the Swiss Bankers Association.

The membership of the Committee consists of eleven persons, five of whom (three principals and two alternates), are appointed by the World Jewish Restitution Organization and five by the Swiss Bankers Association, plus a neutral chairman. The chairman is the former head of the U.S. Federal Reserve, Paul A. Volcker.1

The Committee’s cental purpose is to “...provide the basis for restitution of monies owed to individual victims of Nazi persecution or their heirs who entrusted funds to Swiss banks for safekeeping before and during World War II, to make as full an accounting as feasible of the custody of these funds by Swiss banks, and to satisfy the historic need for a moral accounting for present and future generations of critical events surrounding World War II.”

To this end, the Committee engaged the services of six international audit firms (Arthur Anderson, ATAG Ernst & Young, Deloitte & Touche Experta, KPMG Peat Marwick, Price Waterhouse, and STG-Coopers & Lybrand). These firms, with the cooperation of the Swiss Bankers Association, began their task using an investigation methodology known as the “Bottom Up” approach. That is, the auditors were to compile a data base of all known accounts opened in Swiss banks between 1933-1945. These names were then to be matched against databases of victims of Nazi persecution who were thought to or could have entrusted monies to Swiss banks. The resulting matches of these databases should, in the view of the Committee, “...produce as accurate a picture of the financial dealings of victims of Nazi persecution with Swiss banks as is now feasible after more than fifty years.”

The cost of this investigation is considerable, estimated at about $100 million dollars (or 150 million Swiss francs). The Committee, in its status report of September 16, 1998, emphasized that it had had the full cooperation of the Swiss banks and that the heavy cost of the audit was being borne by the Swiss banking system.

After some extensive work by the accounting firms, the Committee believed that it would be possible to put together a fairly comprehensive list of accounts in Swiss banks during the period 1935-1945. In its words, “In some cases, especially for the smaller private banks with a relatively small number of clients, it appears that it may be possible to come close to reproducing the entire volume of accounts as they existed in the pre-1946 period. For many banks, particularly the largest commercial and cantonal banks, the expectation is that between 50 to 85 percent of the original accounts can be captured for analysis.2 However, the bank databases vary in completeness; the degrees of completeness range from virtually 100 percent of the relevant accounts, especially in the private banks, to a low of 39 percent in a few of the small cantonal banks. The weighted average coverage is expected to be in the range of 75 percent.” The Committee concludes with: “ It is believed that the amount and quality of available data will provide a reasonable basis for estimating the remainder for which specific data is unavailable.”

The “Bottom Up” approach will work most effectively if the coverage of the victims of Nazi persecution that might have had deposits in Swiss banks is comprehensive. The Committee, with the support of Jewish organizations, including the U.S. Holocaust Memorial Museum, and the audit firms, now has a list of over 300,000 names that can be used for matching purposes. At the time of the status report, September 16,1998, work to expand this list was underway by exploiting the resources of Yad Vashem (the Holocaust center in Israel) and the International Committee of the Red Cross.

In the status report, the Committee states that: “The audit firms have used the victim databases to begin preliminary testing of the matching process. So far, they report a sizable number of possible matches, but have not yet undertaken the research necessary to verify these preliminary indications of a match.”

As a supplement to the “Bottom Up” methodology, the Committee also decided on a “Top Down Approach.” Using this approach, the audit firms developed information on the total of on- and off-balance sheets liabilities of Swiss banks related to non-residents of Switzerland. This included information on the number and type of accounts held by these depositors. A purpose of this alternative approach is to ensure that the total amount of liabilities to foreigners doesn’t exceed the accounts thought to be owned by the victims of Nazi persecution. On the other hand, if the sum determined by the “Bottom Up” methodology is but a very small fraction of the total deposits owned by foreigners during this period as determined by the “Top Down Approach,” it may signal that the auditors have missed significant sums owed the victims of Nazi persecution.

The information provided by the audit firms, when all is said and done, will represent the value of these accounts at the time they became dormant or in 1945 if there is no identifiable date of dormancy. Bringing them to current values involves additional issues. Foremost among these is that the accounts will have to be adjusted to reflect their long dormant status by specifying an appropriate return on the established principal value. To perform the valuation, the services of a distinguished panel of three financial experts was engaged. The Chairman is Henry Kaufman and the Members are Walter Ryser and Elhanan Helpman.

For valuation purposes, all accounts are to be classified as belonging to one of the following four categories: (1) demand, savings and time deposits; (2) bonds; (3) equities; or (4) managed accounts. The period of dormancy is fixed to begin on January 1, 1945. Using historic sources, the experts constructed rates of return for each category. These rates will be used to obtain the current or 1998 value of each type of asset. As one might expect, equities had the highest yield, managed accounts the second, bonds the third, and the various types of bank deposits, the lowest yield. When the audit firms ascertain the 1945 value of the various assets, the yields computed by the financial experts will then be used to update these sums to the present.

The final report of the Committee was expected in September 1999, but as of November 24, 1999, it had not been delivered. See December 1999 Press Release.


*Prepared by Gail E. Makinen, Specialist in Economic Policy, Government and Finance Division.

1The Jewish Organizations appointed as Members, Ruben Beraja, Avraham Burg, and Ronald Lauder, and, as Alternatibves, Zvi Barak and Israel Singer. The Swiss Bankers Association appointed as Members, Curt Gasteyer, Klaus Jacobi, and Peider Mengiardi and, as Alternates, Hans J. Baer and Reni Rhinow.

2Switzerland is divided into political units called cantons. Thus, a cantonal bank is one that is chartered by a canton and would correspond to state chartered banks in the United States.


Source: Congressional Research Service of the Library of Congress for the U.S. House International Relations Committee.