A step closer to the dictators' treasure chest

The Zurich banks hold much more than wartime gold, says Nicholas Faith
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A group of Swiss bankers and representatives of world Jewry, under the chairmanship of Paul Volcker, the former chairman of the Federal Reserve Board, has recently been set up to sort out, once and for all, the fate of the riches entrusted to Swiss bankers by the Jews of Germany and Nazi-occupied Europe before and during the Second World War.

But the commission's importance lies not so much in the historic injustices it may rectify, but in the precedent it sets. It could represent a turning point in international legal history, and an unprecedented opportunity to return to the populations of underdeveloped countries some of the loot plundered by their rulers over the years.

In the past, the Swiss have held with incredible tenacity to their sovereignty in guarding the money entrusted to them. For years after 1945, they fought a superb diplomatic and legal battle to prevent the Allies from getting at the enormous sums deposited by individual Nazis - far larger than those of Jewish origin. But their acceptance of the international nature of the Volcker commission shows that they are now sufficiently worried to relinquish a portion of their independence. So anxious are they to give the right, albeit misleading, impression of rectitude that one of their representatives on the commission, Hans Baer, is chairman of the only Swiss bank that did not actively work for and with the Nazis (the bank, Julius Baer, was in fact paymaster for the OSS, the wartime predecessor of the CIA).

This breach in the citadel provides a precedent, not for unearthing further Jewish or Nazi funds, but for trying to return to their rightful owners the far bigger sums deposited by most of the dictators who have ruled so many countries in the Third World since 1945. The precedent was set by President Juan Peron (don't cry for him Argentina, his money was securely tucked away) and he has been followed by every tin-pot autocrat you can think of - as early as the 1960s one cynical World Bank official estimated that a sum equivalent to all the aid distributed to Latin America had been funnelled into Switzerland.

The Swiss have already relented in their previously unbending attitude to the guardianship of such money, and have been relatively helpful in a number of cases recently - most notably that of President Marcos of the Philippines - although they work on a case-by-case basis. As a result of earlier pressure, they also claim that the banks now know the identity of the beneficiaries of all the assets (and no one knows how much: we're talking of hundreds, or even thousands of billions of dollars) managed by Swiss banks. It would thus be perfectly possible to extend the work of the Volcker commission to include claims by the dictators' successors to reclaim the assets on behalf of the country involved.

Of course there are innumerable difficulties in putting such an idea into practice. The definition of the people whose assets would be under scrutiny would have to include not only the dictator, his family (and mistresses) but also his closest associates. It would also be ridiculous to allow what one might call "unworthy" successors to a corrupt regime to get their hands on the money - I'm thinking here of successive rulers of Nigeria, a country which has provided lots of valuable clients for the banks since independence.

Finally, to prevent the money being moved elsewhere, the commission would have to have international backing to supervise the same search in other havens for illicit money. None of these - including Liechtenstein, the Cayman Islands and the Channel islands - have the same infrastructure, the same tradition or the same reputation as the Swiss. But if a suitable international legal structure could be created, based on the precedent set by the establishment of the Volcker commission, the world's poor could benefit to the extent of sums undreamed of by the world's aid agencies.