June 8, 2000

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Bank's Nazi ties spur call for ban

Jewish groups want Canadian branch held up until deal made in Holocaust lawsuit

Glen McGregor

THE German bank accused of once holding accounts for members of Adolf Hitler's dreaded SS is planning to open a branch in Canada, but Jewish groups want the federal government to block the deal until all outstanding claims over the bank's role in the Second World War are settled.

Frankfurt-based Dresdner Bank AG, Germany's third-largest bank, recently applied to Canada's Superintendent of Financial Institutions for permission to open a branch in Toronto.

Dresdner is part of a group of German industrial giants negotiating to settle enormous class-action lawsuits filed by Holocaust survivors and their families over the use of slave labour and the laundering of money taken from Jews during the war.

B'Nai Brith Canada considers securing restitution from German industry a "tremendous symbolic issue" that should be resolved before the banks are allowed to operate freely in Canada.

"If one believes that individuals should be held accountable, the accountability should apply to banks and corporations," said Ruth Klein, the national director of B'Nai Brith's Institute of International Affairs.

"This is a very emotionally charged issue and the government shouldn't just look the other way."

Dresdner Bank and Deutsche Bank were named as a co-defendant in an $18-billion U.S. class-action lawsuit launched in New York State in 1998. The banks allegedly accepted cash, jewelry and even gold tooth fillings seized from Holocaust victims. They were also accused of providing financial support to the Nazis and German businesses that employed Jews as slave labour.

Deutsche Bank admitted it had backed companies involved in the construction of the notorious death camp in Auschwitz, Poland, where an estimated 1.5 million died, but denied it used prisoners as slave labour.

German authorities reached a preliminary settlement with world Jewish leaders last December to compensate Holocaust victims on behalf of the banks and industrial sector.

Dresdner Bank agreed to contribute to the $5.5-billion U.S. settlement fund. But the historic settlement agreement has not been finalized and there are outstanding issues between the German and U.S. authorities over whether civil actions against German industry could continue.

The dispersal of the damages to Holocaust survivors and their families also presents an enormous administrative headache for the Germans.

The Swiss banks have already agreed to pay $1.25 billion U.S. to Holocaust survivors as settlement for wartime claims.

Jack Silverstone, executive vice-president of the Canadian Jewish Congress, says that restitution agreements should be concluded as the banks expand into Canada. He applauds the German government for its pro-active approach to restitution, but he says the country's industry has been slow to admit its ties to the Nazis.

"The German government has accepted their responsibly, they have shown a lot of moral leadership, and I think the banks and other major industrial corporations should behave in the same spirit," he says.

Dresdner operates a separate subsidiary that provides corporate banking in Canada, but with regulatory changes introduced, the firm wants to open a Canadian branch of the German operation.

David Brandt, president of Dresdner Bank Canada, says a foreign branch based in Toronto will provide more flexibility to access the parent company's pool of capital. He would not comment on the bank's position on Holocaust restitution.

The Office of the Superintendent of Financial Institutions will take about six months to study Dresdner's German operation before making a recommendation to Finance Minister Paul Martin for approval.

In the U.S., Holocaust survivor groups have attempted to interfere with regulatory changes involving German banks. Last year, survivor groups wanted the U.S. Federal Reserve to block the acquisition of Bankers Trust by Deutsche Bank until the Holocaust claims were resolved. The purchase was ultimately approved. A $30-billion merger attempt by Dresdner Bank and Deutsche Bank failed in April amid bickering between senior management over terms of the deal. Had the merger succeed, it would have made the bank the largest in the world.