November 19, 1996


       The Independent Committee of Eminent Persons (the "Committee" or "ICEP") was established by a Memorandum of Understanding ("MOU") of May 2, 1996, between the World Jewish Restitution Organization ("WJRO"), the World Jewish Congress ("WJC") (representing also the Jewish Agency and Allied Organizations), and the Swiss Bankers Association ("SBA").   The ICEP was mandated by the MOU to conduct an investigation to determine whether there are any dormant accounts, financial instruments, and other assets of the victims of Nazi persecution that were deposited before, during, and immediately after the Second World War in banks located in Switzerland.   The MOU provides that the ICEP will appoint an international auditing firm to implement this mandate and instruct the firm as to the scope of its duties.

       The persecution of minorities by the Nazis and others, prior to and during World War II, made it likely that many of the victims sought to move their assets to safety in neutral or Allied countries.   In view of neutral Switzerland's borders with the perpetrators of this persecution, Swiss banks and other Swiss financial intermediaries were recipients of at least some of the assets in search of safety.   The loss of life that accompanied the pre-war and wartime persecution has resulted in the concern that the victims were unable to claim these assets entrusted to others for safekeeping, and that they remain as dormant accounts in the institutions in which they were placed for safety.

       In 1962, the Swiss Government adopted a Federal decree, designed to identify and describe any unclaimed assets that belonged to the victims of Nazi persecution.   At that time, SFr. 9.5 million were reported to the Federal authorities, 75 percent of which were distributed to the rightful owners, and the remaining 25 percent to the Swiss Jewish Society and the Swiss Organization for Refugees.

       Nevertheless, concerns still remain that there are unclaimed assets that had been deposited with Swiss banks.   In response to these concerns, the SBA launched a survey of Swiss banks, and on January 2, 1996, the SBA announced the interim results of this statistical survey that identified a total of 775 accounts amounting to SFr. 38.7 million that had been opened by foreign customers before May 8, 1945, and that had been dormant at least since 1985.   Since the interim results of the SBA survey have been published, some banks have identified additional accounts and amounts of foreign customers, which the SBA estimates could increase the total amount of such dormant accounts by 10 percent.   Continuing concerns that an independent investigation be made of dormant accounts led to the formation of the ICEP.

       The ICEP met on August 14, 1996, and, among other actions, authorized a subcommittee to interview international audit firms operating in Switzerland to ascertain their views on the means, methods, and personnel that would be employed to carry out the mandate of the ICEP as established by the MOU.   Six major international auditing firms including Arthur Andersen, Atag Ernst & Young, Deloitte & Touche Experta, KPMG Peat Marwick, Price Waterhouse, and STG-Coopers & Lybrand, responded to this invitation, and presentations were made by each of these firms to the subcommittee on September 12 and 13, 1996.   In addition, on November 4, 1996, in response to a request from the Committee, these six firms submitted formal proposals that confirmed their agreement to implement the mandate, described their program for implementing the mandate, including the personnel and other resources that will be employed, and furnished the ICEP with the amount of the charges for their services.

       In the light of the MOU, the presentations made to the subcommittee, and the proposals submitted by the six international accounting firms, the Committee drafted a mandate for the audit firms and provides the instructions to the selected audit firms as to their duties, functions, and procedures for the First Phase of the work of the ICEP which will consist of a program to prepare for audits, followed by pilot audits of five Swiss banks.   The firms selected to do the investigative audit are Arthur Andersen, KPMG Peat Marwick and Price Waterhouse.

       The assignment of the Committee is of historic importance.   The goal of the ICEP is to conduct a comprehensive, thorough and independent investigation that can satisfy the reasonable demands of public opinion that these matters be definitively settled.   In carrying out this task, the intention of the ICEP is to provide as clear answers as the presently existing record will now permit about assets entrusted by victims of Nazi persecution to the custody of banks in Switzerland through an intensive investigation based on unfettered access to relevant Swiss bank files and personnel.   In the same manner, the investigation will examine the methodology of the Swiss banks, the SBA and the office of the Ombudsman as regards the search for accounts and assets in question and to record its conclusions.   The Committee fully recognizes the great difficulty of the task ahead as it requires following an audit trail that is now dimmed by the passage of more than fifty years.   Because of the historic importance of the work assigned to the Committee and its difficulty, extraordinary efforts of forensic auditing and historical analysis will be required by the auditors, and usual audit practices, such as sampling to verify the accuracy of records, must be effectively supplemented by the more rigorous disciplines of forensic auditing.   The Committee expects the audit work to be completed by approximately June 1998.

The Independent Committee of Eminent Persons
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