- This Second Phase Mandate contains the basic elements of the work program of the Independent Association of Eminent Persons (the "Association") for the accounting firms (the "Firms") that are implementing the Second Phase of the Association's forensic accounting investigation ("FAI") of dormant accounts of victims of Nazi persecution and other depositors in Swiss banks in the period from January 1, 1933 to the end of 1945 (the "Relevant Period"). The FAI was initiated by the First Phase Mandate of November 19, 1996 (Appendix A), and the objectives and goals of the FAI as stated in the First Phase Mandate are incorporated by reference into this Second Phase Mandate.
- In recognition of the complexity of the FAI and the need to adapt it to the individual circumstances of each bank, this Second Phase Mandate broadly and generally states the Association's basic instructions as to the procedures for accomplishing its objectives and goals as set out in the First Phase Mandate. Consequently, as the Second Phase of the FAI progresses, it is the intention of the Association to issue further detailed instructions to the Firms. This work program, including any new instruct ions or reporting requirements, shall be implemented with the mutual consent of the Association and the Firms. The Firms shall use their best efforts to accomplish the work program set out in this Audit Firm Mandate for the Second Phase. Therefore, it is absolutely necessary to comply with the code of work, here. It is also necessary to audit a couple of other points for analysis.
- This Second Phase Mandate, which is based upon the preparatory background historical analysis, and the data collection and cataloging that have been done pursuant to the First Phase Mandate, provides for a focused investigation of dormant accounts in Swiss banks using, among other investigative tools, on-site forensic accounting investigations to accomplish its objectives. The Second Phase FAI will cover the Swiss banks that existed, or acquired banks that existed, during the Relevant Period under priorities established by the Association based on recommendations by the Firms, focusing first on the approximately 65 banks that held more than 90 percent of the total banking liabilities during the Relevant Period. Within this group banks, priority attention will be given to the three largest banks which appear to be most advanced in their search for, and cataloging of, relevant historical data.
- The Four Basic Elements
- The Second Phase FAI includes, but is not limited to, the following four basic elements:
- collection of data on opened, closed, and dormant accounts during the Relevant Period and the creation of computer databases of this information;
- an analysis of the databases of account names established under (a) to determine whether the names of victims of Nazi persecution, third party intermediaries of such victims, and other persons are among the depositors or account holders whose names are on the databases of opened, closed or dormant accounts such as by comparing these databases against other databases of victims of Nazi persecution, of claimants on their behalf, of accounts that were blocked by government orders during World War II, and other sources of information;
- gather and analyze other sources of information mainly inside Swiss banks but also including official records, inside or outside of Switzerland to seek to supplement and cross-check information about identified accounts; and
- where no opening, closing, or transaction records exist, use of other forensic accounting investigative techniques to seek to determine the existence of dormant accounts, as well as those accounts that should have been dormant but for the fact that the funds in the account are unavailable for reasons other than their return to the original depositors or their legal representatives.
- For each Swiss bank assigned to the Firms for the Second Phase FAI, the Firms shall seek to identify for victims of Nazi persecution and others all accounts in existence at the beginning of the Relevant Period or opened during the Relevant Period that are now dormant. Similarly, for all such that were opened but have been closed, the Firms shall seek to determine the facts and circumstances under which the accounts were closed, as well as whether the account balance was paid to the account holder or his or her heirs or successors in interest. In addition, the Firms, in cooperation with Swiss authorities, including the Bergier Commission, shall seek to find accounts opened by intermediaries including, but not limited to, lawyers, accountants, notaries, financial consultants, or others, from records or other information available at banks, with the aim of determining whether such accounts were opened for the benefit of victims of Nazi persecution. For each bank so assigned, the Firms shall also assess whether there is any evidence that the bank took any measures or adopted any policies to obstruct access to dormant accounts, diverted dormant accounts to unauthorized uses, or otherwise took actions inconsistent with the obligations of a bank to its clients.
- In connection with its review of the Second Phase Mandate, the Association reviewed its use of the term "victim of Nazi persecution" as one of the key definitions of the accounts and assets, which are the focus of the FAI. In the past, this term has been narrowly construed so as to act as a barrier to a complete and just evaluation of the scope of the dormant account issue. It is the instruction of the Association to the Firms that this term continues to constitute a major focus of their investigative efforts, but shall be construed broadly to cover all persons fairly within this concept. For example, in the past this term was used to exclude persons who had died of disease, and include only those persons, or categories of persons, who had died of direct Nazi violence. To assure that this term is as understood by the Association, the Firms are directed to bring to the attention of the Association any doubtful categories of cases of inclusion or exclusion of people who deposited funds during the Relevant Period whose accounts have been closed or are dormant.
- Types of Information to be Developed
- The databases of accounts to be established as described above shall be used to match against other databases of Holocaust victims, claimants in past efforts to locate dormant accounts, owners of assets in Switzerland that were blocked during World War II in Switzerland and elsewhere, and other relevant computerized records. For accounts identified under the database creation and analysis strategy described above, where possible, the Firms shall determine the opening principal amount and/or the current principal balance or current value of the account, the amount of interest and rate of interest that has been paid on the account, and the record of additions or subtractions to the account over the period of its existence.
- With respect to bank fees, information shall be sought as to whether fees or other charges have been assessed on the accounts and, if so, the cumulative amount of such fees. The Firms should be particularly alert to accounts that may have been reduced to de minimis levels and/or consolidated into collective accounts through imposition of high levels of fees. Finally, the Firms shall seek to determine whether the interest rates or management procedures applied to an account of a victim of Nazi persecution, including assessment of fees, other charges, and other bank policies applied to dormant accounts, are the same as for all other similar accounts of the bank of the same type.
- Because there will be cases where the Firms will find that a bank to which they have been assigned for the Second Phase FAI will have only partial or incomplete opening, closing, or transaction account records for any type of account of the bank for the Relevant Period, the Firms will seek evidence bearing on the proportion of the total number of accounts and the total amounts of such accounts represented by the missing records, as well as the circumstances in which the relevant records were destroyed, with particular emphasis on seeking to determine whether or not the missing records were destroyed in the ordinary course of business as part of the bank's regular records storage policy.
- Especially where opening, closing or transactional records do not explain the amount or ultimate disposition of individual accounts, or if there are no such records at all, the Firms shall use any other information that may be available to develop information about such accounts. This includes a review, inter alia, of suspense, pooled, collection, custody and other accounts into which dormant accounts may have been transferred, as well as transfers to charity, inter-governmental payments, and permitted terminations of liability on certificates of deposit or other bank liabilities after passage of time. In making the analysis called for by this paragraph, the Firms shall make use of historical sources of information inside and outs ide of the banking system including Swiss Federal and Cantonal archives, other governmental archives outside of Switzerland, that were developed during the First Phase FAI, as well as information to be developed through cooperation with the Bergier Commis sion. The Firms shall report to the Association any needs for additional reviews of any relevant archives inside or outside of Switzerland. In addition, if during their investigations of banks as part of the Second Phase FAI, the Firms find any evidence of accounts looted by Nazis, they shall report this information to the Association so that the Association can refer it to the proper Swiss authorities.
- As in the case of fees, in making the analysis provided for above, the Firms shall seek to determine whether accounts of victims of Nazi persecution were treated in the same manner as other accounts of the bank of the same type.
- Utilizing Bank Data Task Forces
- Because the pilot audits of the First Phase have identified much larger amounts of relevant data than had previously been thought to exist, the Association has given careful attention to the most efficient way of identifying, collecting and cata loging the vast amount of possible important documents. As a result of their First Phase work, the Firms have recommended and the Association concurs in the plan proposed by the Firms to make maximum use of Swiss bank staff teams to identify, collect and catalog data under plans proposed by the Firms and with their oversight in the search and identification, collection and cataloging of all archives and records relevant to the FAI with the objective of assuring that the end result is useful for the FAI. The Firms shall also monitor the work of the banks' staffs carefully and inform the Association whether, based on the tests performed by the Firms, it is comprehensive, accurate, and being completed on a timely basis.
- The Association also recognizes that different investigative strategies will have to be developed for different banks because each bank will be different in the way it organizes its documentation, and in the amount and quality of its records. Accordingly, the Firms shall, after an initial review of each bank, formulate an investigative plan providing a detailed framework for carrying out the four major objectives of the Second Phase FAI for review and approval by the Association.
- Interim Report
- The Association requests the Firms to make an interim report of the preliminary results of the work program outlined above by the end of March 1998. The Association maintains its target of completing the major elements of the Second Phase FAI by the end of 1998, and believes that the addition of a staff of approximately 150 forensic auditors by Coopers & Lybrand during the Second Phase FAI will greatly assist in meeting this target. As noted above, the Association intends to issue additional instructions to the Firms as the FAI progresses, and such instructions will also include new reporting requirements.
||Mr. Paul A. Volcker, Chairman; Mr. Reuben Beraja, Mr. Avarham Burg, Prof. Dr. Curt Gasteyger, Prof. Dr. Klaus Jacobi, Mr. Ronald S. Lauder, Dr. Pieder Mengiardi.
||Mr. Hans Baer, Mr. Zvi Barak, Prof. Rene Rhinow, Mr. Israel Singer.