Swiss Bank Accused of Impeding Hunt for Accounts Linked to Nazis

WASHINGTON — The troubled banking giant Credit Suisse is facing new accusations that it has not been fully forthcoming about the scope of its historical assistance to Nazis, a quarter-century after it agreed to take part in a $1.25 billion settlement of lawsuits by Holocaust survivors.

The Senate Budget Committee on Tuesday released two reports it had obtained from an inquiry that Credit Suisse commissioned into banking activities by German Nazis who went to Argentina in the 1930s.

One of the reports was written by Neil M. Barofsky, a lawyer the bank hired to oversee the investigation but dismissed in November after its scope expanded to Nazis who fled Europe at the end of World War II. The committee received a copy of the report once it issued a subpoena for it last month, as Credit Suisse teetered on collapse.

“Credit Suisse’s decision to stop its review midstream has left many questions unanswered, including questions about the thoroughness of its prior investigative efforts, the extent to which it served Nazi interests and the bank’s role in servicing Nazis fleeing justice after the war,” Barofsky wrote.

The dispute shows that eight decades after World War II, the understanding of how Swiss banks provided financial assistance to Nazis is still incomplete. The topic also remains deeply contentious, adding to the turbulence that Credit Suisse has faced in recent weeks amid the global banking panic that led rival UBS to agree to buy it for about $3.2 billion.

The Budget Committee began an investigation after the Simon Wiesenthal Center, a Jewish human rights group named for a famed Nazi hunter, contacted Sen. Charles Grassley, the top Republican on the committee, in February about what had happened.

In a statement Tuesday, Credit Suisse said Barofsky’s report contained “numerous factual errors, misleading and gratuitous statements and unsupported allegations that are based on an incomplete understanding of the facts. The bank strongly rejects these misrepresentations.” The statement did not specifically identify any mistakes.

Through a spokesperson, Barofsky declined to comment.

In discussions with the committee, representatives of the bank denied any wrongdoing and said it was committed to pursuing the historical truth of what happened, people familiar with the matter said. The bank also portrayed its decision to fire Barofsky as a commercial dispute, not an attempt to impede the investigation. The underlying inquiry by a forensic accounting firm, it said, continued under the oversight of a different lawyer.

The bank produced its own 22-page account of events in March. After reviewing findings that it said “supplement but do not materially alter the information already available in the published historical record,” the report stated, “Credit Suisse has concluded that no further measures are currently warranted regarding the issues” that the Simon Wiesenthal Center had raised.

But after the Senate committee’s investigation, the bank agreed last week that it would scrutinize an additional list of names the center had gathered of people associated with a clandestine network that helped Nazis escape Europe after World War II.

In a statement, Grassley said that Credit Suisse, despite initially agreeing to investigate, had “established an unnecessarily rigid and narrow scope,” refused to follow leads, removed Barofsky and insisted on redacting portions of the report he had turned over.

Many Germans relocated to Argentina in the years before and after World War II, including a number of Nazis who fled Europe amid Adolf Hitler’s downfall. In 2020, the Simon Wiesenthal Center announced that it had uncovered information about Germans living there in the 1930s, which might help identify additional accounts linked to Nazis.

Executives at the time agreed to investigate assets deposited with a bank that became part of what is now known as Credit Suisse and hired an international forensic accounting firm, AlixPartners, to do so. The bank later appointed Barofsky as an independent overseer of the inquiry to give the center greater confidence, the people said.

Barofsky, of the New York law firm Jenner & Block, is a former prosecutor who was the inspector general for the $700 billion Troubled Assets Relief Program, the bank bailout response to the 2008 financial crisis. In selecting him, Credit Suisse went with a familiar figure: Since 2014, he has served as an independent corporate monitor for the bank after it pleaded guilty to helping American clients evade taxes.

In the 1990s, Swiss banks underwent major investigations that sought to uncover and grapple with their past financial assistance to Nazis and to identify any remaining assets belonging to victims of the Holocaust. The banks hoped that scrutiny and the restitution that Credit Suisse and UBS agreed to pay in 1998 had put the matter behind them.

Before he was fired, Barofsky did not definitively identify any Nazi-linked accounts that were still open, according to the documents. But the work was not complete and had uncovered accounts that Nazis had used that were not disclosed during the investigations of the 1990s.

Among them was an account controlled by a Nazi SS officer who was the representative of a holding company for many SS firms that exploited Jews economically. Barofsky portrayed that finding as in conflict with Credit Suisse’s assertion in 2001 that nothing in its corporate archives indicated that it had a business relationship with the holding company.

Information about that account, Barofsky wrote, was “among the working papers that were compiled during the bank’s prior investigations in the 1990s.” Soon after the discovery, the bank cut off his access, he wrote, leaving him unable to determine the details of the account and what happened to the assets after they were transferred to another account in 1945.

The report lists various other leads and findings. The bank, for example, had helped a Nazi businessperson restructure a company that would today be valued at several hundred million dollars so that its assets would not be confiscated given his past, and the bank later used the entity to pay bonuses to bank executives.

The investigation also started to scrutinize accounts opened between 1952 and 1990 by a Nazi scientist who had been imprisoned during the Nuremberg trials and an account closed in 2002 that had been held by a Nazi commander who had been tried and sentenced at Nuremberg.

As the investigation unfolded, Barofsky wrote, Credit Suisse replaced the general counsel who had been in place when his inquiry was established, Romeo Cerutti, with a new top lawyer, Markus Diethelm, who began a review of the bank’s major engagements.

In June, Barofsky briefed Diethelm about the investigation. Soon after, Diethelm ordered Barofsky and AlixPartners to pause their work, according to people familiar with the matter.

Bank officials later told the committee that Diethelm restarted AlixPartners’ work in October. But they said the relationship between Diethelm and Barofsky soured, and Barofsky was fired in November. He completed his report after being terminated.

In February, Grassley and the budget panel’s chair, Sen. Sheldon Whitehouse, D-R.I., opened an investigation.

Underlining the fraught nature of the investigation, senior Credit Suisse officials, including Diethelm, flew to Washington to meet with the committee about the issue April 7, even as the bank was talking to UBS about its future, the people familiar with the matter said.

Representatives from Credit Suisse disputed aspects of Barofsky’s portrayal of events and said the bank had hired a London-based lawyer at the firm Clifford Chance, Luke Tolaini, to continue Barofsky’s previous role.

The committee also pressed Credit Suisse about one of the issues that Barofsky flagged: why it did not look for any accounts linked to hundreds of names of people involved in a clandestine network that smuggled Nazis out of Germany after the war. The list had been developed by the Simon Wiesenthal Center.

Credit Suisse sent a letter to the committee last week saying it would investigate that list after all, the people familiar with the matter said.

In a statement, the center questioned the credibility of any future inquiry if it is not independent of Credit Suisse, saying the bank’s decision to remove Barofsky had eroded its “confidence in a fair, independent and transparent historical review.”

Still, both Grassley and Whitehouse praised the bank’s pledge to expand its investigation and said they would keep an eye on it going forward.

“We commit to seeing this investigation through,” Whitehouse said. “The fact that Credit Suisse has agreed to expand the scope of its initial investigation in response to the committee’s investigation demonstrates the power of congressional oversight of corporate malfeasance.”

This article originally appeared in The New York Times .