Credit Suisse Accused of Impeding Hunt for Accounts Linked to Nazis

WASHINGTON - A quarter century after Credit Suisse agreed to settle lawsuits filed by Holocaust survivors for $1.25 billion, the bank is now facing accusations that it was not fully forthcoming with its history of historical assistance to Nazis.

The Senate Budget Committee released on Tuesday two reports that it obtained from an investigation Credit Suisse had commissioned about the banking activities of German Nazis in Argentina during the 1930s.

Neil M. Barofsky wrote one of the reports. The bank had hired him to supervise the investigation, but he was fired in November when the scope of the report expanded to Nazis that fled Europe after World War II. The committee obtained a copy of this report after issuing a subpoena last month as Credit Suisse was on the verge of collapse.

Barofsky wrote that "Credit Suisse’s decision to end its review in the middle of it has left many unanswered questions, including the extent to its which it served Nazi interest and the role the bank played in serving Nazis who fled justice after World War II."

Eight decades after World War II the dispute demonstrates that there is still a lack of understanding about how Swiss banks helped Nazis with financial aid. Topics like this are also highly controversial, and add to the turmoil Credit Suisse has been experiencing in recent weeks due to the global banking crisis that led UBS to purchase it for $3.2 billion.

The Budget Committee launched an investigation in February after the Simon Wiesenthal Center - a Jewish human right group named after a famous Nazi hunter - contacted Senator Charles E. Grassley (the top Republican on the Committee) about what happened.

Credit Suisse issued a statement Tuesday stating that Mr. Barofsky’s report contained “numerous factual mistakes, misleading and gratuitous claims, and unsupported accusations, which are based upon an incomplete understanding the facts. The bank rejects the misrepresentations. The statement didn't identify any errors.

Barofsky declined comment through a spokesperson.

People familiar with the situation said that in discussions with the committee representatives of the Bank denied any wrongdoing, and stated it was committed to pursuing historical truths of what happened. The bank also claimed that its decision to dismiss Mr. Barofsky was a result of a commercial dispute and not an attempt to obstruct the investigation. It said that the underlying investigation by a forensic accountancy firm continued under the supervision of a new lawyer.

The bank published its own 22-page report of the events that occurred in March. The report said that after reviewing findings which "supplement, but do not materially change the information already published in the historical record," "Credit Suisse concluded that no additional measures are currently required regarding the issues raised by the Simon Wiesenthal Center."

After the Senate Committee's investigation last week, the bank agreed to examine an additional list the center had compiled of people who were associated with a secret network that helped Nazis flee Europe after World War II.

In a press release, Mr. Grassley stated that Credit Suisse had, despite agreeing initially to investigate, "established an excessively rigid and narrow focus," refused to pursue leads, removed M. Barofsky, and insisted upon redacting certain portions of the report he turned over.

In the years leading up to and following World War II many Germans moved to Argentina, including Nazis who fled Europe after Adolf Hitler was overthrown. The Simon Wiesenthal Center reported in 2020 that they had discovered information about Germans who lived there during the 1930s. This could help identify other accounts related to Nazis.

The executives at the time agreed that they would investigate assets deposited in a bank which later became Credit Suisse. They hired AlixPartners to do this. People said that the bank appointed Mr. Barofsky to oversee the investigation as an independent party, in order to increase the confidence of the center.

Mr. Barofsky is a former prosecutor and was the inspector-general for the $700 billion Troubled Assets Relief Program. This program was created to bail out banks in response to the financial crisis of 2008. Credit Suisse chose a familiar face when they selected him: Since 2014, Barofsky has been an independent corporate monitor at the bank, after it admitted to helping American customers evade tax.

In the 1990s Swiss banks were subjected to major investigations to determine their financial support of Nazis in the past and identify any assets that belonged to Holocaust victims. The banks believed that the scrutiny and restitution Credit Suisse and UBS had agreed to pay back in 1998 would put the matter behind.

Documents show that Mr. Barofsky had not identified any Nazi-linked open accounts before he was terminated. The work was not finished, but it had revealed accounts that Nazis used and that had not been disclosed during the 1990s investigations -- although bank representatives have disputed some aspects of the report.

Barofsky claimed that information about a Nazi SS account that was controlled by a Nazi SS representative who represented a holding firm for SS companies that exploited Jews financially was included in "the working papers" that were compiled as part of the bank's previous investigations during the 1990s. Barofsky said that this finding was in conflict with Credit Suisse's 2001 claim that they had found no evidence in their archives that indicated a connection with the holding company.

People familiar with the case said that representatives for the bank denied covering up the incident, and stressed to the committee it was an historian who brought the account records to their attention.

Barofsky wrote that the bank had helped a Nazi-linked entrepreneur restructure an entity that was worth several hundred millions of dollars today so that its assets wouldn't be confiscated. The bank then used this entity to pay bonuses for bank executives.

The bank representatives told the committee the restructuring was done to conceal the assets from the 1930s when the businessman broke with Nazis, not during or afterwards. They also said that the bank bought out the shares before the bonuses.

A Nazi scientist imprisoned in Nuremberg during the Nuremberg Trials opened accounts between 1952 and 1989. Another account, closed by a Nazi officer who was tried and sentenced there in 2002, had also been held.

As the investigation progressed, Credit Suisse replaced Romeo Cerutti as general counsel, who was in place at the time of his inquiry, with Markus Diethelm. Markus Diethelm began to review the bank's most important engagements.

In June 2022 Mr. Barofsky informed Mr. Diethelm of the findings. Diethelm ordered that Mr. Barofsky, AlixPartners and their team halt work shortly after.

Later, bank officials told the committee Mr. Diethelm had restarted AlixPartners in October. However, the relationship between Mr. Diethelm, and Mr. Barofsky soured and Mr. Barofsky's was terminated in November. After being terminated, he completed his report.

Luke Tolaini is a lawyer from the London firm Clifford Chance who was hired to replace Mr. Barofsky.

In February, Mr. Grassley, along with the chairman of the budget committee, Senator Sheldon Whitehouse (Democrat from Rhode Island), opened an investigation.

People familiar with the situation said that to highlight the sensitive nature of the investigation senior Credit Suisse officials including Mr. Diethelm flew to Washington on April 7 to meet with the Committee about the issue, even though the bank was speaking to UBS regarding its future.

The committee pressed Credit Suisse on one of the concerns raised by Mr. Barofsky: Why it didn't look for accounts that were linked to a list containing hundreds of names of individuals involved in a secret network which smuggled Nazis from Germany after World War II.

People familiar with the situation said that Credit Suisse wrote to the committee the previous week, saying it would look into the list.

The center said that the decision by Credit Suisse to fire Mr. Barofsky weakened its confidence in an independent, fair and transparent review of the past.

Both Mr. Grassley, and Mr. Whitehouse praised that the bank had pledged to expand its investigation. They said they'd keep a close eye on this going forward.

Whitehouse stated, "We are committed to seeing this through." The fact that Credit Suisse agreed to broaden the scope of their initial investigation as a response to the Committee's investigation shows the power of congressional oversight over corporate malfeasance.