Secrets and Lies? Swiss Banks and International Human Rights
Ramasastry, Anita, Vanderbilt Journal of Transnational Law
"There is no such thing as good money or bad money, there's just
Lucky Luciano, gangster
What do Hitler and Marcos have in common? Their bankers. Both leaders used numbered Swiss accounts in order to deposit ill-gotten gains. Why? Bank secrecy. In its basic form, bank secrecy refers to the obligation of a bank and its employees to keep information about their customers strictly confidential.(1) Switzerland has been an attractive place to store money because it has historically offered customers confidentiality and security.(2)
The term bank secrecy denotes different things to different people. For some, bank secrecy means the ability of banks to protect an individual's right to financial privacy. People even refer to bank secrecy and financial privacy as human rights or fundamental rights.(3) Banks are seen as guardians, institutions that protect assets and prudently manage money.(4)
In Switzerland, bank secrecy was established to protect individuals who were vulnerable to government intrusion. Article 47 of Swiss Federal Banking Law provides that bank employees shall be subject to criminal prosecution if they divulge confidential information about their customers.(5) Some commentators suggest that Swiss banks enacted Article 47 in the 1930s when they sought to make their banking industry more attractive to Jews and other targets of persecution by enacting comprehensive bank secrecy laws designed to shield the identities of their depositors and protect them from the Gestapo.(6) Prior to World War Two, European Jews became increasingly worried about their fate under the Third Reich. They brought their savings to Switzerland, traveling directly or using agents to store their valuables. These customers were attracted by promises of confidentiality offered by the Swiss.(7) Article 47 thus was created both as a means of attracting wealth and as a way of safeguarding individuals in great need of protection.
Ironically, bank secrecy has proven to be a powerful tool whereby dictators, despots, and war criminals can hide their loot with impunity. Among the notorious leaders who have stashed away money in bank secrecy jurisdictions are the Philippines' Ferdinand Marcos, Romania's Nicolai Ceausescu, Haiti's Jean Claude "Baby Doc" Duvalier, and Zaire's Mobutu Sese Seku.(8) Many of these leaders also have violated the human rights of their citizens.(9) International public opinion displays discomfort with the thought of Swiss banks depositing and profiting from funds that are placed there by such notorious individuals. Perhaps even more egregious is the thought that war criminals have been able to store their spoils in secret accounts. As Chairman of the World Jewish Congress (WJC) Edgar Bronfman declared: "Nobody should be allowed to make a profit from the ashes of the Holocaust."(10) The roles of Swiss banks in relation to the Third Reich and the Marcos regime have been brought into the spotlight due to two recent cases being litigated in U.S. courts. These cases highlight the more problematic aspects of bank secrecy.
At the same time, these cases also demonstrate that awareness of bank secrecy and the role of bankers has evolved. Swiss banks that accepted Nazi assets during World War Two did so under a distinctly different set of international norms. As scrutiny of non-state actors has grown, so has the understanding of the role of corporate enterprises under international law. Swiss banks and multinational banks generally are held to much higher legal standards today.
A. Introduction to the Marcos and Holocaust Assets Litigation
On February 26, 1986, attorney Marvin Belli filed a suit in Hawaii on behalf of eight Filipinos who were U.S. residents claiming to have been tortured by the Marcos government.(11) The suit was filed while Marcos and his entourage were fleeing Manila and were en route to Hawaii after a democratic uprising forced them to leave the country. …