Assembly Approves Ban On Investments In Swiss Banks The Bill Would Impose Sanctions On Banks That Fail To Cooperate In Returning Money To Holocaust Victims.

Posted: May 19, 1998

TRENTON — The New Jersey Assembly, ignoring pleas from the Clinton and Whitman administrations, voted unanimously yesterday for a bill that would sever the state's ties with Swiss banks over the issue of Holocaust-era assets.

The chamber appeared to become the first legislative body in the country to approve sanctions against Swiss financial institutions, according to the National Conference of State Legislatures. It also was the first major defiance of the five-member committee of state and local treasurers that was formed to monitor the negotiations and so far has recommended restraint.

But the vote also revealed that the New Jersey Assembly may be alone so far in choosing the tactic of more pressure. The state Senate said it wanted to take more time to review the bill, and Gov. Whitman issued a statement indicating she likely would withhold her signature, which is necessary for putting the sanctions into effect.

``There is concern . . . that sanctions such as those outlined in this bill could be counterproductive to the recent progress and could actually be detrimental to assuring that Holocaust survivors are able to see justice during the course of their remaining years,'' Whitman said in a statement.

Stuart E. Eizenstat, the American undersecretary of state who has led the U.S. government investigation into Holocaust-era assets, sent letters to the legislators and Whitman urging restraint.

``We share the same sense of urgency that the process now underway must continue to move forward expeditiously,'' Eizenstat's letter said. ``However . . . I believe that we are achieving much more through cooperation with the banks than confrontation.''

The sanctions bill would require New Jersey to begin to sell its holdings in Swiss financial institutions, estimated yesterday at $86 million, mostly in the state's pension systems. It also would bar further investment or dealings with Swiss banks or financial institutions ``until such time as assets owed to Holocaust survivors and heirs of victims are returned.''

A spokesman in New York for the three leading Swiss banks, Jeffrey Taufield, expressed disappointment yesterday over the vote and said the measure was ``ill-timed and ill-conceived and should not be enacted.''

``If enacted into law, this legislation could seriously jeopardize the constructive discussions underway,'' he said.

While New Jersey's investment in Swiss banks is relatively small compared with those of New York and California, sponsors of the legislation said they saw their action as an important first step others might follow.

``The issue before us is not a monetary issue. It is an issue of morality, and I hope that our actions serve as a catalyst and a clarion call for justice,'' said Assemblyman Joel Weingarten (R., Essex), the sponsor who represents many Holocaust survivors in North Jersey.

``With all due respect, the true `counter-productivity' before us is the Swiss bankers' refusal to immediately, today, come clean and return all funds due to all legitimate claimants,'' Weingarten said before the chamber approved the bill in a 77-0 vote.

In March, with the threat of a national sanctions movement looming, the banks had agreed to the concept of a global settlement for all survivors. In return, the committee of treasurers, including Pennsylvania's Barbara Hafer, agreed to put off talk of sanctions while negotiations continued.

Last week, Hafer and New York City Comptroller Alan G. Hevesi, as well as negotiators from the World Jewish Congress, called on the New Jersey Assembly to delay its vote.

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