After months of painstaking negotiations, a group of German corporations is set to offer as much as $3.8 billion to settle a spate of Holocaust-related legal claims, including those brought by slave laborers, according to lawyers familiar with the talks.
The offer comes on the eve of a two-day conference, scheduled to start tomorrow at the State Department, to resolve the question of how to compensate as many as 2.4 million survivors who toiled against their will--often at gunpoint and without pay--to stoke the war machine of the Third Reich.
Also at issue: how much German insurance and banking interests will pay for their alleged role in appropriating assets from Holocaust victims.
But a swift end to this bitter and enormously convoluted dispute seems unlikely. Plaintiffs' lawyers, who have filed more than two dozen class-action lawsuits on behalf of survivors, yesterday denounced the German offer as woefully inadequate.
Under terms of the expected proposal, they said, each victim could end up with a lump sum of roughly $200. Calculated in 1940-era dollars, the lawyers said, that payment could work out to about $20 per victim for an average of two years of hard labor.
"If they present this number as their first and final number, I don't think anyone believes this will produce anything other than the end of the negotiations and a huge worldwide backlash at the arrogance of such a position," said one lawyer, who declined to be identified.
"If, however, this is a good-faith opening offer that has flexibility to become a reasonable number, there is hope that this could finally be resolved."
A State Department official said it was premature to comment on any anticipated offers. "We expect the German companies to live up to their moral commitment and make a presentation at this meeting," said James Bindenagel, the State Department's special envoy for Holocaust issues.
The conference will bring together representatives from countries where former victims reside, such as Poland, Russia, Ukraine and Israel, as well as leaders of Jewish groups and plaintiffs' lawyers. German participants, which include top government officials and executives from DaimlerChrysler AG and Volkswagen AG, hope that the talks settle the forced-labor issue for good and lead to the voluntary dismissal of all related litigation.
The lawyers have asked for as much as $30 billion to settle the cases, but they made those demands when their claims stood on sturdier legs. In September, a pair of federal judges dismissed five of the class actions, arguing that the U.S. courts are not the proper place to resolve this matter.
Those rulings curtailed the lawyers' leverage to influence the negotiations and added a greater importance to out-of-court discussions already underway between top U.S. and German officials. Stuart E. Eizenstat, the deputy Treasury secretary, has led those talks on behalf of the U.S. side.
The upcoming conference is intended to provide legal closure to victims of one of the least-known crimes of the Holocaust. Starting in the 1930s, the Nazi regime put millions of people to work in the chemical, steel and mining industries, producing critical materials for its war machine. German industry capitalized on cheap and often free labor, and the government sidestepped a growing manpower crisis, allowing more German soldiers to fight in the war.
The majority of victims were civilians captured during the Nazis' occupation of Eastern Europe. Many were Catholic; some were shipped to Germany, while others were kept in occupied territories. Roughly 500,000 were held in concentration camps and ghettos and treated as something less than slaves--they were unpaid and often starved and worked to death. Millions more were paid tiny sums and kept in labor camps where they were adequately fed and in some cases allowed conjugal visits.
For years, German corporations have contended that they had little choice but to play by the brutal rules of Hitler's government. Further, under previous restitution agreements, German companies have already dispensed some $53 million to forced wartime laborers.
Nonetheless, in response to a growing number of lawsuits, 12 German companies announced in February that they would establish a $1.7 billion fund to compensate former forced and slave laborers.
The companies said they were meeting a moral, rather than legal, obligation. At the time, lawyers called the sum paltry and vowed to continue pushing their class actions, using that leverage to pursue an out-of-court settlement.
According to sources, about 35 German corporations plan to establish a single fund by Jan. 1 that will disburse money to foundations for Holocaust victims in a handful of countries.
Also contributing to the fund would be several German banks that have been accused of stealing the money from account holders, as well as German insurers that allegedly profiteered by cashing out scores of policies.
In exchange, German companies would receive assurances that lawyers would abandon the suits. The companies also would win a declaration by the U.S. government officially supporting the settlement, a document likely to dampen interest in additional suits.