Metropolitan News-Enterprise

Tuesday, April 19, 2005

Panel Revives Claims That Vatican Bank Aided Nazi Puppets

By KENNETH OFGANG, Staff Writer/Appellate Courts

Victims of Nazi persecution in Eastern Europe can sue the Vatican Bank for restitution of property allegedly misappropriated by the Nazi puppet regime that ruled Croatia during World War II, the Ninth U.S. Circuit Court of Appeals ruled yesterday.

Judge M. Margaret McKeown, writing for a divided panel, said a federal district judge in San Francisco was wrong to dismiss “garden-variety” property claims as being within the exclusive jurisdiction of the executive and legislativel branches under the political question doctrine.

The panel did, however, uphold District Judge Maxine Chesney’s dismissal of claims that the bank and the Order of Friars Minor—a Franciscan order whose members allegedly held positions of influence in the Ustasha and aided former Ustasha in escaping prosecution after the war—were complicit in the exploitation of slave labor and other wartime activities of Germany’s Croatian allies, known as the Ustasha.

Bank’s Denials

The bank, the financial arm of the Roman Catholic Church, denies allegations that during World War II it stored the looted assets from thousands of gypsies, Jews, Serbs and others who were killed or captured by the Ustasha.

Twenty-four individuals and four groups filed suit in the U.S. District Court for the Northern District of California in 1999, on behalf of a class that may number more than 300,000 persons.

The suit followed publication of a State Department report, part of a larger effort to track Holocaust-related assets. The report cited postwar intelligence reports estimating that $80 million in gold from the Ustasha treasury was taken to Italy after the war, that the Vatican maintained relations with the regime in Zagreb during the war, and that the Ustasha leadership received sanctuary at a pontifical college in Rome after the regime was toppled.

The report cites no proof of Vatican involvement in the disposition of the gold, or other looted assets, but declares it “unlikely that [the Pope or his advisers] were entirely unaware of what was going on.” Officials in the Vatican, however, “have told us they have not found any records that could shed light on the Ustasha gold question,” the State Department explained.

Washington Silent

In concluding that federal courts have jurisdiction over the property claims, McKeown acknowledged that “the management of foreign affairs predominantly falls within the sphere of the political branches and the courts consistently defer to those branches.” But she also noted that the U.S. government, despite entreaties from the Vatican, had not taken a position in the litigation.

Unlike similar actions that have been rejected by the federal courts, McKeown added, the property claims do not implicate issues that have been the subject of a treaty or an executive agreement, or that would require that court to make policy decisions normally reserved to the political branches.

Instead, she wrote, the plaintiffs have raised “straightforward claims involv[ing] identifiable personal property for which federal statutes, common law, state law, and well-established case law provide concrete legal bases for courts to reach a reasoned decision.”

She cited the Supreme Court’s decision in Republic of Austria v. Altmann (2004) 541 U.S. 677, rejecting Austria’s claim of sovereign immunity from liability for the alleged misappropriation of artworks stolen from their rightful owner by the Nazis.

The “war objectives” claims, however, were appropriately dismissed, McKeown went on to say. Those allegations, the judge wrote, “present a nonjusticiable political question” of the type normally addressed by war crimes tribunals rather than civil courts.

Trott Dissents

McKeown’s opinion was joined by visiting Senior District Judge Milton I. Shadur of the Northern District of Illinois, but Senior Judge Stephen S. Trott dissented.

Claims involving foreign relations, Trott argued, cannot be considered by the courts, “whether the political branches have done anything about them or not.”

The dissenting jurist elaborated:

“Notwithstanding appellants’ lawyers’ ability to cast this dispute in ‘garden-variety’ legal terms, i.e., conversion, unjust enrichment, restitution, etc., the ineffable fact remains that this functionally is a lawsuit against (1) the Vatican itself, (2) the Vatican Bank, which is an instrumentality of the sovereign state of the Vatican, and (3) untold others — including probably the Pope — seeking relief for World War II wrongs

against foreigners committed by the Nazis and their allies in Europe almost sixty years ago....This set of facts and circumstances strikes me as demanding a ‘single-voiced statement’ of our government’s views, not a series of judgments by our courts.”

An attorney for the survivors and their beneficiaries said the decision, combined with a new pope expected to be named any day, could spark an out-of-court settlement.

The case is Alperin v. Vatican Bank, 03-15208.