CA Treasurer Fong Says "No" to Business With Swiss Banks.

NEW YORK--(BUSINESS WIRE)--July 1, 1998--California State Treasurer Matt Fong made it official Wednesday that he has decided to stop doing business with Swiss banks until they return to the bargaining table and negotiate in good faith.

Fong made the announcement in New York, following a daylong meeting of the Executive Monitoring Committee, a group representing 800 state and local treasurers that are seeking restitution from Swiss banks for survivors of the Holocaust. The five-member oversight group unanimously voted to lift a moratorium on investment restrictions that had been in place since last December.

"It's clear from their actions 50 years ago and their actions the past 18 months, that we can not trust the Swiss banks," Fong said showing his displeasure of how the banks responded to the process and to questions Wednesday.

In March, the Swiss banks agreed to a settlement that called for announcing an acceptable dollar amount and a timeline for making payment to the Jewish community and survivors of the Holocaust by July 1. Two weeks ago, the negotiations broke down when the U.S. State Department was unable to close the deal. Wednesday's testimony by the State Department troubled committee members because of insufficient information and a lack of progress.

Fong is California's chief financial officer and was credited with leading a boycott on investments with Swiss banks last summer. Today, Fong clarified the notion that he is reinstating the boycott.

"There's a difference," Fong said. "Last year I imposed sanctions to bring the Swiss banks to the negotiating table. I was looking for a response from them and that worked. This time, however, I am choosing not to do business with them because they didn't hold up their end of the bargain."

Fong likened his move to the action he took against Merrill Lynch following the Orange County bankruptcy when he stopped conducting business with one of the world's largest brokerage firms because of potential problems.

"This is an issue of trust," Fong said. "The Swiss banks used bad faith and delay tactics to string out an agreement they made to us three months ago. As banker-to-banker, if I can not trust them, then I'm sure not going to do business with them."

Fong made it clear that he aimed his objections at the Swiss banks, not the Swiss government or the Swiss people. Meanwhile, some 120,000 to 150,000 survivors of the Holocaust are estimated to be living in the United States. With the average age of a survivor at around 79 years, time is running out. "Time has become an ally to the Swiss banks," Fong said.

The California treasurer presides over a $32 billion dollar short-term investment portfolio.

    CONTACT:  California State Treasurer's Office
               Stan Devereux or Roger Wildermuth, 916/653-4052
               http://www.treasurer.ca.gov