The Federal Supreme Court of Switzerland ordered Thursday that the bank Julius Baer & Co. Ltd. (Julius Baer), as the successor of the Cantrade Private Bank Switzerland (Cantrade), must pay CHF 150 million to the German government. The case stems from an ongoing investigation by the Bundesanstalt für vereinigungsbedingte Sonderaufgaben (Federal Agency for Unification-related Special Tasks) into East German cash that vanished after the fall of the Berlin Wall.

The Federal Agency for Unification-related Special Tasks has pursued the missing funds for more than two decades. The money was illegally transferred out of East Germany during the collapse of the Soviet Union. It was then moved to several foreign banks outside of the German government’s jurisdiction, which prevented the funds from being seized.

Cantrade allowed unauthorized withdrawals in 1990 and 1992 from the account of a foreign trade company established in East Germany.  The unauthorized withdrawals resulted in millions of missing funds, and Cantrade was found liable for allowing them. Julius Baer became involved in this case as a result of its acquisition of Bank Ehinger & Armand von Ernst Ltd., which was the successor to Cantrade, from UBS AG in 2005.

The Federal Agency for Unification-related Special Tasks decided to claim CHF 97 million plus interest, which accrued since 2009, amounting to roughly CHF 150 million. Julius Baer has contended that the amount is fully covered by provisions in a 2019 decision between Julius Baer and UBS AG regarding the representation of warranties made during the transfer of the company. In essence, Julius Baer believes that UBS AG should have to pay for the missing funds because they failed to accurately disclose potential liabilities that Bank Ehinger & Armand von Ernst Ltd. had at the time of its purchase.

In their official statement, Julius Baer said, “UBS AG was notified of the claims by the [Federal Agency for Special Tasks] under the terms of the 2005 transaction agreement with regard to representations and warranties granted in respect of the acquired entities. In view of the final ruling, Julius Baer will pursue such notification further.”