07/14/97 MAN ON A CRUSADE

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MAN ON A CRUSADE
Christoph Blocher's Nazi gold campaign
It was late September, 1995, and at an outdoor political rally in Zurich, Christoph Blocher was giving a familiar speech. He warned that Switzerland must not risk its autonomy by getting too close to the European Union. But this time the affair got out of hand. Skinheads who had assembled to support Blocher began throwing stones at the hundreds of anarchists massed on the other side of the Limmat River to heckle the speaker. A two-hour riot ensued downtown, with the anarchists breaking windows, overturning cars, and hurling abuse at baton-wielding police.
Not your typical executive lecture. But then there's nothing typical about the man who gave it. Blocher, 56, is one of Switzerland's most successful entrepreneurs, as head of EMS-Chemie Holding--and its most controversial politician. In a 1992 referendum, when the Swiss narrowly rejected formal association with the EU, Blocher was widely credited with swaying public opinion.
Now, Blocher, leader of the right-wing populist Swiss People's Party in the canton of Zurich, has taken up an even thornier issue expected to come to a referendum in 1998 or 1999: whether Switzerland should use its gold reserves to create a $5 billion fund for victims of Nazi and other crimes. Blocher firmly opposes the idea. He also believes the Swiss central bank should not contribute to a separate $185 million fund for Holocaust survivors and their heirs.
FOLKSY ELOQUENCE. To his critics, Blocher is a provocateur. But he also taps into a deep strain of conservatism and nationalism, especially among German-speaking Swiss. And he is increasingly resented by U.S. critics who say that Switzerland's dealings with the Nazis--specifically, acting as their banker--prolonged the war. ''A lot of Swiss feel unfairly treated, and Mr. Blocher expresses that feeling,'' says Thomas Borer, Switzerland's special ambassador on issues relating to its wartime role. Although Blocher's party polls only about 15% of the Swiss vote, his folksy eloquence--and personal fortune--give him enormous power in Switzerland, where major issues are decided by referendum. But if Blocher succeeds in blocking the reparation fund, ''he may cause a reaction against Switzerland that will not be to our advantage,'' worries one banker.
Blocher achieved his power by sheer perseverance. A pastor's son from the nation's German-speaking heartland, he grew up poor, one of 11 children. He worked his way through college, in the process becoming friendly with the founder of a small chemical company, and not many years after graduation became one of its top executives. In 1983, after the founder died, Blocher pulled off a management buyout.
Today, Blocher is one of Switzerland's richest men. He has built EMS-Chemie Holding into a powerhouse that earned $157 million on sales of $650 million in 1996. With personal control of 23% of EMS's capital and 60% of its voting shares, Blocher has a net worth on paper of around $500 million. Short and sandy-haired, he has an unassuming air. But he entertains business guests at a thousand-year-old castle on the Rhine and posts his provocative speeches on a Web site (www.blocher.ch).
As an executive, Blocher is hard-nosed and adaptable, focusing his company on profitable niches in the mature chemical industry. EMS-Chemie is tops in Europe in automotive undercoating, supplying nearly every carmaker. In April, Blocher inked a joint venture with a major rival, St. Paul (Minn.)-based H. B. Fuller Co. Analysts think the deal will boost EMS's prospects as an automotive supplier on both sides of the Atlantic.
Blocher is also a savvy player in the Swiss stock market. In recent years, he has poured EMS's excess cash into the shares of big Swiss drugmakers. In 1996, earnings from these investments generated nearly half of EMS's profits. Early this year, fearing a market correction, Blocher liquidated EMS's equity positions and plans to put much of the cash into a $223 million share buyback. As a result, figures Meinrad Gyr, an analyst with Zurcher Kantonalbank, EMS will earn $299 million on sales of $719 million this year--a margin of 42%.
D'AMATO FURIOUS. But Blocher's success doesn't impress his critics in the U.S. Senator Alfonse M. D'Amato (R-N.Y.), one of many American politicians who support the World Jewish Congress in pressuring the Swiss to make reparations to Holocaust survivors, is furious that Blocher continues to refer to such pressure as ''blackmail.'' Says D'Amato: ''It is a shame that Mr. Blocher would impose his narrow-minded prejudices when it comes to righting the past wrongs against humanity.''
Although Blocher insists he is no anti-Semite, his language sometimes raises hackles. In his interview with BUSINESS WEEK, he used the German word Handlanger, meaning helper or accomplice, to describe D'Amato's relationship with the WJC. ''That's pure anti-Semitism,'' says Elan Steinberg, the WJC's executive director. ''Switzerland received some $3 billion in gold that the Nazis looted from throughout Europe. My question for Mr. Blocher is: What does he intend to do about it?''
If the fight keeps escalating, U.S. politicians and investors could revolt against Swiss banks and businesses. Blocher's political argument is that the Swiss should not bow to the wishes of foreign interests. But his country may pay dearly if he prevails.
By Thane Peterson in Zurich, with John Parry in Bern and Joan Warner in New York

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