Claims Conference

Claims Conference fraud: Apologize!

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This week, the full extent of the fraud and theft of funds specifically earmarked by the German Government for Holocaust survivors was disclosed by the United States Attorney for the Southern District of New York. The money was stolen from the Hardship Fund and the Article 2 Fund, administered on behalf of the German Government by the Claims Conference.

The stolen amount was not $350,000 as indicated by the Claims Conference in February this year. Nor was it $7 million as the Claims Conference had suggested in June after the Jewish Week revealed that the scandal was far more substantial than the Claims Conference had initially inferred. It was a staggering $ 42.5 million and there is every probability that it may well substantially exceed this sum.

As late as last week, in preparation for an article I wrote in Israel Hayom (for the English version click here), the Claims Conference refused to acknowledge the extent of the fraud in response to enquiries from the Israel Hayom editors.

However, following the announcement of the US Attorney’s Office this week, the Claims Conference can no longer play down the extent of the fraud or the role played by employees and insiders of the Claims Conference. As stated by the US Attorney, “six corrupt insiders … systematically defrauded the Article 2 Fund and the Hardship programs for over a decade.” These insiders, who were employees of the Claims Conference, “allegedly processed thousands of fraudulent applications for payments meant for actual victims of the Holocaust.”

Contrary to the message that the Claims Conference is trying to promote, there should be no confusion. The Claims Conference was not the victim of the fraud. It is the Holocaust survivors who are the only victims.

The Claims Conference is disingenuously trying to divert attention from their shortcomings by quoting the US Attorney thanking them for “their extraordinary cooperation.” But it would be inconceivable for the Claims Conference not to cooperate with the investigation and it certainly does not absolve them from their duty to oversee funds earmarked for Holocaust survivors. The question remains unanswered as to how this fraud remained undetected for so long despite repeated previous appeals for greater oversight.

It was the sacred duty of the Claims Conference to administer the Funds and ensure that the payments were only made to survivors. Instead, due to what was clearly a breakdown in oversight and controls, this fraud was able to be perpetuated for over a decade and was even carried out from New York offices of the Claims Conference.

Surely, this highlights the need for an in-depth organizational review of the structure of the Claims Conference to ensure that effective checks and balances are put in place and genuinely implemented. If the calls over the last few years for such a review and a thorough forensic audit of all the operations of the Claims Conference had not been so arrogantly rebuffed, this fraud may have been averted.

After the Jewish Week reported in June that the fraud was not limited to $350,000, Claims Conference Chairman Julius Berman proclaimed that “no survivor payments were affected.” He failed to acknowledge that pensions payable from the Hardship Fund to survivors were suspended for three months or that the German government could hold the Claims Conference accountable for the missing funds.

But even more bizarre is the attempt to downplay the breakdown in oversight and controls and refusal to accept accountability for a fraud actually perpetrated by Claims Conference insiders.

I THEREFORE ask Gregory Schneider to advise if he still stands by the statement he made to the media when the fraud was first reported. His attempt then to shrug off and trivialize a fraud involving millions of dollars over a 10 year period, insisting that nobody was responsible because there was no deviation from standard procedures, was surely unconscionable.

It was and remains the duty of the Claims Conference to ensure that foolproof procedures are in place. There is a question of accountability, not to mention transparency, which the Claims Conference must now be forced to confront. And it is surely time to overhaul the “standard operating procedures” and restructure the Claims Conference and its operating procedures to ensure that no such fraud can ever recur.

In light of the criminal indictments, I would also challenge the Claims Conference to retract their statement in response to my first article in The Jerusalem Post on this matter, alleging that “the Claims Conference is well led, well governed, well-staffed and manages its restitution funds in a manner consistent with best practice and probity.”

No responsible public institution encountering a fraud of this magnitude would respond in such a cavalier manner, nor would it attempt to present itself as a victim, and thereby avoid any responsibility or accountability for its role in the fraud. It was, as the US attorney general stated, the Claims Conference, “which administered the programs, [and Claims Conference employees] were supposed to process and approve legitimate applications. Instead, they allegedly approved over 5,500 fraudulent applications, resulting in payouts to applicants who did not qualify for the programs. In exchange, these insiders kept a portion of the money for themselves and their co-conspirators.”

Will the Claims Conference finally accept responsibility? Unfortunately, it appears that even after the criminal indictments, they are disingenuously presenting themselves as the victim. They have employed what they themselves describe as “the biggest and the best PR organization in the United States” to refurbish their image. It is surely outrageous in the current circumstances to use Holocaust funds to engage a PR firm to promote a positive spin for the leadership of the organization.

The Claims Conference was set up for noble causes and its role is of vital importance to the Jewish world and in particular, the survivors. So when such an outrageous failure of oversight occurs, when over $ 42 million specifically earmarked for Holocaust survivors is stolen under the watch of the leadership of the Claims Conference, surely it is time for the chairman, Julius Berman, the executive vice president, Gregory Schneider and other leaders to be accountable, accept responsiblility and most importantly: Apologize to the true victims: the survivors.

And if the leadership is not willing to accept responsibility, then those organizations whose representatives serve on the Board have the obligation to raise their voices and demand genuine accountability, transparency and a forensic audit encompassing the entire administration and management of the Claims Conference.

ileibler@netvision.net.il

This column was originally published in the Jerusalem Post 



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