Will the Claims Conference Board Act Before it is Too Late?

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July 9th Update

Interview with Walter Bingham on Israel National News (click here) on the Claims Conference.

In addition, see today’s report from the Jerusalem Post (click here) and the eJewishPhilanthropy post featuring the full internal report (click here), by Ombudsman Shmuel Hollander, regarding “Management failings” by the the Claims Conference.

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On July 8, the Conference on Jewish Material Claims against Germany (the Claims Conference), the wealthiest Jewish organization in the world, will hold its annual board meeting behind closed doors.

Board members will be obliged to respond to scandals about their organization that have been widely circulated throughout the media, casting shame on the entire Jewish community. The most serious issue under review will be the lack of accountability in relation to $57+ million stolen by 17 employees, including a high ranking administrator, over a 16-year period under the very noses of senior executives at the head office.

Until now, instead of accepting responsibility for the breakdown in oversight,  management has manipulated the board into passing shameless resolutions praising itself, and circulating self-serving letters from directors claiming that “the organization is well led, well governed, well-staffed and manages its restitution funds in a manner consistent with best practice and probity.”

In contrast to mandatory procedures within public institutions accused of lesser frauds, Claims Conference management has frenziedly resisted efforts to set up an independent review to ascertain, among other issues, whether negligence was a contributing factor. It has also brushed aside calls for an independent review to discover whether there are additional skeletons in the closet.

In addition, management has refused to consider appeals to freeze allocations of discretionary funds in order to ensure that there is support to enable elderly, ailing Holocaust survivors to live out their remaining years with dignity.

But with the latest revelations and scandals, board members will be obliged to cease acting as rubber stamps or may face the intervention of outside bodies which monitor the management of charitable funds, and find themselves open to charges of having failed to exercise their fiduciary obligations.

Board members uncertain how to respond, should heed the call of the Claims Conference’s First Vice President, Jewish Agency Chairperson Natan Sharansky, who has stated that “we cannot investigate ourselves or our colleagues or our benefactors,” and who, in no uncertain terms, has demanded that a genuinely “independent public committee composed of distinguished individuals who are not connected to the board or its beneficiary organizations examine all the events surrounding this unfortunate embezzlement…and examine Claims Conference procedures and its structure” in order “to resolve the doubts and concerns” regarding this body that prevail throughout the Jewish world so “that the public trust can be restored.”

They should also pay attention to Ronald Lauder, President of the World Jewish Congress, who was the first to demand that the Chairman of the Claims Conference, Julius Berman, directly respond to specific questions relating to the latest allegations, and instructed his organization to undertake a review of the Claims Conference.

This will not be an easy task for board members. The damaging new disclosures published in recent weeks in The Jerusalem Post, The Forward and the JTA have caused widespread shock.

In particular, allegations that senior management leaders failed to adequately investigate details of fraud that had been brought to their attention as far back as 2001, are highly disturbing. The accusation that both Chairman Berman and CEO, Greg Schneider, were warned about the scam, but failed to follow up, is what caused some to question senior leadership.

More damning, however, is that it appears that neither Berman nor Schneider disclosed their prior knowledge of the fraud to the board, and, when confronted, engaged in deliberate attempts to cover up their involvement and failure to follow up.

If confirmed, such a cover-up would represent a major breach of governance, not to mention a public embarrassment of the highest order, especially in view of management’s portrayal of itself as a paragon of organizational morality.

A few months ago, during the trial of the embezzlers, a court transcript quoted CEO Schneider expressing “shock” over the $57+ million fraud. Yet, when confronted with the existence of an anonymous letter from 2001 warning of the fraud, the Claims Conference spokespersons released a series of conflicting statements, and ultimately apportioned blame exclusively to a German manager who died in 2004; what they failed to reveal was that Berman himself, then Counsel to the Claims Conference, had been commissioned to investigate the fraud allegations in 2001.

In a widely disseminated, self-incriminating, 11-page memorandum attacking his critics rather than addressing the charges against him, Berman ironically highlights his failure to responsibly administer the duties of the Chairman of an organization dispensing restitution funds.

His arrogance and failure to pursue sound governance and organizational transparency is highlighted by his boast that he refused to examine incriminating evidence I provided him some years ago – evidence that was subsequently verified by the New York Attorney General.

He also misleadingly implies that the FBI, by conducting a criminal investigation, effectively validated Claims Conference oversight of funds.

To make matters worse, Berman justified his refusal to apologize for the theft of the $57+ million on the grounds that it was German taxpayers’ money, and did not have an impact on recipients’ restitution. Such an unconscionable remark in itself provides sufficient grounds for deeming Berman unfit to hold a leadership role in the organization.

Regrettably, Berman fails to appreciate the gravity of the situation. Rather than allow an independent investigation, he has set up a bureaucratic procedure that relies on the discredited technique of appointing an internal committee comprised of handpicked loyalists to review the issue.

To offset demands for an independent investigation, this internal committee has requested that the Claims Conference Ombudsman, an employee of the Claims Conference whose contract will soon be reviewed for renewal, determine what has transpired. The Ombudsman will report to the internal committee, which, in turn, will make a recommendation to the board. This process hardly qualifies as an independent review, and certainly will not address the primary issue of accountability.

Furthermore, the Claims Conference board has not been informed as to what the Ombudsman was instructed to scrutinize, and whether his brief will include Berman’s and Schneider’s alleged cover-up of their prior exposure to the fraud.

There are already bitter complaints that the Ombudsman’s findings and the committee’s recommendations are being suppressed prior to the board meeting. But even worse, in what can only be described as an unconscionable action, the board agenda just circulated, lists the report as the very last item on the two day meeting even after the election of the incoming leadership team. Aside from making a mockery of governance and due process, relegating such a crucial issue relating to accountability and allegations of a cover up to the end of the meeting, demonstrates that the leaders continue operating the organization like their personal fiefdom and treat the directors with utter contempt.

It is therefore no surprise that last week, noted Holocaust historian Deborah Lipstadt pessimistically predicted that nothing would change and that none of the leaders would even relinquish their positions, saying “Have they lost all sense of decency, if not shame?”

One test as to whether the Claims Conference is willing to undertake reform or face intervention from an external monitoring body, is whether Julius Berman will continue to insist that he remain Chairman of the Board, despite the many reasons he should step down: his arrogance in running the organization like a private fiefdom; his failure to establish genuine governance and organizational transparency; his unwillingness to intervene to ensure a greater flow of funds to aging Holocaust survivors, and his alleged failures relating to the $57+ million fraud. Berman has occupied the position of Chairman for more than11 years; it is time for him to go.

But it is not just Berman who must accept responsibility and take action. Greg Schneider and all those responsible for failures of oversight must be held accountable, including those who participated in the cover-up by withholding information from the board, breaching a fundamental principle of organizational governance.

If Berman possesses a modicum of consideration for the well-being of the Claims Conference, he will realize that in retaining the chairmanship in the current climate, he will be acting solely to promote his ego, and will be displaying utter contempt for the standing and reputation of this crucial organization. If he does not appreciate this, board members purportedly representing world Jewry have the obligation to ensure that he step down, graciously or otherwise.

The writer may be contacted at ileibler@leibler.com

This column was originally publlished in the Jerusalem Post and Israel Hayom


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