Accountability for Claims Conference

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in Prague on November 17, the Claims Conference held its first executive meeting since the revelation of the $42.5 million theft from funds granted by the German government to Holocaust survivors.

One would have expected that the fraud would be the focus of the meeting. But the report from the executive vice president suggests it was business as usual and it was only mentioned as a side issue in the final paragraph, without a hint of remorse.

The cavalier manner with which the leadership refuses to accept any responsibility or even apologize for the failure to have adequately overseen these funds is unconscionable. When chairman Julius Berman was asked by the New York Jewish Week about resigning or apologizing for taking 16 years to uncover the fraud, his cynical response was: “If there is a scandal in Washington that the president has no control over, the first thing he should do is submit his resignation?”

When Holocaust survivors called on him to appoint an ombudsman, Berman arrogantly responded “What would an ombudsman do?”

He not only refuses to apologize, he would have us believe that the leadership bears no responsibility, even though the fraud was orchestrated for years by key employees in the New York claims processing office under the very noses of senior executives. One of those arrested was the manager administering the Hardship and Article 2 funds.

I have also seen documents drawing attention to suspicions of fraud referred to the Claims Conference prior to FBI involvement that were disregarded without even the courtesy of an acknowledgement.

Executive vice president Greg Schneider, while bemoaning “the fact that I knew some of them made it worse for me personally,” insists that he was unaware who hired the thieves or what background checks were undertaken. As a highly paid CEO, that surely does not absolve him for his failure to impose adequate oversight and assume responsibility for not detecting criminals conspiring from his office and under his authority for almost two decades.

More importantly, for years appeals for more effective supervision and independent forensic audits were contemptuously dismissed.

Despite bitter protests by board member Haim Roet, who repeatedly warned Berman that engaging only one person on a part time basis to overview a multi-billion charity fund was absurdly insufficient, nothing was done. In exasperation, Roet resigned from the board.

TO MAKE matters worse, this was not the first major fraud affecting the Hardship Fund. From 1980 to 1987, Werner Nachman, the head of the German Jewish community, embezzled $12 million. But in sharp contrast to today’s Claim Conference leaders, nine directors of the Central Council of Jews in Germany resigned after the theft was revealed.

The German Finance Ministry informed Time magazine that it may demand compensation. Hopefully this threat, which would be at the expense of survivors, will not be implemented. But the German government is surely obliged to demand responsible oversight of its taxpayers’ funds entrusted to the Claims Conference on behalf of survivors.

The Claims Conference has now appointed international consultants to review the claims process. However, when the terms of reference for such reviews are determined by those responsible for the failure of oversight, this is unacceptable.

There must be a genuinely independent public inquiry to determine whether there has been gross neglect or breach of fiduciary duties to either the German government or survivors. And such a review must not be limited to investigating claims procedures of the Article 2 and Hardship funds. Independent forensic audits should be mandatory for all aspects of the organization, with particular focus on other controversial areas such as the sale of German properties. The public must be assured that no additional frauds were or are being perpetrated under this incompetent management.

LAST WEEK’S meeting reaffirms that the current leaders regard themselves as immune from accountability and remain confident that the old boy board network will enable them to continue managing the Claims Conference as their personal fiefdom. To make matters worse, the chairman, treasurer and executive vice president not only deny culpability, but disingenuously even portray themselves as heroes.

A board member boasted that “the best and biggest PR firm” had been hired and the Claims Conference widely circulated a document containing the mind boggling assertion that despite the fraud, it “is well led, well governed, well staffed and manages its restitution funds in a manner consistent with best practice and probity.”

It is inconceivable that the management of any major private, public or corporate entity could disown responsibility after a monstrous failure in oversight, in which its own employees orchestrated a massive fraud for 16 years. Surely the leadership of a Jewish organization entrusted to distribute sacred restitution funds requires at least the same degree of accountability.

The Jewish world can no longer afford to remain silent.

The Claims Conference will only maintain credibility if it submits to an independent review of all its operations by an outside authority which would institute efficient management checks and balances and introduce term limits for senior officers.

An ideal candidate could be the Israel state comptroller with authority to review the method of allocating funds, conflicts of interest and the entire decision-making process.

Should the Claims Conference senior officers continue to deny their obligation to provide genuine accountability, the organizational representatives who comprise the board are morally obliged to demand their resignations. If they fail to act, then not merely survivors, but Jews throughout the world, must exercise people power and demand that board members uphold their fiduciary obligations.

The most pressing issue remains the tragic status of ailing survivors, many of whom live in abject poverty.

The key to ameliorating their plight rests with prioritizing allocations to them rather than projects such as hospitals, Birthright or other worthy causes not directly related to Holocaust restitution. This problem exploded last month when six key members of the Israel Holocaust Survivors Advisory Committee (inappropriately chaired by Julius Berman who resides in New York) proclaimed that they would boycott meetings because, in the words of former Claims Conference executive committee chairman Moshe Sanbar, “our recommendations relating to assisting survivors have been totally ignored and the board was never apprised of their view.”

In addition, over $1 billion is currently retained in the investment fund of the Claims Conference.

It rejected calls for more money to be allocated immediately to survivors from this fund, insisting that the money has been earmarked and will run out in four years.

However, large sums still continue to be provided annually by the German government for allocation to survivors. Indeed, when challenged by the newspaper Israel Hayom, it became clear that although the money currently held in the investment portfolio is scheduled to last four years, the Claims Conference still anticipates substantial additional income from the German government, the sale of recovered properties and other sources. That being the case, a greater proportion of the billion dollars currently maintained in the investment portfolio should immediately be allocated to survivors.

The sacred duty of the Claims Conference, even at this late stage, is to provide for survivors’ basic needs and to enable them to live out their remaining years in dignity.

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This column was originally published in the Jerusalem Post

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