On Tuesday, the Conference on Jewish Material Claims Against Germany (Claims Conference) will be holding its annual meeting in New York. Proceedings will be overshadowed by the recent exposure of a massive misappropriation of funds, which will be regarded as one of the ugliest Jewish organizational financial scandals in our time.
The New York-based Jewish Week recently made the shattering disclosure that the FBI was investigating fraudulent misappropriation of at least $7 million, possibly substantially more, over the past decade from the Article 2 Fund created in 1995 by the German government to provide quarterly pensions to eligible Holocaust survivors. The task of administering the payments had been delegated to the Claims Conference.
It had already been disclosed earlier in February that the Claims Conference had dismissed three employees, one of whom was the supervisor of the Hardship Fund. It appeared that $350,000 was involved and investigations into that fraud apparently led to the discovery of the far greater misappropriation from the pension fund. Had The Jewish Week not exposed the story, there is every likelihood that the public would not be aware of what had transpired.
One would have assumed that a scandal of this order involving restitution funds would have caused a major stir throughout the Jewish world. Yet there seems to have been little follow up or outrage. To make matters worse, Claims Conference executive vice president Gregory Schneider had the gall to inform The Jewish Week that “no Holocaust survivors” lost any money and that there had not been a failure in standard operating procedures.
THREE YEARS ago, in a Jerusalem Post column, I suggested that it was time for a major and comprehensive review of the outdated structure of the Claims Conference. I pointed out that the membership of that body was completely out of sync with the current realities of Jewish life, which still includes extinct organizations such as the Anglo Jewish Association and the Jewish Labor Committee which retain equal representative status to the Jewish Agency. I also noted that there was a lack of transparency, that the organization functions more like an old boys club than a representative body and that the board is largely a rubber stamp to endorse the decisions of a few machers. Members of the board are disinclined to rock the boat by challenging the administration or seeking to reform the structure – confirmed by the fact that the board never meaningfully evaluates allocations submitted by the selection committee.
This view was reinforced subsequently when the shady deals involving the New York/New Jersey branch of the Global March of the Living Program were exposed. The March of the Living was founded by Avraham Herschson, the disgraced former Israeli finance minister who is currently serving a jail sentence for fraud. Herschson had arranged for Curtis Hoxter to receive consultancy fees in excess of $700,000 allegedly for fund-raising activities on behalf of the March of the Living, despite the fact that the bulk of contributions were being provided by the Claims Conference. When Hoxter was asked why the March of the Living paid him $700,000 he could not recall. The Claims Conference then undertook to do a thorough investigation to ascertain what had happened to these funds, but since then there has been a deafening silence.
IF THE Claims Conference, which apparently failed to oversee the utilization of funds in other areas, is now facing yet another scandal, it would surely be appropriate to launch an independent forensic audit to cover its broad operations to allay concerns and instill confidence in the Jewish world that adequate oversight is being applied. There is no suggestion that malfeasance on the part of the directors was involved, but there surely should be accountability for what appears to have been gross incompetence. The problem is that there is little likelihood of the leaders being brought to task because of the conflicts of interest of board members to retain the benefits for their respective organizations.
This latest scandal highlights the urgent need to infuse the Claims Conference with new leadership and restructuring of its board to satisfy the Jewish public that restitution funds are managed in an exemplary manner.
A discourse throughout the Jewish world to review the criteria for granting assistance to survivors and the ground rules of eligibility for providing grants to worthy organizations or projects is also highly overdue.
Most importantly, the Jewish public has difficulty in comprehending why there are so many Holocaust survivors living in abject poverty while considerable sums continue to be expended by the Claims Conference on causes which lack a genuine relationship with the Holocaust, ranging from the Tel Aviv Yiddish Theater, Hatzola Volunteer Ambulance Services in Brooklyn, Birthright and Bnei Brak women’s organizations.
Perhaps this extraordinary scandal will impel some of the more responsible directors to set aside their organizational interests, introduce greater accountability and initiate genuine reform to the Claims Conference.
This column was originally published in the Jerusalem Post