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.
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
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
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.
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
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
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
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
The Jewish world can no longer afford to remain
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.
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
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.”
addition, over $1 billion is currently retained in the investment fund of the
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 Yisrael 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