Last month I devoted a column to the ongoing disgrace of the Conference on
Jewish Material Claims Against Germany, and the failure by the management to
take appropriate action to provide financial assistance to ailing survivors
unable to afford food, medicine and other basic necessities to enable them to
live out their remaining years with a modicum of dignity.
I also drew
attention to the scandal of the $57 million embezzled over a 15-year period by
Claims Conference employees in the New York head office. I maintained that it
was outrageous that the management responsible for overseeing these funds failed
to accept any responsibility or accountability. Instead, they shamelessly
manipulated the board to carry resolutions expressing “complete confidence in
the leadership and management,” extolling their purported “commitment to the
principles of transparency... integrity, fairness, accountability,
dialogue and... the highest ethical standards.”
Last week, Paul Berger,
an investigative journalist for The Forward
, the American Jewish weekly,
published a devastating investigative exposé demonstrating that the Claims
Conference senior management had received copies of an anonymous letter in June
2001 warning them about the scam which resulted in the theft of at least $57m.
of funds earmarked for survivors, but failed to follow it up. The letter,
providing evidence of the fraud orchestrated from the New York office, was sent
to the current executive vice president, Greg Schneider, who was then the Claims
Conference chief operating officer, and his now-retired chief, Gideon
Despite the fact that numerous employees followed up the letter
and expressed concern regarding the allegations and their discoveries, the
investigation was quashed by Semen Domnitser, the Claims Conference manager who
was convicted on May 8 this year in a federal court for being the ringleader of
Berger reports that Schneider refused to respond on record to
inquiries from the Forward as to why the allegations were not followed up.
Initially, a spokeswoman merely stated “all the participants in the fraud have
now been found guilty and we consider this matter closed.”
sensing the mounting public concern, the management released a statement to the
Jewish Telegraphic Agency insisting that the current chief executive, Schneider,
who was then the chief operating officer and director of allocations, was not
involved and laid the blame on others. “The entire investigation that occurred
did not include Greg and involved people senior to him” stated the
All Schneider received was “a third CC” explaining why the
letter was not followed up.
This is absolutely mind-boggling. For a
start, this was the first time the Claims Conference has ever conceded that they
had been negligent over the issue and that senior executives were in fact
responsible. But they leveled blame for the oversight, enabling the fraud to
occur in the New York office, against Dr. Karl Brozik, one of the senior German
heads of the Claims Conference, located in Berlin. However, Dr. Brozik had
passed away in August 2004 at the age of 78 and is therefore unable to
corroborate the latest story or defend himself. Perhaps, coincidentally, no
blame has been apportioned to any living executive officer.
It is now
clear that, despite repeated previous appeals over many years by outside parties
urging the Claims Conference to impose more effective supervision, gross
negligence was the order of the day. But even more scandalous are the attempts
by executive vice president Schneider and chairman Julius Berman to present
themselves as heroes and claim credit for having uncovered this fraud. In fact,
they were engaging in systematic and deliberate efforts to conceal the
incompetence and breakdown of their management and leadership which enabled this
fraud to occur under their very noses.
Berman reiterated nauseating
statements praising Schneider’s performance in relation to allegedly uncovering
the fraud. Berman also orchestrated the incredible resolutions praising the
impeccable performance of the management, which were rubber stamped by his
Indeed, there is little doubt that had the matter not
been raised during the criminal trial and astutely followed up by the Forward’s
Paul Berger, this aspect of the story would have effectively been permanently
covered up. Instead of being informed of the true facts, we would continue
hearing Berman and Schneider praising themselves for having “discovered” the
Moreover, Berger noted that at the trial Schneider even had the
chutzpah to express “shock” over the massive, $57m. fraud that he had previously
not bothered to verify and then sought to cover up.
The Claims Conference
was created to represent the Jewish world for the purpose of obtaining
restitution and providing assistance for Holocaust survivors. There is now
absolutely no question that the executive officers and leadership failed in
their obligations over the years to respond to calls to provide more effective
In the light of what has been revealed, the board has a moral
and fiduciary obligation to demand the dismissal of all senior office bearers
and to introduce a process designed to restructure the organization.
can now appreciate why the management fought so desperately to prevent a
genuinely independent audit and review which, under normal circumstances, would
automatically have been implemented in the wake of such a huge fraud involving
public funds. The board would be well advised even at this late stage to
introduce a broad, independent review in order to satisfy the public that there
are no additional skeletons in the closet.
There has clearly been a total
breakdown in accountability, but no less concerning is the unconscionable
cover-up the existence of which was even concealed from the board. Failure by
the board to act now could create the greatest upheaval in global Jewish
organizations since the post-war era.
The board includes representatives
of the most prominent global Jewish and Israeli bodies, including the Jewish
Agency for Israel, the World Jewish Congress, the American Jewish Committee and
major national Jewish communal umbrella bodies such as the Board of Deputies of
British Jews, CRIF from France and the Executive Council of Australian Jewry.
The representatives and heads of these organizations will be held accountable if
they procrastinate and fail to immediately demand the resignations of the key
There are already plans afoot by a committee to identify and
challenge the heads of the organizations and their board representatives. This
will not merely result in public confrontations and protests. The Claims
Conference is the wealthiest and one of the most important organizations in the
Jewish world, dispensing billions of dollars. The directors must be made aware
that if they fail to implement their fiduciary responsibilities, they may also
face major legal challenges.
Setting aside all other considerations, this
crisis may also provide an opportunity to ensure that all discretionary
financial allocations by the Claims Conference are frozen. For the time being,
funds must be directed solely toward the ailing Holocaust survivors whose
shocking living conditions represent a disgrace to the entire global Jewish
community. Survivor organizations are already now preparing to petition courts
on their behalf in the light of this extraordinary exposé.
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