This week the Conference on Material Claims against Germany (Claims Conference)
is convening its annual board meeting in New York.
The agenda has already
been circulated. Yet most of the 60 well-intentioned directors, whose principal
involvement with the conference involves attending annual meetings, will have
difficulty comprehending the complex and confusing data presented to them. As
they have for over 40 years, the majority are likely to continue acting as a
rubber stamp, automatically endorsing resolutions and allocations recommended by
the small innermanagement clique.
It is evident that the burning issues
raised last year remain unresolved, and in many cases were not even seriously
considered. Directors are thus unlikely to gain further insight into who was
responsible for the lack of oversight that facilitated the greatest fraud ever
inflicted on a Jewish charitable organization.
The theft, first disclosed
in February 2010 as a $350,000 swindle, had risen by July to $7 million. In
November, the amount had escalated to $42.5m. A few weeks ago, we were blithely
informed that the sum was about $50m. and likely to rise even higher.
could such a scam proceed unimpeded for over 15 years in the head office of the
Claims Conference, literally under the noses of the chief executives, with six
key staff members, including a manager, being the alleged perpetrators? In any
enterprise – private or public – after such a scandal, one would expect
resignations or at least some acceptance of responsibility.
Conference, a nonprofit charity, employs highly paid, purportedly top
“professional” executives. The CEO receives a salary commensurate with the head
of the International Monetary Fund. Despite ignoring repeated warnings that a
single part-time internal comptroller was absurdly insufficient for an
organization handling billions of dollars, no one is now willing to accept
After the theft was discovered, the chief executive even
had the gall to praise management for its “efficient” response, insisting that
there had been no deviation from standard operating procedures. In a statement
officially circulated to the board, one director even boasted that “the Claims
Conference is well-led, well-governed, well-staffed and manages its restitution
funds in a manner consistent with best practice and probity.”
will no doubt be informed of the commendable steps undertaken following the
much-heralded K2 Global Consulting company’s recommendations to implement greater
safeguards and ensure that such an outrage is not replicated.
is not qualified to undertake an audit or review. In the wake of such a scandal,
it is surely mandatory for directors to demand a fully independent forensic
audit to guarantee that there are no additional areas in which lack of oversight
could enable the plundering of public funds – for example, allocations of funds,
alleged conflicts of interest, the recovery and sale of German properties, and
other issues. However, the management adamantly rejected such a
THE REALITY is that a handful of people – basically an old boys’
club – operates the Claims Conference like a personal fiefdom. The excessive
centralization of control and lack of checks and balances is highlighted by the
fact that Chairman Julius Berman (who has occupied the position for a decade)
also appointed himself chairman of key committees such as the all-powerful
Allocations Committee, the US Allocations Advisory Committee, and even its
Israeli counterpart. That the chairman, an American resident, appoints himself
to head the Israeli Advisory Allocations Committee says it all.
are glimmers of hope that some organizations represented on the board are
becoming more conscious of their fiduciary duties and assertive in exercising
The Board of Deputies of British Jews commissioned an
independent review (the Gruder Report) to consider complaints from Holocaust
victims’ heirs that the Claims Conference lacked “transparency and
accountability,” and had behaved unethically in the sale of German properties.
The report, released in December 2010, was highly critical of the Claims
Conference’s moral conduct, demonstrating reprehensible efforts to prevent heirs
from recovering property stolen from their families.
As there was no
response to the recommendations demanding greater transparency, the British
directors are likely to raise the issue at the meeting.
In February, the
Executive Council of Australian Jewry – the umbrella body of the Jewish
community, which includes the highest proportion of post-war Holocaust survivors
other than Israel – requested that the Claims Conference management institute a
comprehensive independent review of the way the organization is being
administered. The resolution called for “a recognized independent expert or
experts to undertake a review” of “strategic risk and governance issues” in
order to retain public confidence. The Claims Conference management denied the
request that the resolution be immediately distributed to board members, and it
was buried as one of the last items on the upcoming conference
Survivor groups are treated disrespectfully. The majority of the
Israeli survivor organizations in fact, temporarily boycotted meetings of a
newly constituted group to review the allocations process, when they were not
even consulted about the committee’s composition.
Their US counterpart on
the board, the American Gathering of Holocaust Survivors, submitted a memorandum
on the same subject, demanding that it be circulated to board
Their submission was dismissed as “chutzpa” by Berman, who
refused to circulate this and other requests. Such behavior exemplifies the
shameful contempt directed at those expressing dissent over any aspect of
It is astonishing that since the last annual meeting, there
has been no public outcry, and the management continues to deny any
responsibility for the $50m. fraud.
The onus surely rests with
organizations represented on the board to rectify this and ensure that
substantive reforms are instituted to achieve genuine transparency and
A genuinely independent forensic audit reviewing all
aspects of the organization should be immediately undertaken to ensure that
there are no additional ‘black holes’ requiring attention. Those responsible for
the failure of oversight regarding the financial scandal should retire or be
retired. Term limits for senior elected officers must be introduced. Berman
should do the honorable thing and step down as chairman.
conflicts of interest for directors whose organizations obtain funding should
also be reviewed.
Most importantly, intensified efforts must be
undertaken to ease the desperate plight of the remaining ailing survivors.
Despite the commendable agreement by the Germans to substantially increase
support for those requiring home services, it is an indictment on us all that
many elderly Jewish survivors still have insufficient resources to pay for food,
fuel and basic medical expenses.
Millions of dollars are spent on
numerous, for the most part deserving projects, like hospitals and Israeli
infrastructure, which do not directly benefit survivors. Surely, under the
current appalling circumstances, justice and dignity demand that funding for
these activities be suspended and diverted exclusively to survivors.
quote from the Gruder Report, we must demand that the Claims Conference act
“ethically and with the highest possible standards of integrity, transparency
and sensitivity.” If there is the slightest doubt as to whether those standards
are being upheld, board members and the organizations they represent have a
legal fiduciary obligation to act.[email protected]