Claims Conference denies Germany is demanding money back

In 2009 conference officials discovered that $57 million provided by Germany and earmarked for survivors had been stolen by insiders.

By SAM SOKOL
Money [illustrative] (photo credit: REUTERS)
Money [illustrative]
(photo credit: REUTERS)
The Conference on Material Claims Against Germany on Monday denied a media report that the German government demanded the return of tens of millions of dollars that employees of the restitution fund had embezzled over a period of two decades.
Over the weekend The Jewish Daily Forward reported that it had obtained a letter written by an employee of the German Finance Ministry in December demanding that the Claims Conference make “repayments to compensate for the financial damage arising from the cases of fraud.”
In 2009 conference officials discovered that $57 million provided by Germany and earmarked for survivors had been stolen by insiders such as Semen Domnitser, who served as the director of the conference’s hardship fund.
At the time, the Claims Conference and Germany were in discussions over a joint fund to help child survivors and, according to the Forward, the Finance Ministry indicated that it would consider the conference’s contribution toward this fund as compensation for the fraud.
However, two separate figures involved in the negotiations have denied that the issue of compensation was raised at all.
“No one raised any question of asking for money from the fraud losses to be repaid,” Andrew Baker of the American Jewish Committee told The Jerusalem Post.
Baker confirmed that a German official did state that the money “should be considered a form of payback to Germany for the losses on the fraud” but that conference executive vice president Greg Schneider informed the ministry that “this is not considered as any kind of payment for the fraud money.”
“At no point during the negotiations did the German delegation suggest that the €54 m. be retrieved from the money of the fraud,” agreed Colette Avital, chairwoman of the Center of Organizations of Holocaust Survivors in Israel, who also participated in the negotiations.
“Moreover the board was notified of this decision and approved this contribution,” she added.
“In December 2014, four months after the agreement establishing the Child Survivor Fund, the Claims Conference received a letter from the German government stating that the €54 m. contribution should be considered a financial contribution against the losses from the fraud,” a conference spokeswoman told the Post.
“The Claims Conference responded that, as previously agreed, any funds the Claims Conference received back from guilty parties or those who should not have received funds, would be used by the Claims Conference for the benefit of Holocaust victims but the €54 m. was a separate, stand-alone contribution to the Child Survivor Fund.”
The Claims Conference came under intense fire from critics in 2013 when media reports emerged that senior officials at the organization had been warned of the fraud in 2001 in a tip off letter sent to the conference that resulted in two internal probes – one conducted by current chairman and then board member and pro bono counsel Julius Berman – that failed to uncover the embezzlement.
Berman said to the Post that “neither the board nor the chairman of the board, nor anybody around the board, including the senior staff, was aware of it [the fraud] in 2009.”
The conference’s comptroller would later issue a report stating that “management failings” were responsible for “facilitating” the fraud and citing what he termed “systematic failings and problematic organization behavior.”
The conference has since revamped many of its internal procedures to ensure that such fraud does not recur, the group stated.