Holocaust Claims Conference fraud likely ‘much higher’ than $57 million

For over a decade, a criminal ring within the organization embezzled tens of millions of dollars through false restitution claims.

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July 8, 2015 00:56
holocaust yad vashem

A Holocaust survivor shows his prisoner number tattooed on his arm, Yad Vashem, Jerusalem. (photo credit: REUTERS)

 
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The scope of a conspiracy to defraud the world’s largest Holocaust reparations organization, uncovered in 2009, was much greater than previously believed, a former senior official has alleged.

This is one of several recent revelations that are causing a shake-up behind the scenes at the Conference of Jewish Material Claims Against Germany.

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Writing to the Claims Conference’s board last week, recently terminated ombudsman Shmuel Hollander asserted that, while reports had said organizational insiders had siphoned off $57 million in German taxpayer funds meant for survivors, “the final sum is in all probability much higher.”

Hollander’s letter was prompted by the board’s decision not to renew his contract – a move that he saw as retribution for his role in preparing a 2013 report that blamed the fraud on “systematic failings and problematic organization behavior.”

For over a decade, a criminal ring within the organization embezzled tens of millions of dollars through false restitution claims. Two years ago, it emerged that despite stating that he had been unaware of the fraud until 2009, Claims Conference president Rabbi Julius Berman had in fact received an anonymous letter in 2001 tipping him off to the fraud. Soon after the tip-off, Berman launched an internal probe that ultimately concluded that there was no cause for concern.

In 2013 – four years after the fraud’s discovery – Hollander was tasked with writing a report on the internal workings of the Claims Conference.

Hollander’s report to the board exonerated Berman of his critics’ accusations that he had masterminded a cover-up, but it nevertheless presented a severe blow to the organization’s leadership.

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In a blistering critique of the Claims Conference’s corporate culture, Hollander asserted in the report that “the absence of professional control systems...constituted a key factor in enabling, and certainly in facilitating, the fraud.”

According to Hollander’s letter last week, Berman had informed him in a June 3 phone call that the decision to discontinue his employment was “in response to the report I [Hollander] prepared for the [board] some two years ago.” During a conference call two weeks after that, a board committee voted not to extend his contract.

“Berman told me the truth,” Hollander told The Jerusalem Post in an interview last Thursday.

“He said he fired me for the report.”

He added that he had never been fired before.

In the interview, Hollander – who had long served as Israel’s Civil Service commissioner – condemned what he sees as a troubled corporate culture.

“The management of the conference very often doesn’t function in a professional manner. It’s very centralized,” he said.

“They wouldn’t listen. When we came to them with systematic problems, like things that weren’t written or implemented equally, they were mad at me.”

Weeks after the report’s submission, Berman, together with executive vice president Greg Schneider and directors Reuven Merhav and Roman Kent, wrote to the German Finance Ministry to repudiate the report.

Berman’s decision to sign the letter to the German government in an official capacity constituted a clear conflict of interest, given that he was a subject of the internal probe, Hollander said. In his letter, Berman informed the Germans that Hollander had “inadequate resources...[and] limited familiarity with the organization” and “could not have sufficiently comprehended the existing and complex administrative structure of the Claims Conference’s three far-flung offices.”

Hollander, meanwhile, accused Berman of falsely claiming that the German government had demanded that he rebut the report.

Asked about the matter, a German spokesman answered somewhat ambiguously, telling the Post last week that the “Federal Ministry of Finance once heard about the mentioned facts in 2013.”

In his letter to the board last week, Hollander wrote that Schneider had perceived him as a “hostile element whose actions must be blocked” and placed “numerous obstacles” in his path, such as withholding information and instructing staffers not to reply to inquiries.

“The Claims Conference is an organization that is incapable of hearing criticism regarding its senior management. In light of the organization’s conduct toward the Ombudsman’s office, I must conclude that the organization wanted only a ‘yes man’ – a fig leaf or a charade of an Ombudsman. If this was indeed the goal, I was not the right person to select for the role,” Hollander wrote.

Berman was quick to respond.

Penning his own letter to the board, he accused Hollander of making “many misstatements,” and counter-asserted that had his firing been connected to the report, he would not have had his contract renewed six months after it was authored. Berman also said that he had never refused to meet with Hollander, as the ombudsman had claimed.

Berman also implied that the reason for Hollander’s ouster had to do with budgetary concerns.

In response, Hollander asked why the conference had approved his 2015 budget if it felt he was spending too much.

He expressed the belief that it would have been overly suspicious to fire him so soon after his report, and that it was therefore decided to wait until his contract came up again for renewal.

Board members who spoke with the Post were divided in their assessment of why the ombudsman had been fired.

“The fact is that based on the number and nature of questions and complaints that have been addressed to him during his tenure, it is hard to justify maintaining such a person with support staff on a full-time basis,” said director Rabbi Andrew Baker.

According to Baker, each inquiry directed to Hollander had cost the conference close to $1,000, and as such, “it was decided that this could be handled by someone working on a part-time basis.”

However, director Abe Biderman, who sits on the committee that is looking for Hollander’s replacement, said that Hollander “just wasn’t the right person for the job,” and that the ombudsman’s position would remain full-time.

Jonathan Arkush, who sits on the Claims Conference board representing the British Jewish Community, expressed concern over the firing, telling the Post that “the clear impression is that his contract is not being renewed because he was too independent for the officers. It does not put them in a particularly good light.”

In a document prepared at the request of the World Jewish Congress and obtained by the Post on Tuesday, Robert Goot – president of the Executive Council of Australian Jewry – accused Berman of not informing the board’s leadership committee of “any issues with the Ombudsman before ringing him on June 3rd and telling him that he was effectively fired.”

Goot, who did not respond to a request for comment, also wrote that Berman had failed to inform the board of the letter he had sent to the Germans repudiating Hollander’s report.

Berman had emailed Goot earlier Tuesday, stating that he believed sharing that letter with the board “flies in the face and spirit of the board made two years ago... to place the entire divisive episode behind us to the [greatest] extent possible.”

In the same email, Berman also accused Hollander of seeking to create “as much internal division and acrimony as possible and maybe even bring the whole edifice down.”

“Personally, I find Hollander’s tactics despicable and I refuse to participate in furthering the result he is working for,” Berman declared.

In an email to the Post on Sunday, however, the Claims Conference extended its thanks to Hollander and stated that he had “established a valuable infrastructure and developed channels of conscientiously dealing with incoming inquiries from those who suffered and lost so much.”

Correction: A previous version of this article stated that the recently terminated ombudsman says organizational insiders have siphoned off funds meant for Holocaust survivors.. We have removed this text as it could have been understood to imply that that there were new accusations of fraud at the Conference of Jewish Material Claims Against Germany.

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