WJC to probe 'Claims Conference fraud cover-up'

In letter obtained by ‘Post,’ WJC head Lauder instructs new CEO to appoint task force on issue.

Ronald Lauder speaks at WJC conference 370 (photo credit: REUTERS/Laszlo Balogh)
Ronald Lauder speaks at WJC conference 370
(photo credit: REUTERS/Laszlo Balogh)
World Jewish Congress president Ronald S. Lauder has asked Conference on Jewish Material Claims Against Germany chairman Julius Berman and executive vice president Gregory Schneider to respond to allegations of covering up fraud, The Jerusalem Post has learned.
According to the allegations, senior conference executives covered up a 2001 communiqué exposing ongoing fraud within their organization that ultimately cost $57 million.
Both Lauder and WJC secretary- general Michael Schneider sit on the board of directors of the Claims Conference, which works to secure restitution from the German government for Holocaust survivors.
Lauder made the request in a letter to Berman and Schneider on Friday.
In another private letter provided to the Post by someone familiar with the matter, Lauder again referred to allegations of a cover-up, calling them a “long-term issue with potentially serious implications” before announcing that a task force was being formed by WJC CEO Robert Singer to “deal with and follow through on this and related issues.”
The task force, Lauder wrote, is to be chaired by Michael Schneider and include WJC general counsel Menachem Rosensaft.
Lauder’s push toward an investigatory panel stems from allegations that senior executives at the Claims Conference knew of the fraud in 2001, failed in their obligation to maintain adequate oversight and covered up their alleged negligence.
Earlier this month, conference employee Semen Domnitser, along with co-defendants Oksana Romalis and Luba Kramrish, was found guilty by a New York court of defrauding the Claims Conference of $57m. through the approval of falsified restitution claims.
The fraud was discovered in 2009, and dates back to 1993. It involved falsified applications to the Hardship Fund, an account established by the German government to provide one-time payments of approximately $3,360 to those who fled the Nazis as they moved east through Germany, and the Article 2 Fund, through which the German government gives pension payments of approximately $411 per month to needy victims of the Nazis who spent significant time in a concentration camp, in a Jewish ghetto in hiding or living under a false identity.
In 2001, an unsigned letter made its way to the desk of the Claims Conference’s director in Germany, Karl Brozik, which accused Domnitser of approving five claims that the anonymous author believed ineligible for restitution.
While The Forward reported that Brozik copied senior conference officials, including Gregory Schneider, on correspondence discussing the allegations, Claims Conference spokeswoman Hillary Kessler- Godin denied the report, telling the New York-based newspaper that “the entire investigation in Germany, directed by Dr. Brozik [who was senior to Greg at the time], was never shared with Greg. The entire investigation that occurred did not include Greg and involved people senior to him.”
The Claims Conference has blamed Brozik, since deceased, for accepting Domnitser’s explanations of his behavior and allowing the fraud to continue.
In his letter on Friday to Schneider and Berman, Lauder asked if the “existence of the aforementioned letter of June 6, 2001, and the subsequent communications regarding that letter among members of the Claims Conference professional staff ever disclosed to the board of directors and/or the members of the executive committee of the Claims Conference, or other members of the Claims Conference key professional staff?” Lauder wrote that, if such communications were in fact disclosed, he wanted to know if they were “duly minuted.”
When he ascended to the WJC’s presidency in 2007, Lauder said that one of his focuses would be on building “transparency” at the Claims Conference. In an interview with The Jewish Week after announcing his candidacy, Lauder told editor Gary Rosenblatt that the conference had “anywhere between $900m.
and $9 billion available at a time when 80,000 Holocaust survivors in Israel are living below the poverty line. And the question is why is the Claims Conference holding the money?” WJC general counsel Menachem Rosensaft told the Post on Sunday that while Lauder “asked for this task force to be set up, at the moment we are limiting ourselves to waiting for a response to the questions he asked in [his] letter” to Berman and Schneider.
Spokeswoman Orly Joseph said that the Claims Conference was not aware of the WJC task force, but that it welcomed “all inquiries into this issue or any other, subsequent to the important guilty verdicts of those convicted of defrauding our organization, especially from our longstanding board members, like WJC president Lauder.”
Joseph said that at the conclusion of the Domnitser trial, Berman had “asked Amb. Reuven Merhav, chairman of the executive committee, to head a Select Leadership Committee of the board to formulate an appropriate course of action for the conference to the issues surrounding the 2001 letter,” adding that “we look forward to its deliberations and recommendation.”