For more than a decade, there have been passionate pleas for the Conference on
Jewish Material Claims Against Germany, the organization responsible since its
inception for the distribution of over $70 billion of restitution payments, to
review its management, governance and oversight procedures and prioritize the
distribution of discretionary funds so that aged Holocaust survivors desperately
in need of assistance could live out their remaining years with a modicum of
The Claims Conference response has been consistently hostile. It
has demonized critics, threatened the media with libel suits and accused me of
conducting a vendetta and jeopardizing its negotiations with the German
government. At all times it has brazenly insisted that its management and
oversight procedures were impeccable.
Even following a $57 million fraud
– the largest financial transgression ever experienced by a Jewish organization
– chairman Julius Berman and CEO Greg Schneider adamantly rejected pleas to
strengthen organizational oversight and authorize an external independent
review. They insisted that the fraud, which was orchestrated by a senior manager
at the head office and perpetrated over 16 years, was merely a regrettable
breakdown that could never have been detected. They refused to accept
accountability; they did not even apologize.
Over the past month, in
response to media accusations of failed governance and a possible cover-up,
Claims Conference ombudsman Shmuel Hollander was commissioned to prepare a
report for a committee of directors handpicked by Berman.
which were belatedly released to the board of directors just one day before its
annual meeting last week, were unambiguous, confirming the charges of the
organization’s harshest critics. It was a clear-cut condemnation and an
expression of lack of confidence in the Claims Conference management, leadership
and board of directors.
The report notes that during the period 2001-2009
the Claims Conference: • Failed in “tailoring its organizational structure to
meet the growing range of activities and needs.”
• “Was governed in a
manner unacceptable in both public and corporate bodies.”
“systematic failings and problematic organizational behavior.”
with an “absence of professional control systems... [that] constituted a key
factor in enabling and certainly in facilitating the [$57m.]
Hollander’s findings show that the management failed to address
the fraud even when made aware of it. It states that an “enormous hole in the
control mechanisms sent out an invitation to the thief” and that “even with the
writing on the wall, and the organization exposed to warning signs, the matter
was not attended to.”
The report goes further, concluding that management
failures were not restricted to the $57m. fraud.
According to the report,
the scandal should be “reviewed and addressed against a backdrop of systematic
failings and problematic organizational behavior,” adding ominously, “only the
tip of the iceberg was revealed to us.”
A key piece of evidence in the
accusations against the Claims Conference is an unsigned letter sent to the
organization in 2001 detailing and potentially exposing the nature of the
Despite the debate over whether or not there was a deliberate
attempt to cover up this letter, it is indisputable that Berman – acting in 2001
as the Claims Conference’s counsel – failed to adequately investigate its
contents. The board was not informed of the letter’s existence, neither at the
time of its receipt in 2001 nor on the discovery of the fraud in 2009. Indeed,
had it not been for the sharp eye of a journalist for The Forward, who picked up
an oblique reference to the letter while attending court during the fraud trial,
it would have remained concealed to this day.
As the ombudsman’s report
attests, the Claims Conference’s dysfunctional organizational culture of secrecy
and opacity enabled this concealment to take place.
It concludes that “no
one who was aware of the 2001 letter [including Berman and CEO Schneider]
treated it with the gravity that it demanded at the time or examined or
supervised the work of the department where the fraud took place.... In this
respect the management of the letter and the report [undertaken by Berman’s law
firm] was a symptom of a more serious problem.”
In any functional
organization or public institution, such a damning report necessarily leads to
the resignation of the parties involved and raises major questions concerning
the fiduciary responsibilities of the board of directors. Not so in the case of
the Claims Conference.
Indeed, ignoring the incriminating report, the
organization presented a list of nominated officers, including chairman Berman
and CEO Schneider, as a bloc to the board at its annual meeting last week. The
board was obliged to accept or reject the list in its entirety. To maintain a
façade of total unanimity, abstentions were not recorded. Board members were
quietly warned that if they failed to endorse the list they would bear
responsibility for the dissolution of the Claims Conference.
of directors, true to form, “unanimously” endorsed the list of nominees,
including those directly responsible for the mismanagement and fraud. Despite
the findings of the ombudsman’s report, the apathetic refrain repeated again and
again by Berman apologists was “Yes, they made mistakes, but it is over. Let us
To their credit, the chairman of the Jewish Agency, Natan
Sharansky, and the president of the World Jewish Congress, Ronald Lauder, who
head the two most significant organizations affiliated with the Claims
Conference and represent the bulk of world Jewry, fully endorsed the ombudsman’s
report. Both expressed “great disappointment and dismay” at the failure of the
leadership to disclose the 2001 letter warning of the fraud to the board.
Sharansky referred to the “growing perception that the organization is run like
a closed club, with little transparency or accountability in its decision-making
process.” He called for the creation of a committee, totally independent of the
management or leadership, to review the organization.
board summarily rejected this call, highlighting that it is disproportionately
represented by minor and even marginal organizations and members lacking
accountability to anyone. Furthermore, that that many of its member
organizations themselves receive funding from the Claims Conference and
therefore have a conflict of interest.
Neither Sharansky nor Lauder
partook directly in the vote, and, to his credit, Jewish Labor Committee’s Sam
Norich, a former fervent supporter of Berman, made an impassioned speech and
resigned in protest.
Yet even allowing for the abstentions, support for
the status quo was overwhelming. CEO Greg Schneider subsequently boasted to The
Jerusalem Post that “Our board spoke loudly, clearly and unanimously. It was
inspiring to see unanimous agreement that all extraneous issues, from
personalities to internal Jewish politics, were put aside so that the Claims
Conference can continue in successfully providing for Holocaust
In line with this fatuous remark, the board rejected the call
of Sharansky and Lauder for an independent review, and again approved the
creation of an internal committee to assess whether the current management has
the capacity to implement future strategic plans.
committees dominated by Berman supporters have become a standard procedure by
which the board buries embarrassing matters.
There remain serious
fiduciary issues at stake. The report stated that auditing procedures were
“neglected in terms of both resources and personnel... as required in the body
handling monies on such a large scale.” Yet the board failed to appoint external
auditors to conduct a forensic audit to ensure that there were no additional
skeletons in the closet – a standard procedure for organizations in which
embezzlement has taken place.
Berman and Schneider’s failure to disclose
the 2001 letter to the board also represents a breach of fiduciary
responsibility. And the board itself clearly has a fiduciary obligation to
ascertain whether the negligence of Berman’s law firm in failing to adequately
investigate the $57m. fraud in 2001 exposes it to liability.
has gone further, to question whether the violations of fiduciary obligations on
the part of the board and Berman for failing to adequately investigate the fraud
and take adequate measures to ensure appropriate checks and balances were in
place constitute a criminal offense.
And there is the matter of chairman
Despite his awareness that retaining the chairmanship
would irretrievably compromise the reputation of the organization, Berman
canvassed unabashedly to retain his position. He succeeded in being re-elected,
enabling him to carry on with business as usual despite the devastating finding
that for 11 years he has presided over an organization handling billions of
dollars of restitution funds without effective controls, oversight or
management. It is simply inconceivable that under such circumstances and facing
a conflict of interest, the chairman of such an immensely powerful charitable
organization could retain his role.
By enabling the chairman and his
management team to retain their positions and continue to run the organization
like a private fiefdom, the board of directors has de-legitimized the Claims
Conference itself. It has forfeited its legitimacy and moral authority to speak
in the name of the Jewish people and survivors.
In the eyes of world
Jewry, despite the massive sums of money from Germany which it disperses, the
organization is perceived as an example of the abuse of power on a grand
But more disgraceful than the lack of organizational integrity is
the Claims Conference’s lack of moral integrity. At its last board meeting, the
directors again displayed an utter failure to recognize the moral
responsibility, if not the sacredness, of the task with which they have been
entrusted by declining to implement proposals urging a diversion of funds from
other projects to ease the plight of aging Holocaust survivors in the twilight
of their lives.
What will happen next? The board’s failure to act may
well encourage intervention from outside regulatory bodies. According to The
Forward, the office of the New York attorney-general is monitoring the
If this were to lead to a full-blown investigation, it will
cause further disgrace and humiliation in the Jewish world.The writer’s
website can be viewed at www.wordfromjerusalem.com.
He may be
contacted at firstname.lastname@example.org