Claims Conference: Cry Gevalt now!

The principal weakness is centralization of control by the chairman and his arrogant attitude when anyone questions his judgment.

j street conference 248.88 (photo credit: Courtesy)
j street conference 248.88
(photo credit: Courtesy)
It reflects adversely on the Claims Conference when its chairman, Julius Berman, stoops to personal abuse in response to the troubling concerns I raised concerning the organization’s management and policy over the past few weeks. When Berman accuses me of being motivated by “malice” and indulging in “diatribes” and “scandal mongering”, he exemplifies the intimidating approach employed to silence critics and the arrogant response frequently encountered by those seeking clarification on restitution matters from Claims Conference executives.
Yet Berman failed to factually refute a single statement in my article, side-stepped the major issues and falsely accused me of alleging that the FBI discovered the $7 million fraud in his organization. He cannot deny that the Claims Conference only informed the public after the New York Jewish Week had exposed the theft.
Berman fails to appreciate that his executives trivialized the fraud by denying that there was a failure in oversight and “that nobody was responsible because there was no deviation from standard procedures.”
This related to a fraud in excess of $7 million which the Treasurer now reveals is “only the tip of the iceberg” and obliged the auditors to withhold signing off on the accounts. That such a gigantic loss from funds destined for restitution is brushed aside in such a cavalier manner highlights a serious lack of accountability.
Nor can Berman justify how, in the wake of having been defrauded of millions of dollars, the Claims Conference can have the gall to appoint “the biggest and best PR organization” in the US to refurbish its image when it already employs a full time public relations bureau.
THREE YEARS ago in the wake of the March of the Living scandal which also involved a failure in oversight, I urged the Claims Conference to launch an independent forensic audit to review the broad spectrum of control within the organization. Had they acted then, this multimillion dollar fraud may have been averted.
Berman’s insensitive spin that “no survivor payments were affected during the fraud” is disingenuous. In fact, when the fraud was discovered, the Claims Conference suspended for three months all Hardship Fund payments to legitimate claimants, including many in dire need.
He confirms that the Claims Conference has an investment portfolio of over a billion dollars but fails to mention that this portfolio increased over the past year by over 30 million dollars whilst conceding that today tens of thousands of survivors remain in abject poverty. Instead of expanding the investment portfolio, I reiterate that “more of this money should be employed to ease the lives of the elderly ailing survivors living in poverty”.
According to Berman, $70 billion has passed through the Claims Conference. I would challenge him to facilitate an independent authority to review and disclose the substantial amounts of funds directed to irrelevant projects – some utterly undeserving, others worthy but unrelated to easing the condition of Holocaust survivors or even Holocaust memory. For example, Birthright is a worthy cause, but surely not justifying substantial subsidies from restitution funds because a visit to Yad Vashem is incorporated in the program.
THE REALITY is that despite an external façade of governance, the Claims Conference operates like a private club.
Aside from conflicts of interest in which directors representing organizations receiving grants determine policies, the principal weakness is the centralization of control by the chairman and his arrogant attitude to anyone questioning his judgment.
Berman has been in office for over 8 years. This is unhealthy in any democratic organization, but especially so in one dispensing billions of dollars. While not implying personal malfeasance, in the absence of adequate checks and balances and after a long period in control, the chairman behaves as though the organization was his personal fiefdom.
Take, for example, the special Claims Conference Advisory Committees for Social Welfare Allocations encompassing the US and Israel – regions which include the largest number of survivors.
That the US section is chaired by none other than the Claims Conference chairman, Julius Berman, highlights a failure to appreciate that in such a highly complex organization, excessive centralization and control must be avoided. But when the same Julius Berman also chairs the Israel section, it is utterly unconscionable. This not only exemplifies the absence of checks and balances, but raises major questions about the entire decision making process of allocating funds.
Only a few months ago, Haim Roet, an Israeli Claims Conference director resigned, stating in a letter to Berman “I am too experienced and old to be a rubber stamp for the autocratic majority of the Claims Conference Board and its management.”
He deplored the fact that the Allocations Committee had ignored a recommendation by the Israel Board members who “are all Holocaust survivors” as well as explicit recommendations by the Knesset. Such behavior, Roet said “is unbelievable and unacceptable” and can only be described as “chutzpa.”
He also protested that Berman repeatedly failed to respond to his communications.
THERE ARE rumblings elsewhere. A leading UK barrister, Jeffrey Gruder QC, in response to numerous demands from members of the UK Jewish community concerned by the absence of “transparency and accountability”, has been commissioned by the Board of Deputies to examine “both documentary and financial records of the Claims Conference”.
This presumably will also relate to allegations by former owners of properties in East Germany and their heirs that the Claims Conference had defrauded them, selling their properties without approval and refusing to pass on the funds. There were also complaints that lists of Jewish property owners “disappeared” and that properties were auctioned by the Claims Conference without adequate oversight, allegedly enabling selected German real estate agencies to enrich themselves by indulging in questionable sales practices. In the US, there are also legal actions pending by heirs seeking compensation and damages for unjustified enrichment of the Claims Conference at the expense of the rightful heirs to recovered assets.
What must now be done?
An independent forensic audit review should be implemented forthwith. The Claims Conference Board should also appoint an independent committee to review the structure of the organization and ensure that conflicts of interest are removed from the decision-making progress.
The Board should be streamlined, eliminating representation from defunct organizations and co-opting new bodies with legitimate claims to be party to policy and allocation deliberations. The Claims Conference should not be allowed to operate as an “old boys’ club” and must be genuinely representative of the Jewish people.
Most importantly, there should be term limits for senior elected officers and directors. This would allay the fears of survivors that the money is being withheld to enable leaders and functionaries to continue maintaining and allocating funds even after the survivors have passed away.
This concern is reflected by the submission of the USA Holocaust Survivors Foundation to the Knesset subcommittee reviewing Holocaust restitution in 2007 which refers to the then-president of the Claims Conference (who was subsequently forced to step down following disclosure of misappropriation of charitable funds of another organization) having opined that “there would be an abundance of Holocaust restitution money left over to be used for the community’s needs … after survivors were
In addition, the Claims Conference should submit to full oversight by an objective regulatory authority such as the Israel State Comptroller with authority to appraise not only the flow of funds but also the decision making process.
Instead of a public relations firm to enhance their image, the Claims Conference should appoint an Ombudsman to ensure that survivors and heirs are treated with respect.
But the absolute priority must be to immediately ease the plight of the ailing survivors. Time is of the essence. In view of the appalling suffering and indignities being experienced by remaining survivors, every cent not committed to heirs should be diverted towards this humanitarian crisis. And if some projects need to be frozen, so be it. It is obscene that elderly survivors are denied the opportunity of living out their few remaining years in dignity. There is a Jewish obligation on us to raise our voices and cry Gevalt!