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No End to Claims Conference Distortions and Shamelessness

[Isi Leibler]

Summary ... The Board of Directors of the Conference on Jewish Material Claims Against Germany repeatedly sought to side-step the issue of the embezzlement of $57 million from the Holocaust survivor's benefit fund. This has resulted in the appalling suffering of Holocaust survivors, denying them the basic essentials of food, medicine, and other services to allow them to live out their remaining years with dignity.

Less than six months after the Board of Directors of the Conference on Jewish Material Claims Against Germany (Claims Conference) brushed off allegations of managerial negligence and insufficient oversight, and re-elected all officers to another term of office, instead of seeking to mitigate their previous failures by belatedly reforming the organization, Chairman of the Board, Julius Berman and his acolytes have launched a media campaign to exonerate themselves.

In an article published in The Jerusalem Post on October 10, Berman claims that individuals have distorted the truth about the Claims Conference in order to stymie its noble cause of distributing money to elderly Holocaust survivors. The facts, however, point to the opposite conclusion: that we critics have been so vocal, because we are appalled by the Claims Conference's gross management failures, for which its Board refuses to take responsibility, and which have caused Holocaust survivors to suffer unnecessarily.

Berman is demonizing his critics in order to remove the spotlight from the real issue at hand: embezzlement of $57 million, the largest financial transgression ever experienced by a Jewish organization. He accuses critics of feeding "a web of lies and distortions" to the media, and "leveling baseless attacks" against the Claims Conference. But what we have done is reported the facts in order to expose the lack of accountability and oversight which enabled this massive fraud, and the need for new leadership of this extraordinarily important organization.

Berman boasts that the Claims Conference uncovered the embezzlement when, in fact, the organization systematically and deliberately concealed evidence of the breakdown of management and leadership which facilitated the fraud. After discovery of the fraud, Berman and CEO Greg Schneider concealed not only from the public, but also from their own Board that they personally had been forewarned of the fraud in 2001 and that Berman himself had undertaken to investigate the allegations.

Holocaust claims conference
Holocaust claims conference on Jewish Material Claims Against Germany

Berman notes that the FBI and the US Department of Justice have commended the Claims Conference for acting appropriately during their investigations. Is it being suggested that the Claims Conference be complimented for not hindering the investigation? Not surprisingly, Berman does not mention that the organization failed to notice or act upon the embezzlement during the 16 years that it was perpetrated by a senior manager in the organization's main office.

Berman further cites the fact that the German government has increased its annual contribution to the Claims Conference as evidence of its confidence in the organization. This financial increase does not necessarily demonstrate organizational trust, as it is in the interest of the German government to continue providing funds in its genuine effort to convey remorse for the crimes of its antecedents.

Berman has even minimized the extent of this massive fraud by noting that being German taxpayers' money the $57 million embezzled did not impact on survivor recipients' restitution. Such an unconscionable remark expressed to justify denying any responsibility for the safekeeping of these funds entrusted to the Claims Conference provides sufficient grounds for deeming Berman unfit to hold a leadership role in the organization. But, it is also misleading. The German government does not have unlimited funds available for restitution. And German taxpayers' funds earmarked for restitution, which were stolen, would surely impact on other funds which may have been made available.

Based on the findings of the Claims Conference's own ombudsman, I stand by my view that the Claims Conference's mismanagement represents an abuse of power for which the organization's leaders should be required to publicly apologize and resign. I challenge Rabbi Berman to dispute the following facts:

  1. The 16-year, $57 million embezzlement could have been detected by the organization years earlier than 2009. The organization's management received an anonymous letter that warned of a scam as far back as 2001. Management failed to adequately investigate the accusation and never disclosed the letter's contents to the board. As a report prepared in 2013 by internal Ombudsman, Samuel Hollander (a former Israeli Cabinet Secretary), states: "No one who was aware of the 2001 letter [including Berman and 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 ..."

  2. The embezzlement could have been detected—if not prevented—had the organization implemented adequate oversight procedures. Critics, including one prominent board member who resigned as a result of the failure to heed his warnings, repeatedly demanded that the organization improve its managerial oversight and auditing procedures, but Berman and Schneider refused to do so.
  3. A genuine independent review and forensic audit should have been conducted as soon as the fraud was discovered. Natan Sharansky, Senior Vice President of the Claims Conference, demanded that an "independent public committee composed of distinguished individuals who are not connected to the board or its beneficiary organizations examine all the events surrounding this unfortunate embezzlement ... and examine Claims Conference procedures and its structure". He was subsequently supported by World Jewish Congress president Ronald Lauder. However, Berman rejected this and instead handpicked colleagues from the Board to conduct an internal review.
  4. At the very least, Berman and Schneider should have taken responsibility after the internal review revealed vast managerial failings. Ombudsman Hollander's report stated that from 2001 to 2009, the Claims Conference "was governed in a manner unacceptable in both public and corporate bodies ... demonstrated systematic failings and problematic organizational behavior ..." and operated with an "absence of professional control systems ...[that] constituted a key factor in enabling and certainly in facilitating the fraud." It further stated 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 concluded that 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." Despite these devastating findings Berman and Schneider never held themselves accountable; they even tried to place blame on the former manager of the Berlin office who died in 2004.
  5. The board has been manipulated into maintaining the status quo. At its most recent annual meeting the organization presented a bloc of nominated officers, including Berman (who had already occupied the position for over ten years) and Schneider. The board was obliged to accept or reject the list in its entirety. Board members were quietly warned that if they failed to endorse the list they would bear responsibility for the dissolution of the Claims Conference. To maintain a fa├žade of unanimity abstentions were not recorded.

As part of his current PR effort Berman quotes Albert Einstein, who said, "Whoever is careless with the truth in small matters cannot be trusted with important matters." Berman has been entrusted with important matters indeed, and he has [been] proven unworthy of the job.

And whilst this goes on, every day we hear heartbreaking stories depicting the appalling suffering of Holocaust survivors in the twilight of their lives, denied elementary needs such as food, medicine, and other basic services to enable them to live out their remaining years with dignity. They deserve better. We all deserve better. The mishandling of sacred Holocaust restitution funds represents the greatest moral failure of organized Jewish life in our generation.

[ Published: October 24, 2013 ]

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