A trust betrayed

Isi Leibler
October 7, 2010
http://wordfromjerusalem.com/?p=2460

Some readers will say "Surely not again.

He is obsessed with this issue." Indeed, I am deeply pained and angered that for all these years we have remained shamefully silent while the Claims Conference failed to adequately prioritize the desperate needs of ailing Holocaust survivors.

Since my last Jerusalem Post column, I was castigated by the chairman, treasurer and other apologists for the Claims Conference.

But they were unable to refute a single charge I had raised. Chairman Julius Berman disingenuously misrepresened my remarks about the organization's huge $1 billion in "investments" (defined as such in the Claims Conference financial statement), which has increased by $33 million since the last financial report. I never said all these funds should have been disbursed to survivors. I said more should have been allocated - a statement I emphatically reiterate.

But my principal charge - to which Berman failed to respond - was that if only a slightly greater percentage of the $70 billion allocated by the Claims Conference over the years had been distributed to survivors instead of other charities - many not even Holocaust related, including projects of various organizations represented on the Claims Conference board - we would not today face the tragedy of survivors unable to pay their basic food, medical and utility bills.

SINCE MY last column, I have received a flow of additional information concerning aspects of Claims Conference activities of which I was unaware.

I knew that Berman had assumed the chairmanship of the crucial advisory committees for disbursement of funds in the US and even Israel. But I only learned subsequently that he actually chairs five (!) of the most important committees, including the powerful allocations committee. He is also a member of three other committees which do not list a chairman. With such concentration of power in the hands of one person, checks and balances disappear and governance inevitably becomes corrupted.

Now, to my astonishment, I learned that Burt Neuborne is one of three members of the Claims Conference's "goodwill fund late applicants committee," which decides on payments for claimants who file after the German deadlines for properties for which the Claims Conference had already taken possession or received compensation.

Since its inception in 1994, the fund has disbursed close to $1 billion.

That Neuborne - a lawyer who enriched himself with funds from restitution cases - can be a member of this important committee is obscene. In an op-ed in the New York Post in 2006, Menachem Rosensaft, founding chairman of the International Network of Children of Jewish Holocaust Survivors, disclosed that in 1997 Neuborne had accepted an invitation from US District Judge Edward Korman "to serve in a pro bono capacity as co-counsel for the plaintiffs" in the Swiss bank litigation. Two years later, he was appointed lead counsel on this basis. In October 2000, he stated that "every penny in the $1.25 billion Swiss bank case will go to Holocaust victims," and ridiculed as "absurd" another lawyer's $4 million fee. As late as September 2005, he boasted, "I am the lead settlement lawyer in the Swiss case, in which I served without fee now for almost seven years."

However, only months later, in December 2005, he had a change of heart and demanded $4.7 million, finally extracting $3.1 million (aside from $4.4 million he had already pocketed from the settlement of Holocaust-related claims against German corporations).

This loathsome behavior enraged Holocaust survivor groups and led to a formal resolution adopted unanimously by the leadership of the American Gathering of Jewish Holocaust Survivors and their Descendants condemning "his greed which eclipses any consideration for overriding moral and ethical concerns. His actions constitute a moral stain on the legal profession."

The anger flowed over to the media, including an editorial in The New York Times.

It is inexplicable and unconscionable that a person who behaves in such a manner is appointed to a leading position in the Claims Conference and is symptomatic of how the uninformed board simply acts as a rubber stamp for every decision proposed by its chairman.

THIS ATTITUDE is compounded by the extraordinary assertion made in response to my criticisms by treasurer Roman Kent, who stated that the Claims Conference refused to provide access to the list of German properties published in 2003 because heirs would "think that they could file claims but will not be able to do so because the Claims Conference sold many of these properties since the 1 March 2004 deadline."

Denying heirs and their children access to such information is in itself outrageous.

Kent's statement reflects the arrogance of the Claims Conference's refusal to adequately publicize these properties to divert funds from rightful heirs and compensate for their appalling failure over the years to prioritize grants to impoverished survivors.

It was only after pressure from the German and UK governments that the Claims Conference released the list of properties to the public. It was initially only circulated for six months. As a consequence, many legitimate heirs only learned of their right to reclaim their properties after the deadline had expired.

This should also be viewed in tandem with the huge uproar and litigation which arose over the manner in which the German properties were managed. There were allegations of questionable practices related to the sale of properties - amounting to up to $7 billion - which led to two internal audits, the findings of which were withheld from the public. To date, the Claims Conference has refused to provide an estimate of the value of the properties it has retained or still claims title to. Allegations of failures in "transparency and democratic accountability" in these areas resulted in a major investigation of the Claims Conference by the Board of Deputies of British Jews, the findings of which will soon be released.

Then there is the revelation of the fraud perpetrated over the past 10 years. It is alleged that three Claims Conference officials were sacked and two returned to Russia.

Nobody has explained why there was no prosecution and more importantly, no one has revealed how much money was actually stolen. In February, the Claims Conference told the New York Jewish Week that the amount was $350,000. In July, after being further confronted by the Jewish Week, it conceded that the sum had grown to $7 million. However, at the July board meeting, Kent cautioned that this was "only the tip of the iceberg."

Since then, there have been requests for clarification of rumors rampant in Claims Conference circles that more than $40 million may have been purloined. The Claims Conference has made evasive responses without denying the veracity of these rumors.

Whatever the situation, instead of hiring the "biggest and the best" Madison Avenue PR firm, the board should undertake an independent forensic audit and appoint an ombudsman to protect the interests of survivors and heirs. An independent authority should also be commissioned to review the conflicts of interest, governance and transparency of the organization, and in particular investigate the manner and decision-making process by which funds are allocated.

Recently, the New York Jewish Week dropped another bombshell. This month, Stuart Eizenstat, special negotiator of the Claims Conference, will be hosting a concert commemorating the defiance and resistance of Jewish prisoners at Terezin. It will be a gala event, with members of the Obama administration and congressmen expected to attend.

But what angered the survivor community is that instead of using such a laudable occasion as a vehicle to raise funds for survivors in desperate need, the Claims Conference provided a $50,000 subsidy. Admittedly, in the context of billions of dollars, this is a drop in the ocean. However, it reflects an attitude and as Leo Rechter, president of the National Association of Jewish Child Holocaust Survivors, pointed out: "20 survivors could have been taken care of with $50,000 and provided with a shred of dignity in their last days."

David Schachter, head of the Miami Holocaust Survivors Foundation, added that the Claims Conference had "blown close to $250 million on [educational research and documentation] projects in recent years, including grants to board members which had nothing to do with survivor needs.

How in God's name can the Jewish world allow this diversion of holy money while survivors are suffering?" How indeed?

ileibler@netvision.net.il

This column was originally published in the Jerusalem Post