July 2, 2013
http://wordfromjerusalem.com/?p=4712
On July 8, the Conference on
Jewish Material Claims against Germany (the Claims Conference), the
wealthiest Jewish organization in the world, will hold its annual board
meeting behind closed doors.
Board members will be obliged
to respond to scandals about their organization that have been widely
circulated throughout the media, casting shame on the entire Jewish
community. The most serious issue under review will be the lack of
accountability in relation to $57+ million stolen by 17 employees,
including a high ranking administrator, over a 16-year period under the
very noses of senior executives at the head office.
Until now, instead of accepting
responsibility for the breakdown in oversight, management has
manipulated the board into passing shameless resolutions praising
itself, and circulating self-serving letters from directors claiming
that “the organization is well led, well governed, well-staffed and
manages its restitution funds in a manner consistent with best practice
and probity."
In contrast to mandatory
procedures within public institutions accused of lesser frauds, Claims
Conference management has frenziedly resisted efforts to set up an
independent review to ascertain, among other issues, whether negligence
was a contributing factor. It has also brushed aside calls for an
independent review to discover whether there are additional skeletons in
the closet.
In addition, management has
refused to consider appeals to freeze allocations of discretionary funds
in order to ensure that there is support to enable elderly, ailing
Holocaust survivors to live out their remaining years with dignity.
But with the latest revelations
and scandals, board members will be obliged to cease acting as rubber
stamps or may face the intervention of outside bodies which monitor the
management of charitable funds, and find themselves open to charges of
having failed to exercise their fiduciary obligations.
Board members uncertain how to
respond, should heed the call of the Claims Conference's First Vice
President, Jewish Agency Chairperson Natan Sharansky, who has stated
that “we cannot investigate ourselves or our colleagues or our
benefactors,” and who, in no uncertain terms, has demanded that a
genuinely “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”
in order “to resolve the doubts and concerns” regarding this body that
prevail throughout the Jewish world so “that the public trust can be
restored."
They should also pay attention
to Ronald Lauder, President of the World Jewish Congress, who was the
first to demand that the Chairman of the Claims Conference, Julius
Berman, directly respond to specific questions relating to the latest
allegations, and instructed his organization to undertake a review of
the Claims Conference.
This will not be an easy task for board members. The damaging new disclosures published in recent weeks in The Jerusalem Post, The Forward and the JTA have caused widespread shock.
In particular, allegations that
senior management leaders failed to adequately investigate details of
fraud that had been brought to their attention as far back as 2001, are
highly disturbing. The accusation that both Chairman Berman and CEO,
Greg Schneider, were warned about the scam, but failed to follow up, is
what caused some to question senior leadership.
More damning, however, is that
it appears that neither Berman nor Schneider disclosed their prior
knowledge of the fraud to the board, and, when confronted, engaged in
deliberate attempts to cover up their involvement and failure to follow
up.
If confirmed, such a cover-up
would represent a major breach of governance, not to mention a public
embarrassment of the highest order, especially in view of management’s
portrayal of itself as a paragon of organizational morality.
A few months ago, during the
trial of the embezzlers, a court transcript quoted CEO Schneider
expressing “shock” over the $57+ million fraud. Yet, when confronted
with the existence of an anonymous letter from 2001 warning of the
fraud, the Claims Conference spokespersons released a series of
conflicting statements, and ultimately apportioned blame exclusively to a
German manager who died in 2004; what they failed to reveal was that
Berman himself, then Counsel to the Claims Conference, had been
commissioned to investigate the fraud allegations in 2001.
In a widely disseminated,
self-incriminating, 11-page memorandum attacking his critics rather than
addressing the charges against him, Berman ironically highlights his
failure to responsibly administer the duties of the Chairman of an
organization dispensing restitution funds.
His arrogance and failure to
pursue sound governance and organizational transparency is highlighted
by his boast that he refused to examine incriminating evidence I
provided him some years ago – evidence that was subsequently verified by
the New York Attorney General.
He also misleadingly implies
that the FBI, by conducting a criminal investigation, effectively
validated Claims Conference oversight of funds.
To make matters worse, Berman
justified his refusal to apologize for the theft of the $57+ million on
the grounds that it was German taxpayers’ money, and did not have an
impact on recipients' restitution. Such an unconscionable remark in
itself provides sufficient grounds for deeming Berman unfit to hold a
leadership role in the organization.
Regrettably, Berman fails to
appreciate the gravity of the situation. Rather than allow an
independent investigation, he has set up a bureaucratic procedure that
relies on the discredited technique of appointing an internal committee
comprised of handpicked loyalists to review the issue.
To offset demands for an
independent investigation, this internal committee has requested that
the Claims Conference Ombudsman, an employee of the Claims Conference
whose contract will soon be reviewed for renewal, determine what has
transpired. The Ombudsman will report to the internal committee, which,
in turn, will make a recommendation to the board. This process hardly
qualifies as an independent review, and certainly will not address the
primary issue of accountability.
Furthermore, the Claims
Conference board has not been informed as to what the Ombudsman was
instructed to scrutinize, and whether his brief will include Berman's
and Schneider's alleged cover-up of their prior exposure to the fraud.
There are already bitter
complaints that the Ombudsman’s findings and the committee’s
recommendations are being suppressed prior to the board meeting. But
even worse, in what can only be described as an unconscionable action,
the board agenda just circulated, lists the report as the very last item
on the two day meeting even after the election of the incoming
leadership team. Aside from making a mockery of governance and due
process, relegating such a crucial issue relating to accountability and
allegations of a cover up to the end of the meeting, demonstrates that
the leaders continue operating the organization like their personal
fiefdom and treat the directors with utter contempt.
It is therefore no surprise
that last week, noted Holocaust historian Deborah Lipstadt
pessimistically predicted that nothing would change and that none of the
leaders would even relinquish their positions, saying “Have they lost
all sense of decency, if not shame?”
One test as to whether the
Claims Conference is willing to undertake reform or face intervention
from an external monitoring body, is whether Julius Berman will continue
to insist that he remain Chairman of the Board, despite the many
reasons he should step down: his arrogance in running the organization
like a private fiefdom; his failure to establish genuine governance and
organizational transparency; his unwillingness to intervene to ensure a
greater flow of funds to aging Holocaust survivors, and his alleged
failures relating to the $57+ million fraud. Berman has occupied the
position of Chairman for more than11 years; it is time for him to go.
But it is not just Berman who
must accept responsibility and take action. Greg Schneider and all those
responsible for failures of oversight must be held accountable,
including those who participated in the cover-up by withholding
information from the board, breaching a fundamental principle of
organizational governance.
If Berman possesses a modicum
of consideration for the well-being of the Claims Conference, he will
realize that in retaining the chairmanship in the current climate, he
will be acting solely to promote his ego, and will be displaying utter
contempt for the standing and reputation of this crucial organization.
If he does not appreciate this, board members purportedly representing
world Jewry have the obligation to ensure that he step down, graciously
or otherwise.
The writer’s website can be viewed at www.wordfromjerusalem.com.He may be contacted at ileibler@leibler.com
This column was originally publlished in the Jerusalem Post and Israel Hayom
Some of my recent articles:
Teheran and Islamic Fundamentalism: Facing Realities (June 24, 2013)
Chief Rabbinate Electoral Machinations (June 17, 2013)
Implications for Israel in the US Global Retreat (June 12, 2013)
Religious Tolerance and Mutual Respect rather than Polarization (June 6, 2013)
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