October 22, 2013
http://wordfromjerusalem.com/?p=4861
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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 (click here to see Jerusalem Post editorial).
In an article published in The Jerusalem Post on Oct. 10 (click here for link),
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.
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 façade 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 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.
The writer’s website can be viewed at www.wordfromjerusalem.com.He may be contacted at ileibler@leibler.com
This column was originally published in the Jerusalem Post and Israel Hayom
Some of my recent articles:
Electing the Mayor of Jerusalem (October 14, 2013)
J Street Not a “Pro-Israel” Organization (October 8, 2013)
Netanyahu – “If Needed Israel Will Stand Alone” (October 4, 2013)
President Obama and Israel: Looming Confrontations (September 29, 2013)
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