Monday, September 13, 2010

Printer-friendly Comment on this Digg this Save to RSS Feed The Ongoing Claims Conference Controversy

Isi Leibler
September 13, 2010

In recent weeks Claims Conference president Julius Berman and treasurer Roman Kent published a spate of articles in various Jewish media defending their position and bitterly attacking me, even trying to reverse my allegations that they had failed to adequately promote the interests of survivors, by accusing me of jeopardizing the limited support survivors were receiving.

As I had already written extensively on this issue for the Jerusalem Post and the Jewish Week, I requested the Jewish Telegraphic Association (JTA) which published an article by Berman to provide me with a right of reply. They ultimately declined to publish my response. I attach links to the articles by Berman and Kent as well as my (unpublished) response to the JTA.

If you agree with my concerns about the manner in which the Claims Conference is being managed and the need for them to divert more resources to survivors, some of whom have insufficient funds to cover their food ,electricity and medical needs, I would ask you to circulate this material to your friends and urge your local Jewish representatives to speak up.

Berman OpEd in Jewish Week - Aug 31:

Kent OpEd in Jewish Week - Sep 3:

Berman OpEd in JTA - Sep 6:
The Case against the Claims Conference Management

The angry response from Claims Conference Chairman Julius Berman to my concerns about undemocratic behavior, conflicts of interest and the failure to prioritize the needs of the aging and rapidly dwindling Holocaust survivor community speak for themselves. He failed to refute a single charge I had raised.

Berman disingenuously misrepresented my remarks about the organization's huge $1billion in "investments" (defined as such in the Claims Conference Financial Statement), which grew by $33 million since the last financial report. I never said that 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 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 - we would not today face the scandal of survivors unable to meet their basic food, medical and electricity bills.

The core of the problem is that a small self-perpetuating clique of leaders operates the Claims Conference like a private fiefdom and determines how these sacred funds are to be allocated.

Julius Berman has retained the role of chairman for over eight years - an extraordinary long tenure for a public organization dispensing billions of dollars annually.

Berman also occupies the chair of the crucial advisory committees for disbursement of funds both in the US and even Israel. Beyond that, he also chairs seven of the key committees, including the powerful allocations committee. In any organization, absence of checks and balances and the concentration of power, even amongst a well-intentioned leadership clique, inevitably lead to a corruption of genuine governance.

In addition, dissent from survivor groups and others is not tolerated. Leo Rechter, who heads a respected survivor group, recently disclosed that a $200,000 loan from the Claims Conference was withheld from a major umbrella survivor group until it formally undertook not to criticize them.

It is unconscionable for an organization dispensing such huge sums to operate in this manner. The Board meets annually, but the well-intentioned delegates inevitably endorse the allocations determined by a small clique, many of which in retrospect proved to be highly questionable. Haim Roet, a survivor, resigned this year as an Israeli director of the Claims Conference, because he refused to be "a rubber stamp for the automatic majority the chairman has and exploits in the decision making process". Most Board members were unaware that vast amounts of funding were being channeled into institutions such as hospitals, nursing homes and general welfare operations in which survivors only benefitted as a small percentage of the overall population and were usually still obliged to pay the standard fees. In addition, large sums were funneled into projects only peripherally related to the Holocaust.
Roman Kent, the Treasurer of the Claims Conference recently provoked another storm by justifying the refusal of the Claims Conference to provide potential heirs access to the list of German properties published in 2003 because they 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 1 March 2004 deadline". He failed to mention that only six months' notice was provided to file claims and many legitimate heirs only learnt of their right to reclaim their properties after the deadline had expired.

The sheer chutzpa of refusing to provide access to such documents should be viewed in tandem with the huge uproar and litigation which arose over the manner in which this matter was handled. There were allegations of questionable practices related to the sale of properties - amounting to up to $7 billion - which led to an internal investigation, the findings of which to this day have been suppressed. There is no detailed breakdown available of the sale of the properties or a record of those which the Claims Conference still retains. Allegations of an absence of "transparency and democratic accountability" resulted in the current investigation of the Claims Conference by the Board of Deputies of British Jews.

Whilst the management adamantly denies any culpability for the fraud which was perpetrated for over ten years, Haim Roet, insists that had the internal audits, which are undertaken by one person as a part time job, occupied a higher priority, the massive fraud may have been averted. The Claims Conference Executive Vice President actually had the gall to inform the Jewish media that no holocaust survivors lost money (ignoring the fact that Hardship Fund recipients were cut off for three months) and blithely denied that there had been any failure in operating procedures. Such a statement surely trivializes the fraud and reflects an absence of accountability.

There is also great uncertainty as to how much money was stolen, obliging the auditors KPMG to refuse signing off on the accounts. In February, it was announced the amount was $350,000. At the July Board meeting, this sum grew to $7 million, although Treasurer Roman Kent cautioned that this was "only the tip of the iceberg". The current gossip in Claims Conference quarters is that as much as $40 million was stolen. Berman has an obligation to inform the public how much he estimates was purloined. If the sum substantially exceeds the $7 million disclosed at the July meeting and the management failed to update its Board, it would be in breach of its fiduciary responsibilities and obliged to resign.

Whatever the situation, instead of hiring the "biggest and the best" Madison Avenue PR firm, the Board should set up 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, the governance and transparency of the organization and in particular investigate the manner and decision making process in which funds are being allocated.

The arrogant response from Berman signals a determination to resist reform and retain control. If so, the Jewish public should demand a change in the leadership. The Claims Conference is coming to the end of its life, but over the few remaining years this important organization must enjoy the confidence and respect of the public as it allocates the residual of the sacred restitution funds.

The top priority remains the distressing plight of ailing survivors. The Claims Conference must ensure that the declining numbers of ailing survivors are enabled to live out their remaining years in dignity. There may indeed be insufficient funds available because of previous flawed allocation priorities. But the situation can at least be partially alleviated if all grants not explicitly committed to heirs or linked directly to exclusively holocaust survivor related projects are frozen and directed towards survivors in need.

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