This week the Conference on Material Claims against Germany (Claims Conference) is convening its annual board meeting in New York. The agenda has already been circulated. Yet most of the 60 well-intentioned directors, whose principal involvement with the Claims Conference involves attending annual meetings, will have difficulty comprehending the complex and confusing data which was presented to them. As they have for over 40 years, the majority are likely to continue acting as a rubber stamp, automatically endorsing resolutions and allocations recommended by the small inner management clique. It is evident that the burning issues raised last year remain unresolved and in many cases were not even seriously considered. The directors are thus unlikely to gain further insight on who was responsible for the lack of oversight which facilitated the greatest fraud ever inflicted on a Jewish charitable organization. The theft, which was first disclosed in February 2010 as a $350,000 swindle, had risen by July to $7 million. In November, the amount had escalated to $42.5 million. A few weeks ago, we were blithely informed that the sum was about $50 million and likely to rise even higher. How could such a scam proceed unimpeded for over 15 years in the head office of the Claims Conference, literally under the noses of the chief executives, with six key staff members including a manager being the alleged perpetrators? In any enterprise - private or public - after such a scandal, one would expect resignations or at least some acceptance of responsibility. The Claims Conference, a non-profit charity, employs highly paid, purportedly top professional executives. The CEO even receives a salary commensurate with the head of the International Monetary Fund. Despite ignoring repeated warnings that a single part-time internal comptroller was absurdly insufficient for an organization handling billions of dollars, no one is now willing to accept responsibility. After the theft was discovered, the chief executive even had the gall to praise management for its efficient response, insisting that there had been no deviation from standard operating procedures. In a statement officially circulated to the Board, one director even boasted that the Claims Conference is well led, well governed, well-staffed and manages its restitution funds in a manner consistent with best practice and probity. Directors will no doubt be informed of the commendable steps undertaken following the much heralded K2 Global Consulting companys recommendations to implement greater safeguards and ensure that such an outrage is not replicated. However K2 is not qualified to undertake an audit or review. In the wake of such a scandal, it is surely mandatory for directors to demand a fully independent forensic audit to guarantee that there are no additional areas in which lack of oversight could enable public funds to be plundered. For example, allocations of funds, alleged conflicts of interest, the recovery and sale of German properties and other issues. However, the management adamantly rejected such a review. The reality is that a handful of people - basically an old boys club - operate the Claims Conference like a personal fiefdom. The excessive centralization of control and lack of checks and balances is highlighted by the fact that Chairman Julius Berman (who has occupied the position for a decade), also appointed himself chairman of key committees such as the all-powerful Allocations Committee, the U.S Allocations Advisory Committee and even its Israeli counterpart. That the chairman, an American resident, appoints himself to head the Israeli Advisory Allocations Committee, says it all. Yet there are glimmers of hope that some organizations represented on the Board are becoming more conscious of their fiduciary duties and assertive in exercising their rights. The Board of Deputies of British Jews commissioned an independent review (the Gruder Report) to consider complaints from heirs of Holocaust victims that the Claims Conference lacked transparency and accountability and had behaved unethically in the sale of German properties. The report, released in December 2010, was highly critical and damning of the moral conduct of the Claims Conference, demonstrating reprehensible efforts to prevent heirs from recovering property stolen from their families. As there was no response to the recommendations demanding greater transparency, the British directors are likely to raise the issue at the meeting. In February, the Executive Council of Australian Jewry, the umbrella body of the Jewish community, which includes the highest proportion of post war Holocaust survivors other than Israel, requested the Claims Conference management to institute a comprehensive independent review of the manner in which the organization was being administered. The resolution called for a recognized independent expert or experts to undertake a review of strategic risk and governance issues in order to retain public confidence. The Claims Conference management denied the request that the resolution be immediately distributed to Board members and it was buried as one of the last items on the forthcoming conference agenda. Survivor groups are treated disrespectfully. The majority of the Israeli survivors organization even temporarily boycotted meetings of a newly constituted group to review the allocations process when they were not even consulted about the composition of the committee. Their U.S. counterpart on the Board, the American Gathering of Holocaust Survivors, submitted a memorandum on the same subject demanding that it be circulated to board members. Their submission was dismissed as "chutzpah" by chairman Julius Berman, who refused to circulate this and other requests to the board. Such behavior exemplifies the absence of governance and the shameful contempt directed towards those expressing dissent over any aspect of management. It is astonishing that since the last annual meeting there has been no public outcry that the management continues to deny any responsibility for the $50 million fraud. The onus surely rests with organizations represented on the Board to rectify this and ensure that substantive reforms are instituted to achieve genuine transparency and accountability. A genuinely independent forensic audit reviewing all aspects of the organization should be immediately undertaken to ensure that there are no additional black holes requiring attention. Those responsible for the failure of oversight relating to the financial scandal should retire or be retired. Term limits for senior elected officers must be introduced. The chairman, Julius Berman, should do the honorable thing and step down. Potential conflicts of interest by directors whose organizations obtain funding should also be reviewed. Most importantly, intensified efforts must be immediately undertaken towards easing the desperate plight of the remaining ailing survivors. Despite the commendable agreement by the Germans to substantially increase support for those requiring home services, it is an indictment on us all that many elderly Jewish survivors still have insufficient resources to pay for food, fuel and basic medical expenses. Millions of dollars are spent on numerous, for the most part deserving projects, like hospitals and Israeli infrastructure projects, which do not directly benefit survivors. Surely, under the current appalling circumstances, justice and dignity demand that funding for these activities be suspended and diverted exclusively to survivors. To quote from the Gruder Report, we must demand that the Claims Conference act ethically and with the highest possible standards of integrity, transparency and sensitivity. If there is the slightest doubt as to whether those standards are being upheld, board members and the organizations they represent have a legal fiduciary obligation to act.
The never-ending Claims Conference scandal
מערכת ישראל היום
מערכת "ישראל היום“ מפיקה ומעדכנת תכנים חדשותיים, מבזקים ופרשנויות לאורך כל שעות היממה. התוכן נערך בקפדנות, נבדק עובדתית ומוגש לציבור מתוך האמונה שהקוראים ראויים לעיתונות טובה יותר - אמינה, אובייקטיבית ועניינית.
