Claims Conference Facing New Pressures

Claims Conference Facing New Pressures

Board members call for reforms; AG said to be exploring charges of ‘mismanagement.’

Editor & Publisher of The NY Jewish Week.

On the eve of the annual meeting of the Claims Conference this week, a member of its leadership council demanded that the council be shown a document suggesting a serious conflict of interest — with legal ramifications — involving the organization’s lay president, Julius Berman, and its executive vice president, Greg Schneider, The Jewish Week has learned.

Berman refused the written request from Robert Goot, leader of the Australian Jewish community and one of the 14 members of the conference’s leadership council, which was created last year in part to decentralize the authority of the organization’s president. Berman responded that to release the document now would violate the spirit of the group’s decision two years ago, during a particularly contentious time, to move ahead and not look back.

Berman was referring to the summer of 2013, when the Claims Conference’s annual meeting focused on a report by the group’s ombudsman, Shmuel Hollander, a highly respected former Israeli public servant. He had been tasked with looking into the conference’s level of culpability for an embarrassing, multimillion dollar in-house fraud that went unnoticed for years, perpetrated by a number of employees of the New York office through false restitution claims.

Initially thought to total under $1 million, the amount stolen was later estimated to be $57 million, though Hollander believes now it is far more, with some insiders putting the figure at as much as $100 million.

Hollander issued a stinging report at the 2013 meeting, asserting that “the absence of professional control systems” was a “key factor in enabling, and certainly facilitating, the fraud.” Berman was cited for not acting sufficiently on an anonymous letter to him in 2001 that outlined the details of the fraud. The fraud was not discovered by the conference until 2009, when the FBI was alerted.

The Claims Conference (officially the Conference on Jewish Material Claims Against Germany) represents world Jewry in negotiations with Germany, which has released more than $70 billion in restitution and compensation for survivors and their heirs since its founding in 1951. It is widely seen in the Jewish world as a sacred trust, distributing more than $700 million annually; its actions are watched closely by survivors and the broader Jewish community.

The polite-but-contentious exchange of letters between Goot and Berman, obtained by The Jewish Week, has not been discussed publicly. But it signifies a growing concern inside and outside the conference regarding its oversight, management, transparency and adherence to laws governing charities.

At the two-day board meeting this week, Goot and several other members of the conference were expected to demand reform and an independent study of the organization’s operations. Perhaps more worrisome to Berman, who has headed the conference since 2002 and weathered previous storms of dissatisfaction from within, is that the office of New York State Attorney General Eric Schneiderman is said to be looking into allegations of mismanagement of the conference, The Jewish Week has learned.

A spokesman for the attorney general told The Jewish Week his office “cannot comment on ongoing or potential investigations,” a verbal formulation whose non-denial suggests to some that there is substance to reports of a probe.

‘Absolutely Entitled’

At the moment, the central figure in this complex case is Hollander, the ombudsman with an impeccable portfolio of four decades of service in Israel, whose contract with the conference expired June 30 and was not renewed. He claimed, in a June 29 letter to the board, that Berman told him June 3 in a phone call that the decision not to rehire him was “in response to the report” he prepared in 2013 that criticized Berman and the conference top management.

In his letter to the board, obtained by The Jewish Week, Hollander charged that top lay and professional leadership repeatedly and deliberately thwarted his attempt to do his work over the last three years. He asserted that “numerous obstacles were placed in our path. … Relevant information was withheld from us, and formal obligations were violated.”

Hollander also asserted that shortly after the leadership council fully endorsed his 2013 report, Berman and Schneider and two other conference leaders, Roman Kent and Reuven Merhav, sent a letter to German Finance Ministry officials disavowing themselves of the very report they had approved — a report that, in part, blamed them for their failure to recognize and respond to the fraud. According to Hollander, “the findings of the report were repudiated” by the four conference leaders, an act he believes places Berman and Schneider “in a position of personal conflict of interest” and raises “suspicion of the violation of proper administrative behavior.”

Hollander further alleges that while Berman explained to him that the German Finance Ministry demanded the letter and said that without it “there would be future financial consequences,” in fact Hollander later learned there was no such demand from the Germans.

Just what did the Berman and Schneider letter to the German Finance Ministry say, and why is it being withheld from conference board members?

That’s what Robert Goot wants to know. In response to Berman’s refusal to release it, Goot insisted that he and the other members of the leadership council are “absolutely entitled” to see a copy of the letter. “The letter is required by me to discharge my fiduciary obligation,” he wrote to Berman, suggesting that “such entitlement … is recognized under Australian law” and presumably under New York law as well since the conference is a “not-for-profit New York regulated corporation.”

Berman strongly denies all of Hollander’s allegations, which he attributes to bitterness over not being rehired. In one of his emails to Goot, Berman wrote: “Personally, I find Hollander’s tactics despicable and I refuse to participate in furthering the result he is working for.”

In a sense, the letter to the German Ministry of Finance is the equivalent here of what famed movie director Alfred Hitchcock called “the MacGuffin,” the plot device “that motivates the characters and advances the story.” The letter in question appears to be just one of many points of contention that speak to concerns, at the very least, over lack of communication within the conference itself.

If and how these issues will be resolved, and whether the conference leadership will allow a truly independent report on its management practices remains to be seen, particularly after Hollander’s allegations as the organization’s first ombudsman. And hovering over this week’s proceedings is the specter of an outside probe by the attorney general, which surely would be an embarrassment to the conference and affect its standing as a representative body of world Jewry.

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