Blistering Report Slams Claims Conference — Two Members Object to Findings

80-Page Report Demands Restructure After $57M Fraud

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By Paul Berger

Published July 08, 2013.
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The organization responsible for allocating billions of dollars in Holocaust restitution must commit to “a comprehensive restructure of…its culture structures, administration, management and governance,” according to a blistering 80-page report to board members of the Conference on Jewish Material Claims Against Germany obtained by the Forward.

Two members of the four-man committee presenting the investigation to the board, Abraham Biderman and Roman Kent, resigned from the committee in protest at the report, which found serious weaknesses in Claims Conference management.

“I believe that the report is inappropriately pejorative, contains material factual errors, and does not take into account the substantial management improvements made subsequent to 2001,” Biderman wrote in a July 7 letter announcing his resignation from the committee.

The committee based its findings on an investigation conducted by the Claims Conference ombudsman Shmuel Hollander. The investigation was commissioned following a story in the Forward that Claims Conference officials failed to heed an anonymous 2001 letter alleging fraud against key personnel in the organization’s New York claims processing office.

When the fraud was eventually discovered, in late 2009, two Holocaust funds had been defrauded of $57 million. But the committee found that had the 2001 letter been “properly addressed and investigated thoroughly” the fraud might have been discovered.

The allegations in the letter were investigated twice, first by a Claims Conference employee in Germany, then by a paralegal at the New York law firm of Julius Berman, the current Claims Conference chairman who at the time served as pro bono counsel to the Claims Conference.

Crucially, the report found a key weakness in the management structure of the Claims Conference: the alleged ringleader of the fraud, Semen Domnitser, had no superior. Although both investigations were cursory, they “should have served as an alert to Mr Domnitser’s superiors, had anyone been functioning in this capacity,” the committee found. Since Domnitser had no superior, the “fraud continued — and was perhaps even expanded — for eight years.”

The committee reported that “the absence of professional control systems, as well as the absence of computerization…, constituted a key factor in enabling, and certainly in facilitating, the fraud.”


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