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.

(page 2 of 2)

“The organization was governed in a manner unacceptable in both public and corporate bodies,” the report said. “The apportionment of authority and the organizational structure in no way matched the needs of the organization, which was characterized by unreasonable levels of centralization.”

The report was circulated among Claims Conference board members ahead of their annual general meeting in New York on July 9.

In a 21-page letter appended to the document, Greg Schneider, executive vice-president of the Claims Conference, said the ombudsman’s report was “deeply flawed.” Since the 2001 letter was publicized, current and former Claims Conference officials have blamed the failure to adequately investigate the 2001 letter on Karl Brozik, the organization’s then-director in Germany, who died in 2004.

Although Brozik oversaw an initial investigation into the letter’s claims, the ombudsman found it “impossible to accept” that Brozik had any authority over Domnitser. But Schneider insisted that Brozik was responsible.

“The plain fact is that Brozik, while clearly not a manager in New York, was the second most senior staff member of the Claims Conference worldwide and certainly the most respected and knowledgable about [one of the defrauded funds],” Schneider wrote.

Schneider noted that the report “seems to go to great lengths to blame the New York staff, which I find perplexing and inexcusable.”

Schneider also criticized the ombudsman’s comments on the managerial culture of the Claims Conference. He said that such issues were outside the mandate of the ombudsman’s investigation — a fact that the ombudsman noted in his report — and that, given the ombudsman’s limited time and resources, he could not possibly have investigated this topic sufficiently. “I simply cannot accept this rush to judgement,” Schneider said.

The committee noted in its report that the 2001 letter was not disclosed to the Claims Conference board of directors either at the time it was received or subsequently. Rather than attributing this to a deliberate coverup, the committee found that the failure to disclose the letter was “part of the litany of lack of diligence, competence and judgment that, as the ombudsman has shown, characterized this event throughout.”

“I vehemently object to this language and accusation,” Schneider said.

Later, he wrote: “There is not a day that goes by in the grueling four years since I discovered the fraud that I don’t replay events in my head, wondering what else I could have done.”

“I considered Domnitser a trusted colleague,” he added. “And so, when I say that I was ‘shocked at the discovery in 2009,’ I mean it. I was lied to, fooled, hoodwinked, duped. I missed it. I am sorry.”

Thirty-one people, including 11 former Claims Conference employees, have pleaded guilty or been found guilty of fraud. The committee requested that after the final person is sentenced, the Claims Conference conducts a more “comprehensive investigation” of “the general conduct over many years that enabled such a large scale fraud to continue unimpeded.”

Contact Paul Berger at berger@forward.com or on Twitter @pdberger

Claims Conference Select Leadership Committee Report



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