Pressure Mounts on Claims Conference Chief Over Fraud Probe
When the American Gathering of Jewish Holocaust Survivors and Their Descendants called for an independent review into the handling of an anonymous tipoff that could have curtailed a $57 million fraud, it became the latest in a string of Jewish organizations to publicly break ranks with the leadership of the Conference on Jewish Material Claims Against Germany.
But the decision was noteworthy for another reason. Roman Kent, chairman of the American Gathering, is a member of the internal Claims Conference committee that his own organization wants replaced by an independent inquiry.
“While we do not question the integrity of [the] committee,” Max Liebmann, senior vice president of the American Gathering, wrote to the Claims Conference on June 3, “the process of providing answers to the entire Board … must be able to withstand any and all scrutiny.”
The American Gathering is one of several organizations represented on the board of the Claims Conference that has publicly questioned the organization’s handling of the anonymous 2001 letter. The fraud, which was eventually uncovered in 2009, is thought to have gone on for about 15 years. Since 1951, the Claims Conference has distributed billions of dollars from the German government as restitution to Holocaust survivors.
In recent weeks, Ronald S. Lauder, president of the World Jewish Congress, sent several pointed questions about the handling of the 2001 letter to Julius Berman, the chairman of the Claims Conference. Natan Sharansky, chairman of the Jewish Agency for Israel, has publicly called for an independent investigation into how the letter was dealt with by Claims Conference officials.
Samuel Norich, a representative of the Jewish Labor Committee, also called for an independent investigation in a memo circulated among board members on June 3. (Norich is president of the Forward Association, which publishes the Forward.) And Stefanie Seltzer, president of the World Federation of Jewish Child Survivors of the Holocaust and Descendants, told the Forward on June 4 that she believes that the investigation should only be carried out by people “totally independent of the Claims Conference.”
On May 19, Berman announced the formation of a “select leadership committee” comprised of his fellow board members to investigate issues related to the 2001 letter.
UPDATE: The committee announced on June 6 that it has asked the Claims Conference’s ombudsman to “investigate the facts surrounding the 2001 letter” and that the committee would report back to the full board in early July.
The committee is headed by Reuven Merhav, a widely respected former Israeli diplomat. In addition to Kent, the other committee members are Abraham Biderman, a representative of Agudath Israel World Organization, and Robert Goot, of the Executive Council of Australian Jewry.
Biderman and Kent are longstanding Claims Conference board members who, according to an annual report, served alongside Berman on the organization’s executive committee in 2001, the year the letter was received. Merhav and Goot serve on the Claims Conference’s public information committee, which is tasked with enhancing the organization’s image.
Since the fraud was publicly disclosed in 2010, three members of the select leadership committee are on record defending the Claims Conference.
In July 2010, Goot wrote on an online Jewish news site: “I believe that the organization is well led, well governed, well staffed and manages its restitution funds in a manner consistent with best practice and probity.”
A few months later, writing in the New York Jewish Week, Kent said the fraud “was intricate enough to escape eligibility screeners and detection not only by Claims Conference personnel, but also by supervisory authorities.” He added that the Claims Conference has “swept nothing under the rug.”
In May, the Forward revealed that the anonymous 2001 letter implicated about a half dozen New York-based employees in a fraud scheme and laid out the basic steps necessary to prove it. A decade later, almost all of the people implicated in the letter pleaded guilty to or were convicted of fraud, including Semen Domnitser, a director of the two Holocaust funds that were targeted by the fraudsters.
After the letter was revealed, a Claims Conference spokeswoman, Hillary Kessler-Godin, blamed the director of the Claims Conference’s office in Frankfurt, Germany, Karl Brozik, for failing to adequately investigate the letter’s claims. Brozik died in 2004.
Biderman echoed Kessler-Godin’s statement on May 13, when he told the New York Jewish Week that only Brozik was at fault. “If we had realized what was going on, we never would have countenanced it for a second,” Biderman said.
During Brozik’s investigation, several Claims Conference officials in New York were copied on faxes between New York and Germany. They were Saul Kagan, a former executive vice president, Gideon Taylor, then executive vice president, and Greg Schneider, then assistant to the executive vice president. Kagan and Taylor have since resigned from the Claims Conference. Schneider is now executive vice president.
“There was a mistake in the way this was handled, but it was not [Schneider’s] mistake,” Biderman told the Jewish Week.
Subsequent to the Brozik investigation, Taylor and Berman oversaw a second investigation into the letter’s allegations, which was carried out by a paralegal at Berman’s law office, Kaye Scholer LLP.
Since his fellow board members began calling for an independent investigation into the handling of the letter, Berman has insisted that several independent bodies have already investigated the matter. In an 11-page memo to board members, on May 30, Berman cited investigations by the FBI, the U.S. Department of Justice and Deloitte LLP.
But none of those organizations focused on how the Claims Conference has handled the anonymous letter.
The FBI and the Justice Department investigations focused on prosecuting the fraudsters, an effort that resulted in 28 guilty pleas and three convictions. A spokesman for Manhattan U.S. Attorney Preet Bharara said his office could not comment on the Claims Conference’s handling of the 2001 letter.
Deloitte was hired by the German government after the Claims Conference had tightened security following discovery of the fraud. Deloitte’s aim was to “identify any potential weaknesses and recommend improvements,” according to a May 8 letter from Berman to board members. A spokesman for the German Ministry of Finance said: “It was agreed that the report would be treated confidentially.”
Neither Berman nor the Claims Conference has described the scope of the select leadership committee’s inquiry. Merhav did not respond to requests for comment.
Kessler-Godin said: “The committee … has been formed to formulate an appropriate course of action for the Claims Conference with respect to the issues surrounding the 2001 letter. All issues on this topic will be referred to this committee. Once the work of this committee is complete, its findings and recommendations will be made public.”
Kent told the Forward on June 3 that the parameters of the investigation would be decided at the committee’s first meeting, due to be held that week. “The committee was formed for certain reasons and I will see what [they are],” Kent said.
Kent said he had not seen the letter from the American Gathering calling for an independent investigation, and was not interested in reading it for comment.
Kent and Berman have a famously antagonistic relationship, clashing often over Claims Conference spending. But Seltzer, who has worked closely with Kent for decades, said the antagonists share a devotion to survivors.
If Kent and Berman believe it is in the survivors’ interest to “clear the name of the Claims Conference,” they will do so, Seltzer said. “This is truly for the welfare of the Jewish people. And they will want to clear it up,” she said.
Seltzer, though, believes that only an independent investigation can silence Claims Conference critics who allege that the 2001 letter was mishandled. “Otherwise, no matter what, people will still be throwing rocks,” she said.