The dimensions of a recent financial scandal at the World Jewish Congress appear to be significantly broader than has been publicly known, judging from an unreleased audit that found about $3 million to have been withdrawn from the organization’s accounts with no documented explanation.
The missing sum of 3.85 million Swiss francs is detailed in a report written by the financial firm PricewaterhouseCoopers about the WJC’s Swiss bank accounts. The confidential report was submitted to the New York attorney general by the WJC.
PricewaterhouseCoopers, which looked at records from the WJC’s accounts from 1994 to 2004, wrote in the summary that “we have not seen any indication of embezzlement of money.” But the firm goes on to report that there were “significant un-reconciled cash withdrawals where there is no documentation of the usage of the funds.”
The New York attorney general’s office investigated the WJC’s financial governance after calls were made for a full audit of the organization’s Swiss bank accounts. In the end, however, the attorney general’s final report made little mention of the broader issues relating to the Swiss accounts and focused instead on a $1.2 million sum that was transferred around the world without proper oversight. The newly surfaced audit provides a broader picture of the financial disarray at the organization. The $3 million in undocumented withdrawals was 30% of all withdrawals from the WJC’s Swiss accounts over the 10 years in question. According to the audit, the Swiss accounts existed partially to pay for the WJC’s Geneva office, but some also went to cover other WJC costs. Without documentation it is not clear where the rest of the money went.
The secretary general of the WJC, Stephen Herbits, declined to comment on the specifics of the audit and referred instead to the organization’s most persistent critic, Isi Leibler.
“The World Jewish Congress has no comment on Mr. Leibler or the third year of his continuing campaign of attacks,” Herbits said in a statement. “The investigation by the New York Attorney General was thorough, exhaustive and completed last January. We will have no further comment on Mr. Leibler in the future.”
Leibler, a former vice president at the WJC, said that he “was not surprised” by the findings in the audit, but he declined to elaborate.
The report of the attorney general did deal briefly with the Swiss bank accounts in question, but it mentioned no specific sums, saying only that “a significant portion of the deposits and withdrawals could not be reconciled to documentation, although part of the discrepancy appeared attributable to the Geneva office’s practice of paying a significant portion of its payroll in cash.”
The audit offered the same explanation for the 1.26 million Swiss francs in unaccounted-for funds held in one account. It did not offer an explanation for the remaining 2.57 million Swiss francs.
The WJC’s problems in Switzerland have particular resonance because the organization was founded in Geneva in 1936. During the 1990s, it came to international prominence because of its leadership in the campaign to help the heirs of Holocaust victims recover their deposits from Swiss banks.
The investigation by the New York attorney general began after Leibler raised concerns in September 2004 about the WJC’s financial oversight, particularly in regard to the Swiss accounts. As the dispute went public, the main subject of discussion became the $1.2 million that had been transferred out of a Swiss account by Israel Singer, former chairman of the WJC.
The end of the investigation came this past February with the release of the attorney general’s report, which stated that there had been no “criminal conduct” at the WJC but a good dose of financial mismanagement. The WJC also removed Singer from any positions with financial responsibility.
Even before Leibler raised his concerns, the communal organization for Swiss Jews, known as the SIG, had raised questions about the broader management of the WJC’s Swiss bank accounts.
Daniel Lack, the former lawyer at the WJC’s Swiss office, raised the issue in a letter to the organization’s New York office in October 2004. Lack said that when the funds were discovered to be missing from the Swiss bank accounts, the leadership of the Swiss office fired the office’s accountant.
“The employee who was terminated,” Lack wrote, “was making numerous cash payments that were not properly recorded (including salaries and benefits). He claimed that he was acting under direct instructions from Israel Singer and we did not believe him at the time.”
The accountant was unavailable for comment. Singer, reached by the Forward, said he never had any dealings with the Swiss accounts aside from the one time he moved the controversial $1.2 million sum. The New York attorney general’s office criticized the handling of the $1.2 million but emphasized that the money ended up in the organization’s possession.