Friday, November 19, 2010

The Claims Conference Once More

The Claims Conference which is the principal conduit for German government reparations funds is once more in the news and once more the news is not good. A massive fraud, amounting to at least $42 million, has been uncovered, mainly involving bogus claimants from the former Soviet Union. I doubt that this is the entire story. There needs to be an independent investigation, including a thorough audit of all Claims Conference accounts.

Whenever large sums are available for distribution to a large pool of potential claimants, there is a strong likelihood of some fraud, particularly when, as is true of restitution funds, criteria for eligibility are not precise and certain claims are not fully provable. There are claimants who see their opportunity and come out of the woodwork. Although the situations are not quite comparable, the funds established for Ground Zero claimants and recently for those who say that the British Petroleum Gulf of Mexico disaster caused them great harm are feeding troughs for some scoundrels. There is no reason to expect that human nature will be altered because the restitution funds are linked to the Holocaust.

There is no question about the integrity of those in charge of the Claims Conference. There are huge questions about their management skills. It is no comfort that the organization played a key role in uncovering the fraud that just made the front page of the New York Times because this fraud was largely in-house and conducted over a considerable span of years by key employees. That is astonishing.

If a major Jewish organization was beset by a similar scandal, questions would be asked by contributors, the media and others and changes would be made. There would be greater accountability. Because of its vital mission, the Claims Conference should be subjected to greater scrutiny and heightened accountability. This isn’t the case, which is curious and yet there is an explanation. Because there is no fundraising, accountability is diminished. Its board and officers operate essentially as a self-perpetuating body.

The imperious attitude that prevails is manifested by the role now played by Professor Burt Neuborne in the distribution of certain Holocaust-related funds. I have no brief against him and doubtlessly he has done much that is meritorious, but Holocaust-related funds are not his finest hour, as was clearly demonstrated in the Swiss Bank litigation.

The likelihood is that, as in the past, the Claims Conference will do little or nothing in response to the latest scandal, expecting that once more media and communal attention will be short-lived. The organization has weathered worse crises and can calculate that its standard operation procedure of ignoring and often denigrating calls for reform and transparency will pay off. Worse yet, it has engaged Howard Rubinstein and Associates, a sure message that something is rotten and rather than reform, damage control is the order of the day. Is it sufficient to bring in a spinmaster who counsels obfuscation and the application of dabs of perfume to cover up the stench?

Of all of the wrongs or questionable actions attributed to the Claims Conference, none holds a candle to its complicity in the failure to protect those whose property was seized by the Nazis. In the words of Isi Leibler, formerly a leader of Australian Jewry who now lives in Israel and was involved in the Claims Conference, its “leaders have adopted a Robin Hood approach in relation to this issue, arguing that the proceeds of these properties should be directed to other Claims Conference enterprises.”

All told, more than fifty thousand parcels of land have been transferred to the Claims Conference. Many have been sold, with the funds going to the organization to dispense as it pleases. Time limits for applying and other bureaucratic impediments have made it difficult and, at times, impossible for rightful heirs to get back what is rightfully theirs. This is a key issue in Leibler’s powerful indictment of the Claims Conference published last week in Israel Hayom, the country’s largest circulation newspaper. In response to the question, “Will you publish a current list of properties which the Claims Conference holds, including an estimate of their valuation?”, the organization says in part, “The publication of the valuation of the assets, prior to placing them on auction, would prejudice the ability to get the best possible price for them.” Apart from this not being true, how does this trump the rights of heirs?

The Claims Conference story is about what happens when there is too little accountability, when people who doubtlessly have accomplished good elsewhere have come to regard a communal enterprise as theirs and not the community’s. Reparation funds are not meant for staff or officers but for Holocaust survivors and, in a larger and vital sense, for the Jewish nation wherever we may live and especially in Israel. It is not immaterial that over the years the Israeli government and major instrumentalities of Israeli life have been among the most persistent critics of the organization.

When we reflect on what has happened over the years, including multiple big league scandals, it is apparent that the Claims Conference is in a league by itself. No other Jewish enterprise could go through what it has experienced without major reforms in management and policy. The Claims Conference has insulated itself, living inside a self-created communal bubble that provides greater immunity from scrutiny than perhaps any other major player in our robust communal life.

It is time for change in management and leadership. There needs to be transparency and accountability. Our media need to be alert to the story. To start the process of change, outsiders should be brought in to evaluate the situation and to make recommendations and the report that they issue should be made public. The alternative to major reform is the next scandal that may already be in the making.