Thursday, December 2, 2010

A Big Denial Cost Charity $42 Million

by Gary Snyder
As noted a month ago in NI, The Conference on Jewish Material Claims Against Germany (aka the Claims Conference) acknowledged revelations of the $42.5 million theft from funds granted by the German government to Holocaust survivors. Apparently denial has set in at the Conference. Reports indicate that at its first executive meeting since the disclosure of the fraud, all was business as usual. This major swindle was only mentioned as a side issue in the final paragraph, without a hint of remorse. Claims Conference chairman Julius Berman was asked about resigning or apologizing for taking 16 years to uncover the fraud, he was dismissive. He not only refuses to apologize, he believes the leadership bears no responsibility. The fraud was orchestrated for years by key employees in the New York claims processing office under the very noses of senior executives. Executive vice president Greg Schneider also rebuffed charges that he failed to impose adequate oversight and assume responsibility for not detecting criminals conspiring from his office and under his authority for almost two decades. Both board and staff dismissed independent forensic audits. All of this despite repeated warnings from board members.

In contrast to the accountability of the board and executive, the German Finance Ministry informed Time magazine that it may demand compensation. The German government is surely obliged to demand responsible oversight of its taxpayers’ funds entrusted to the Claims Conference on behalf of survivors.
This was not the first major fraud affecting the Hardship Fund. From 1980 to 1987, Werner Nachman, the head of the German Jewish community, embezzled $12 million. But in sharp contrast to today’s Claim Conference leaders, nine directors of the Central Council of Jews in Germany resigned after the theft was revealed.
These board decisions point out that the current leaders regard themselves as immune from accountability. To make matters worse, the chairman, treasurer and executive vice president not only denied culpability, they portray themselves as heroes.
This reminds us of the fiasco at the Smithsonian Institution where internal policies were not followed by the administration and Congress pressed for change. Even though board members endorsed leadership’s abhorrent behavior, they were promoted to higher positions. They did not do their due diligence and even engaged in a cover up exposed by the press.
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