As if the convictions in the $57.3 million (£37.6m) fraud case that was wound up in a Manhattan federal court last week were not enough, it was alleged on Tuesday that top officials at the Conference on Jewish Material Claims Against Germany were warned about the criminal activity nearly a decade before they called in external investigators.
The fraud was perpetrated over two decades and, of the 31 people convicted, 10 were former Claims Conference employees. Semen Domnitser — one of only three to plead not guilty who were on trial last week — was himself the director of the defrauded programmes between 1999 and 2010. It emerged in the trial that Domnitser had helped people falsely apply for funds from two major programmes.
The Forward has now claimed that a whistleblowing letter was seen by senior leaders of the Conference in 2001. The accusations it contained were corroborated by a preliminary internal investigation but further action was deterred by Domnitser until the federal investigation in 2009.
Clearly, the Claims Conference, one of the most important Jewish institutions in the post-Holocaust world, which has disbursed around $70 billion since its foundation in 1951, must now answer some serious questions about its governance and oversight.
The organisation released a statement in the wake of the trial saying that “Deloitte was hired by the German government to review the processing systems for both individual compensation programmes and homecare allocations, identify any potential weaknesses and recommend improvements.”
A “packet of recommendations”, it said, had already been adopted or were in the process of being adopted.
The questions of how the fraud went on undetected for 15 years — and how the warning went unheeded — remain unanswered. As of going to press, Greg Schneider, current executive director and former chief operating officer; Gideon Taylor, then the executive director; and Julius Berman, the chairman of the conference, had not provided any answers.
The Claims Conference has no doubt required a large bureaucracy to achieve its two aims — to secure funds from governments responsible for post-Holocaust compensation and to distribute that money to victims and survivors.
However, the organisation appears to have fallen down in its management of that bureaucracy.
The scale of its achievements is vast. The Conference secured collaboration between a large number of representatives of the institutions of world Jewry, raised money from German governments before and after unification and established myriad programmes to recognise the ways victims suffered.
But it has come under fire in recent years. A former chairman of the board of the WJC, Isi Leibler, has been a voluble critic of the Conference’s lack of independent oversight and recently suggested that the $57.3m fraud might be the tip of an iceberg.
It remains to be seen how the Conference responds to his accusations and how effectively it will be able to clean its own house.