Leibler and the Claims: Goot responds

July 18, 2010 by J-Wire Staff
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Robert Goot, president of the Executive Council of Australian Jewry and a director of the Claims Conference has responded to an article written by Jerusalem-based Isi Leibler…”Scandals at the Claims Conference”.

Leibler’s article about corruption within the Claims Conference was published last week in The Jerusalem Post and J-Wire.

Goot’s response:

Dear Isi,

As you know I usually agree with the general thrust of your opinion pieces published in the Jerusalem Post, so it is with some regret that I find myself having to disagree with your “Scandal at the Claims Conference” piece published this week, which I read in New York where I was attending the Annual Meeting of the Claims Conference.

As a director of the Claims Conference, I was made aware of the facts of the fraud perpetrated against the organization shortly after they were uncovered last November, through the diligence and competence of Greg Schneider and his staff, using the Claims Conference’s standard operating procedures.

Without in any way wishing to minimize the seriousness of the fraud, I do believe it is necessary to consider the relevant facts and to do so in their proper context, which I regret you failed to do, having made no attempt to ascertain those facts from anyone in the organization.

What is clear is that over a period of time, an organized group of people made application for payment from the Hardship Fund and the Article 2 Fund. Those applications were based on sophisticated falsified identification records, forged by people with detailed knowledge of Claims Conference application procedures.

Importantly, once the fraud was discovered, the Claims Conference leadership and staff took a number of steps, including the following:
· the FBI and the USA Attorney General’s office were immediately notified and their investigation processes commenced;
· all payments from the Hardship Fund were suspended;
· 3 staff were dismissed although at this stage there is no evidence that any of them were involved in any criminal activity;
· a review was undertaken with the assistance of external lawyers, of all applications and the identification documents on which they were based (both in the Hardship Fund and the Article 2 Fund); and
· a Task Force, composed of a highly regarded law partner at Phillips Nizer, the head of the American survivor organization, and the pro bono counsel (himself a Nazi victim), are overseeing all of the actions of the Claims Conference.

ECAJ President Robert Goot

The Claims Conference was expressly restrained by Federal authorities from publicly disclosing the fraud, so as not to impede their investigations. Once permitted to do so, the fact of the fraud was publicly disclosed through a statement issued by the Claims Conference.

Given the follow up initiated by the Claims Conference and the alacrity and professionalism with which those activities were undertaken, it is entirely unsurprising that there was no “major stir throughout the Jewish world”, nor “outrage” expressed against the organization, its staff and leadership. Clearly none was warranted.

By February 2010, the investigations had identified that the fraudulent conduct was isolated to a number of applicants from the Former Soviet Union residing in New York. That information enabled the resumption of payments to be made to survivors from Israel and Germany.
In July 2010, 202 pensions paid from the Article 2 Fund were suspended with the recipients being given 90 days to either repay their pensions or to show cause why their pensions should not be cancelled. Recovery proceedings will be instituted against those who do not repay or who are unable to show cause.

Of course everyone associated with the Claims Conference (Board and staff alike) are outraged at the perpetration of this fraud. After all, these compensation programs are the result of many years of hard fought negotiations, resulting in the distribution of over $4.3 billion.

Now while the fraud is serious and highly regrettable, there is nothing scandalous about it as you assert. Nor is it a case as you assert, of “leaders being brought to task because of the conflicts of interest of board members to retain the benefits for their respective organizations”. That suggestion is frankly outrageous.

Further, months ago and without your prompting, the Claims Conference, through its auditors, KPMG, retained a forensic fraud expert to review the investigation and that is ongoing. The Jewish world can indeed have confidence that adequate and appropriate oversight is being applied.

I note that towards the end of your piece, whilst you were good enough to acknowledge “that there is no suggestion that malfeasance on the part of the directors was involved”, you assert that those same leaders need to brought to task “because of the conflicts of interest of board members to retain the benefits for their respective organizations”. This allegation apart from being wrong, is entirely unworthy of you.

Isi Leibler

You also referred to the March of the Living (MOL) issue. As I understand it, the Claims Conference grant was earmarked for scholarships to students and the Claims Conference confirmed early on, that its moneys were used for that designated purpose. The Claims Conference investigation remains open on this matter, only because our auditor has asked MOL about non-Claims Conference funds, which MOL has yet to answer. Meanwhile all payments or allocations by the Claims Conference to MOL have been suspended. Depending on the MOL response, appropriate action will be taken by the Claims Conference’s auditors.

Finally, the Claims Conference is acutely aware that there are many Holocaust survivors living in abject poverty, but that is not because of “considerable sums continue to be expended by the Claims Conference on causes which lack a genuine relationship with the Holocaust”.

In 2010, the Claims Conference through its highly qualified and competent Allocations Committee, will have approved allocations of $218 million to institutions internationally, comprising $200m for social welfare purposes and $18m (8%) for necessary Shoah education, research and commemoration projects. That ratio has been reduced over the past few years from 20% (and remains under review), as the Claims Conference has increased over recent years the amount allocated for social welfare purposes.

You should know, that the survivor organizations have no unanimous view on what the correct percentage ought to be, and that the matter is the subject of earnest and robust debate each year. There is very little appetite amongst those organizations to eliminate entirely the funding for the education projects. In any event, even if all those education projects were abandoned (which I believe would be an act of gross irresponsibility), the position of the impoverished survivors would at best be improved only marginally.

Perhaps you would like to know why the grants that you criticize, are made. For instance: the grants to the Yiddish Theatre subsidize performances for survivors in old age homes and provides tickets for disabled survivors to attend performances at the theatre; the grant to Hatzola Volunteer Ambulance Services funds the purchase of medical supplies to Brooklyn Hatzola which serves an overwhelming number of survivors. (Hatzola was required by the Claims Conference to validate the numbers of survivors whom it serves); and the grant to Birthright, was made on the condition and for the purpose that every Birthright participant visit one of the main Shoah educational facilities in Israel (such as Yad Vashem, Beit Lohamei Hagetaot, Massua, etc), that the Holocaust educational component last for at least four hours, and that to the extent possible, that a survivor participate in these Shoah educational programs. Prior to the Claims Conference involvement with Birthright, none of this critical education was mandatory.

Isi, out of my great respect for you that I have taken some time to respond to your opinion piece in some detail, because like you I believe in the work of the Claims Conference. However unlike you, 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.

I would like to think that in light of the above and in the Jewish communal interest, you would circulate this response to all those to whom you published your article. In any event, as you would understand, I will be sending this email to our colleagues in the ECAJ, whom I represent at the Claims Conference.

Kindest regards and Shabbath Shalom,

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