Retaliation At Claims Conference?

Shmuel Hollander, a highly respected Israeli public servant for four decades, made headlines in 2013 as ombudsman for the Claims Conference when he issued a stinging internal report, blaming the group for allowing a multimillion-dollar fraud to take place for years — unnoticed — within its New York office.

Now, two years later, as he leaves his post on the eve of the annual Claims Conference meeting here, Hollander has again accused the organization’s leadership of serious mismanagement, and of thwarting his efforts to help Holocaust survivors in their efforts to gain restitution. He also asserts that Claims Conference president Julius Berman told him in a June 3 phone call that his contract was not being renewed as a result of the report he, the ombudsman, wrote in 2013, which was embarrassing to the organization in general and Berman in particular.

In a letter dated June 29 and sent to the 64 members of the board of the Claims Conference, obtained by The Jewish Week, Hollander asserted that in his three-year tenure as ombudsman, which ended June 30, he was repeatedly and deliberately thwarted in his attempts to fulfill the mandates of his post by Berman and executive vice president Greg Schneider. And he said that the federal fraud case he reported in 2013 likely totals far more than the $57 million that has been reported. (Several individuals with knowledge of the case say the number may well be closer to $100 million.)

The ringleader of the group that committed the fraud, a senior Claims Conference official, was imprisoned for processing false applications to the organization.

Hollander, the first appointee to the ombudsman post, wrote that from the outset Schneider “perceived me as a hostile element whose actions must be blocked. Punitive actions towards my office quickly followed. Numerous obstacles were placed in our path, hampering our work. Relevant information was withheld from us, and formal obligations were violated,” all of which “constituted a gross violation of the mandate” that empowers the ombudsman to operate independently within the organization, which represents world Jewry in negotiations with Germany to secure compensation and restitution for survivors of the Holocaust and heirs of victims. Since its founding in 1951 it has negotiated for more than $70 billion in reparations, and distributes more than $700 million a year.

In his first interview about the situation, Hollander told The Jewish Week, “I don’t understand the decision made by Mr. Berman, and I am very hurt and disappointed.” (He was speaking by phone from Jerusalem, where he lives and works.) “Not because I am offended personally, but for the sake of the Holocaust survivors we helped so much.”

He said he turned down a prestigious diplomatic posting to take the Claims Conference job, in part because his parents were Holocaust survivors and he wanted to be of service to that generation and their heirs. The mandate for the ombudsman includes receiving, investigating and resolving complaints from victims and heirs applying for financial assistance. But Hollander was deeply disillusioned by the experience, convinced that those at the top of the organization “wanted only a ‘yes man’ — a fig leaf or a charade of an ombudsman. If this was indeed the goal, I was not the right person for the role,” he wrote.

In response, Berman told The Jewish Week that Hollander’s criticisms are unfounded on every level. “If we wanted to hire someone we could control, we wouldn’t have brought in a person of Hollander’s sterling reputation,” he said. And in regards to the allegation that Hollander’s contract was not extended in revenge for the fraud report he wrote two years ago, Berman noted that Hollander was given an 18-month contract six months after the fraud report was submitted. “Would we engage him so that we could let him go 18 months later?” he asked. “It’s absurd.”

Berman was not specific about why Hollander’s contract was not renewed, emphasizing that as president he avoided direct involvement in the process. He said the decision went through a committee and then was voted on, unanimously, by the group’s leadership council. In a July 1 letter to the board — an effort to counter Hollander’s own salvo to the board two days earlier — Berman implied that cost effectiveness of the ombudsman’s office might have been a factor.

His letter urged board members to wait until the issues could be discussed fully at the July 14-15 meetings here in New York, “including about the actual volume of complaints, worldwide, received by the office of the ombudsman in relation to budget and staff, among other things.”

A key Claims Conference official, who asked to remain anonymous given the sensitivity of the issue, said the budget for the ombudsman’s work, which included salary for Hollander, a full-time legal assistant, a secretary, and rent for a Jerusalem office, was about $500,000 a year and did not warrant the volume of cases handled.

As a new department, requests and queries were slow at first, but have increased significantly each of the three years of operation. It is estimated that the ombudsman’s office dealt with about 500 cases so far this year, a figure that was expected to double by year’s end.

“In the beginning, the phone didn’t ring,” Hollander told The Jewish Week, “but now it doesn’t stop.” He said he resented that Claims Conference leadership was always asking about the number of cases being processed. “It’s not right to analyze these cases in terms of numbers,” he said. “You sometimes have to work a long time to save a life,” in providing for the survivors’ needs. “We’re not a factory that makes TVs or washing machines; we deal with people.”

Hollander said he was never asked to reduce the budget, which he said was $400,000, or to cut his salary, and that he would have done so, given his commitment to help survivors. He feels the Claims Conference leadership is being untruthful about why his contract was not renewed. He attributes it to dissatisfaction with his recommendations about the need for systematic changes in its operations. His letter to the board said “the real problem is not the arbitrary dismissal of the ombudsman, but the manner in which the organization is managed — an area that requires a thorough and dramatic change.”

He noted with pride that he held a number of top Israeli government positions over his four-decade career, serving under six prime ministers, most recently as a senior official for 14 years supervising personnel management of Israel’s entire civil service system. Never before, he said, had he been treated with such disrespect.

A key board member of the Claims Conference who often found himself in the middle between Hollander and the organization’s leadership attributed the problem to both the volume (or lack thereof) of casework handled by the ombudsman’s office and the “bad chemistry” between Hollander and the top brass. He asked not to be named and would not discuss specifics.

Abe Biderman, a member of the leadership council of the Claims Conference, spoke on the record and more bluntly in saying Hollander is “a nice man but the wrong man for the job. He had a different sense of what the job was, and over time it became clear that the role he wanted to play was not the role of ombudsman.” He said Hollander “misinterpreted” the role and saw himself as “the quasi head of the Claims Conference.”

Biderman said “expense was a factor” and that Hollander’s allegations about lack of cooperation were “beyond bizarre.”

Berman In Charge

The Claims Conference (officially the Conference on Jewish Material Claims Against Germany) is no stranger to controversy. Over the years, critics, primarily survivors, have asserted that all funds should go directly to survivors, many of whom are needy, and not fund educational projects related to Holocaust memory.

Isi Leibler, a lay leader of the World Jewish Congress, has been most outspoken in alleging that the Claims Conference lacks oversight and refuses to accept accountability or calls for reform. It was the multimillion-dollar fraud case, which came to light in 2009, that prompted the creation of an ombudsman for the organization and the hiring of Hollander. His report on the case found that in 2001, Berman, then pro bono counsel to the Claims Conference, had received an anonymous letter describing how several Claims Conference employees were stealing millions of dollars through false applications for assistance. Berman did not inform the board or take further action at the time. The issue came to light eight years later and resulted in the FBI arresting 31 people, including 11 former employees of the New York office of the Claims Conference.

The fact that Berman, a New York attorney and prominent Jewish leader who has been president of the organization since 2002, was re-elected to that post immediately after the 2013 Hollander report — despite its calls for sweeping reforms — underscores the impression that he is virtually unchallenged in his leadership role. Several lay board members acknowledged privately that they are too involved with their own professional careers to keep close tabs on or buck the system in general and Berman in particular.

Even members and advocates of the Claims Conference admit that it is less than transparent in some of its dealings, and even some of its strongest critics note that it has accomplished remarkable achievements in negotiating for and helping to disburse tens of billions of dollars for Holocaust victims and their heirs.

Both Hollander and Berman say they held great respect for each other until discovering, to their great surprise, that the other spreads untruths. Hollander, in his exit letter to the board, concluded that “the Claims Conference is an organization that is incapable of hearing criticism regarding its senior management.” Berman told The Jewish Week that he “tried to take the high road” in not publicizing the dispute with Hollander, whom he says is “making a big mistake” by airing his false grievances.

Berman said the Claims Conference is committed to maintaining the position of ombudsman and has appointed a committee to find a new candidate, hopefully in the next 90 days. He did not think it would be difficult to find an independent expert in the field after this controversy.

“My first charge to the committee will be to analyze what we went through and look for lessons to be learned,” he said.

Gary@jewishweek.org