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Israel Criticizes Jewish Claims Conference

Huge Profits Casts Shadow over Holocaust Survivors Organization

By Christoph Schult and Andreas Wassermann

Part 2: Calls for Greater Transparency

The case of the Jewish department store dynasty Wertheim is also one that has not been resolved to the satisfaction of the victims' heirs. It was presumably the most valuable individual restitution to which the JCC secured the rights after German reunification. The sale of Wertheim properties flushed more than €180 million ($279 million) into the organization's coffers. A Wertheim property on Leipziger Platz in Berlin's Mitte district sold for €75 million ($116 million) in December 2006, and less than half a year later the Karstadt Group, which operates a major department store chain, paid the JCC €88 million ($136 million), primarily as compensation for the Lenné Triangle on Berlin's Potsdamer Platz. Karstadt had sold the property to billionaire Otto Beisheim in 2000. But in 2005, a Berlin court awarded the Wertheim holdings, which the Nazis had Arianized, to the JCC. Roman Haller, who negotiated the deal on behalf of the JCC, was pleased with the outcome. "We are grateful," Haller said, "to be able to contribute in this way to bringing a small measure of justice to the Wertheim heirs."

For Constance Leninger Fischer, who lives in New York and is the granddaughter of company founder Georg Wertheim, the words of the JCC official must have sounded like sheer mockery. In October 2006, the JCC issued a terse and direct decision, in which it stated that Fischer had "absolutely no basis" for any claims against the JCC. The organization refuses to comment on the status of negotiations, merely confirming that "informal talks" with an attorney are underway.

Discretion is one of the JCC's trademarks, and discretion also characterizes its dealings with the German Finance Ministry. Almost unnoticed by the public, the German federal government has paid the JCC well over €100 million ($155 million) in the last six years. The funds represent payments for so-called global settlements, which the German government intends as settlement of individual compensation cases. The first of these deals with the JCC related to synagogues in eastern Germany that were destroyed during the Kristallnacht pogrom in 1938. Berlin paid the JCC €69 million ($110 million).

The JCC paid the Central Council of Jews in Germany €17 million ($26 million) to develop Jewish communities in the eastern part of the country. But the Central Council has no idea what happened to the remaining €52 million. The money, explains Frankfurt JCC representative Heuberger, "was used for various JCC social projects for Holocaust survivors."

Projects supported by the JCC are listed in detail on the organization's Web site. But individual transactions are systematically shielded against outside inspection. When outside auditors request access, they are quickly reminded of the hazardous terrain they are about to enter. When auditors from the Federal Audit Court wanted to investigate the use of money from the JCC's hardship fund for Holocaust survivors, they encountered substantial reservations. The correspondence to address the Audit Court's questions went on for years. In the end, representative Heuberger insists, the JCC "corrected the deficiencies that were found."

In 2006, auditors were mainly interested in an office the Claims Conference maintains in Paris, paid for with German taxpayers' money. The office, which operates on an annual budget of €58,000 ($90,000), derives its funding from the German government's hardship fund for Holocaust victims. According to the JCC, the Paris office will be closed at the end of June.

An internal review of the business practices of Michael Siegmund, who sold real estate on behalf of the JCC for many years, was treated like a state secret. Beginning in 1998, Siegmund worked part-time as a member of the supervisory board of a real estate auction company, Deutsche Grundstücksauktionen AG. The company earned a profit on almost every sale of real estate that had been signed over to the Claims Conference. The organization terminated its relationship with Siegmund, though not until the middle of last year, "to avoid even the potential appearance of a conflict of interest,” JCC controller Jigal Molad writes in a report SPIEGEL has obtained. "The position on the supervisory board was approved by JCC management," says former JCC manager Siegmund.

It was not the first time that real estate deals left a bitter aftertaste. The JCC also had to bear the consequences of a different case, this time involving a businessman in Bad Homburg near Frankfurt. In the 1990s, the businessman, who represented the eastern states of Saxony-Anhalt and Brandenburg, sold the JCC's restitution claims to properties, the return of which the JCC had already applied for, but for which the agencies that handle unresolved property issues had not yet issued a decision. The businessman's idiosyncratic business practices brought in millions for the JCC. But, as internal documents suggest, the JCC employee was also profiting personally.

In November 2003, a real estate buyer from the northwestern city of Münster contacted the JCC office in Frankfurt to complain about the employee. The buyer claimed that he had paid the employee and one of his independent contractors more than €500,000 ($775,000) in commissions to gain access to JCC properties. A short time later the JCC salesperson, who has declined to comment on the charges, was let go.

To this day, it remains unclear exactly how much money the organization earned through the sale of real estate in eastern Germany. Only after coming under heavy criticism did the JCC mention a sum of roughly €1.5 billion ($2.3 billion). In mid-July the organization plans to publish a list of all properties it sold, including the selling prices.

"This is sacred money," says Seev Bielski, the chairman of the Jewish Agency, a Jewish immigration organization, "which is why the Claims Conference, more so than any other public institution, must seek to provide transparency." Bielski hired an outside auditor to determine how large the JCC's reserves are. The report was never made public, and the incident serves as an example of the JCC's enormous influence. The Jewish Agency was one of the recipients of JCC payments. "They threatened to hold back money," Jewish Agency chairman Bielski complains.

SPIEGEL has obtained a copy of the draft version of the audit report. According to the document, the JCC controlled reserves of $780 million (€503 million) in 2005 alone. "There is no reason to hold on to so much money," says Yehuda Bar-Lev, an accountant from Tel Aviv. According to the JCC, these numbers are outdated, but Heuberger admits "that we must take steps to achieve more transparency."

The control committee of the Israeli parliament, the Knesset, will address the issues surrounding the JCC on June 16. "The Claims Conference is no army, and it has no reason to keep anything secret," says committee chairman Sevulun Orlev. The German government has also pricked up its ears. In an informal meeting during an event at Frankfurt's Paulskirche Church to commemorate the 60th anniversary of the Jewish state, the German ambassador in Tel Aviv described to JCC representative Heuberger the devastating criticism his organization faces in Israel.

This does not present a good starting point for Heuberger in his negotiations with the German Finance Ministry on Wednesday. When Israeli journalists asked him about the Claims Conference, Finance Minister Peer Steinbrück said: "I know about the problems."

Translated from the German by Christopher Sultan.