Fraud at the Jewish Claims Conference 'It's Been a Very Ugly Experience'
A lack of transparency, dubious real estate deals and now massive fraud -- the Jewish Claims Conference is no stranger to negative headlines. Now, the German government has stepped in to ensure that Holocaust victims get their due.
Merely being allowed into the headquarters of the Conference on Jewish Material Claims against Germany (JCC) in New York is a fairly rare event. Being granted an audience on the 20th floor with a senior official like Gregory Schneider is even more seldom.
The JCC has always been very secretive. It has never even released figures on the number of staff members who work there. Such opaqueness is highly unusual for such a prominent organization which, since it was established in 1951, has disbursed billions of euros from Germany to Holocaust victims around the world.
But now the Claims Conference has been forced to become more open, at least for the time being. The organization has been shaken by a scandal -- a case of "perverse and pervasive fraud," as US Attorney Preet Bharara described it last week.
For years, a gang of swindlers siphoned off money from two compensation funds by falsifying thousands of applications from presumed victims of Nazi oppression. There are six JCC staff members among the 17 defendants who stand accused of misappropriating a total of $42.5 million (31 million). "It's been a very ugly experience," says Schneider. "We never expected something like that to happen."
This isn't the first time that the JCC has received bad press. The organization has often been the subject of negative headlines in the past, thanks to dubious managers, a lack of transparency and strange business practices. In 2007, for instance, long-standing JCC president Rabbi Israel Singer was forced to resign amid allegations that he had used his position as the secretary-general of the World Jewish Congress to embezzle funds.
Lack of Transparency
Dieter Wiefelspütz, a Social Democrat (SPD) in the German parliament who deals with compensation issues, complains about the organization's lack of transparency. Once, during a visit to New York, he wanted to have a look at the records of the JCC. "I noticed how put off they were that someone wanted information," says Wiefelspütz.
In 2000, the German politician was instrumental in paving the way for former forced laborers to receive compensation. The Claims Conference played a key role here as well. German legislators assigned the JCC the task of organizing the disbursement of payments to the Jewish claimants among the former slave laborers.
Ever since the founding of the organization, the compensation process has always followed the same pattern: Germany makes the money available, the Claims Conference administers it. This has allowed Berlin to avoid the risk of possible conflicts when it comes to recognizing victims' applications.
The same system was used after communist East Germany was dissolved and authorities began the process of returning hundreds of properties in eastern Germany that had belonged to Jews before the Holocaust. In order to avoid years of legal wrangling with potential heirs, the German government set a deadline: All real estate that no one had claimed by the end of 1992 was automatically transferred to the ownership of the Claims Conference. According to the JCC, roughly 1.5 billion flowed into the organization's coffers from the sale of these buildings and properties.
But the auctions weren't always kosher. The JCC's long-standing real estate broker, Michael Siegmund, took a side job in 1998 as a member of the supervisory board of Germany's largest property auction house, Deutsche Grundstücksauktionen AG. The auction house earned money from the sale of nearly every piece of real estate that was transferred to the Claims Conference. It wasn't until 2007 that the organization severed its ties with Siegmund. Even today, the internal inquiry is treated like a state secret.
Irate heirs were not the only ones to complain. Other organizations representing victims accused the JCC of amassing enormous reserves and not transferring the proceeds of the sales exclusively to needy Holocaust survivors. People were particularly outraged in Israel, where a large number of victims live. At the time, former Israeli Minister of Pensioner Affairs Rafi Eitan called the representatives of the JCC "a gang."
And now a swindle involving tens of millions of dollars has emerged. It is, it must be said, to the JCC's credit that they uncovered the scandal themselves -- a staff member noticed two unusual entries. Once the fraud had been revealed, the organization quickly realized that there was "a systemic problem," says Schneider, which was "elaborate" and "complex," and involved a total of 5,600 fraudulent applications. SPIEGEL was able to view a number of these papers and the corresponding original documents.
There is, for example, Anna B., who was supposedly born in Kiev in 1930. Her mother and father are dead and she has no siblings -- at least that's what it says in a document that was issued in Rome in 1978. Without any relatives, the information cannot be checked. The application was accompanied by a short biography, which tells how Anna B. and her family had to flee from the Wehrmacht and how they were attacked by German bombers when they attempted to cross the Dnieper River. It says that they first slept in forests and then went into hiding in a village. A horrible ordeal, but it didn't quite happen that way.
- Part 1: 'It's Been a Very Ugly Experience'
- Part 2: What Next for the JCC?