Claims Conference Select Leadership Committee Report

July 7, 2013

Mr Julius Berman Chairman Claims Conference Dear Julie, I hereby inform you that I am resigning as a member of the Select Leadership Committee formed to review the circumstances related to the anonymous letter of 2001. After careful reflection and reconsideration of the matters covered in the report and the circumstances related to its preparation I have concluded that I do not wish to be associated with the report or its findings. I believe that the report is inappropriately perforative, contains material factual errors, and does not take into account the substantial management improvements made subsequent to 2001. In addition the affected parties were not given appropriate due process to react and respond to the factual statements contained therein. Please make sure that my name is not included among the committee members when the report is shared with the Board or released publicly. I am sorry that I could not be of more assistance to you or the Board in this undertaking. Sincerely Abraham Biderman

Julius Berman

Chairman, Claims Conference

July 7, 2013

Dear Julie:

I am in complete agreement with the sentiments expressed in Abraham Biderman’s letter to you concerning his participation in the Select Leadership Committee. As such, I, like Abe feel that I have no alternative but to resign from the Committee, dis-associate myself from the reports and findings and insist that my name not be included among the signatories to any report.

Sincerely,

Roman Kent CC: Reuven Merhav, Abraham Biderman, Robert Goot

Greg Schneider July 7, 2013

1

“Mr. Schneider showed great interest, experience and professionalism towards these programs

under his care, and worked actively towards their expansion.” [Hollander Paper, paragraph 9]

I appreciate those words for, as many know, I am passionate about the work of the Claims

Conference. It is that passion that compels me to answer some of the issues in the two reports

issued recently.

Writing extensively about the past decade or two, I am reminded of both the highs and lows of

working at the Claims Conference. For me, as is easily understood, the recent negotiations over

the past four years have been a high. Since 2009:

The amount of funding negotiated by the Claims Conference from the German

government for homecare (“in home services”) has increased by nearly 700% - it

increased from Euro 30 million per annum in 2009 to over Euro 205 Million from the

German Government for 2015 (as agreed on 23 May 2013).

During the last 4 years every criteria in every one of the compensation program has been

liberalized, including

o Concentration Camp – minimum persecution time to be eligible to receive a

pension was reduced from 6 months to no minimum time;

o Ghetto - minimum persecution time to be eligible to receive a pension was

reduced from 18 months to 3 months;

o Ghetto – the type of ghettos that are eligible for a pension were extended from

only closed ghettos to include open ghettos;

o Hiding and False Identity – the minimum persecution time for eligibility for a

pension was reduced from 18 months to 6 months for those under Nazi

occupation (and to 12 months for those living under the Nazi Axis allies);

o Establishment of the Hardship Fund in the former Soviet Union.

It is anticipated that due to the above liberalizations, and several others, over 110,000 Nazi

victims in the former Soviet Union, Israel and elsewhere, will be paid by the Hardship Fund

during the next 2 – 3 years – more than paid during the entire decade between 1992 and 2002

and more than ten thousand survivors will receive pensions for the first time.

The very kind words of former Deputy Treasury Secretary Stuart Eizenstat in his letter

announcing the latest homecare agreement, about me, remain in my heart: “His dedication and

professionalism are above and beyond what could be expected, and he made it clear throughout

this process that he was absolutely committed to obtaining the funding to which the Finance

Ministry ultimately agreed. Greg’s passion and integrity are well appreciated by our German


2

government interlocutors. The lives of tens of thousands of Holocaust victims will be made

easier in their old age due to Greg’s skill and vision.”

Indeed, I am passionate about the work of the Claims Conference. And, in that context, below

please find my thoughts on the issues raised this week.

For the record, I began my employment with the Claims Conference in 1995. In 2001, my title

was Director of Allocations/Assistant Executive Vice President. I was promoted to Chief

Operating Officer in 2002 and assumed the position of Executive Vice President in 2009.

On May 19, Julius Berman announced the appointment of Reuven Merhav as Chairman of the

Select Leadership Committee with a mandate to “formulate an appropriate course of action for

the Conference with respect to the issues surrounding the 2001 letter.” I understand that the

intention was that someone other than Berman determines if there should be an investigation and

if so, who should perform that investigation. The Merhav Committee, composed of Abraham

Biderman, Robert Goot, and Roman Kent, chose the current Claims Conference Ombudsman,

Shmuel Hollander, to perform an investigation.

However, the process to develop this material was deeply flawed and deprived the relevant

people the opportunity to review and comment. There is not one serious investigative process

which deprives people of such basic rights.

Below, please find a review of five aspects of the Merhav/Goot and Hollander papers in detail:

A. 2001 Letter and Related Events

B. Other Issues in the Hollander paper

C. Merhav/Goot Report

D. Due Process

E. Management Issues and Control Mechanisms

A. 2001 Letter and Related Events

1. Who did the investigation?

Brozik, a Holocaust survivor who passed away in 2004, was the Claims Conference

Representative in Germany. Brozik achieved enormous things for the benefit of the Claims

Conference. It can be said that for what he did to benefit Holocaust survivors, he was a great

man. But, like all of us, he was not infallible. Taken on balance with his accomplishments, his


3

mistakes in this episode do not diminish his overall enormous contributions. Sadly, we no

longer have the benefit of his wisdom in general, nor on this episode in particular. But we must

review the facts that we do have.

Hollander is insistent in his paper that Brozik could not have been responsible for the

investigation of the letter or any control over Domnitser’s professional work.

Dr. Brozik himself must have disagreed. First, when Brozik received the anonymous letter

on June 6, 2001, he ordered his own investigation in his office under his jurisdiction. He did

NOT send it to New York office with a note saying “As I have no jurisdiction in matters

pertaining to New York, please see the attached and handle as you see fit.” On the contrary, he

started to investigate in his own office.

Hollander maintains that “… Dr. Brozik had no authority, or indeed ability, to intervene in

the affairs of the New York office, and certainly not as they related to Mr. Domnitser. Indeed,

we were told that Mr. Taylor was careful to maintain the hierarchical structure of the

organization…” Again, Dr. Brozik’s actions, as reported in the Hollander paper, directly

undermine Hollander’s conclusion. Brozik, having received his internal German office staff

report, wrote to Domnitser directly -- not to Taylor -- and then instructed Domnitser to reply to

him: “I would therefore appreciate it if you could let me know your opinion on the whole issue

as soon as possible.” (Brozik letter to Domnitser, June 21, 2001). If Brozik felt bound by the

“hierarchical structure” under which he had no authority over Domnitser, he would not have

written directly to Domnitser but rather to his own boss, Taylor, and he certainly would not

have been in a position to tell Domnitser to reply directly to him, ASAP. If Brozik did not feel

that he had the authority, he could have even written that Domnitser should provide an

explanation to Taylor, or to Kagan, or not specify. But he didn’t. He specifically told

Domnitser to reply to him.

Second, if Brozik felt that this was a New York matter to handle and that he did not have

authority, he would not have submitted the document in German. Brozik knew well that Taylor

did not speak German. Documents, and there were many and many of great length, that Brozik

did want Taylor to review were sent in English so that his boss could address them.1 In this

crucial case, however, Brozik did not do that. He sent the document in German, knowing that

Domnitser could cope with the German and fully understanding that he, Brozik, not Taylor, was

1 In fact, Dr. Brozik employed a professional translator to translate documents needed by the New York office.


4

the person driving this process. (Hollander recognizes in his report that the chart prepared by

Gafsi – that was critical to understanding the accusations – was only translated from German to

English by the New York office in 2010.)2

Third, Domnitser responded directly to Brozik on the same day. He didn’t say anything to

the effect that you, Brozik, are not responsible for this issue. Again, nothing in the Domnitser

response suggests that Brozik is not responsible for the matter or that Brozik does not have the

authority to demand an answer.

Fourth, Taylor and Kagan were copied on the letter from Brozik to Domnitser. Until

receiving a copy of the letter, there is no indication that Brozik even informed Taylor or Kagan

of the existence of the letter. He received the anonymous letter, met with his senior staff,

Deidrich, decided to initiate an investigation in his office, assigned that investigation to Gafsi,

received her report and then wrote to Domnitser and demanded an answer be returned to him

directly. All of that happened without even informing or consulting Taylor or Kagan. But still,

Hollander insists that Brozik “did not have any ability to intervene in the affairs of New York.”

Fifth, neither Taylor nor Kagan informed Brozik that he was out of line. Given the

portrayal of the Hollander report saying that Taylor “accorded the New York office status as the

parent branch to which all others were held accountable,” [HP, p. 23] one might assume that

Taylor would have written to Brozik to say that he was improperly taking over the investigation

and that it was not in the jurisdiction of Brozik. No such memo exists because it was clear that

Brozik was, in fact, responsible for this investigation.

Sixth, having received Domnitser’s answer, Brozik continued his investigation. He did not

inform the New York office that the investigation should be taken up there; rather, he gave the

Domnitser response back to his own staff person in Germany and asked her to review

Domnitser’s answer.

Finally, Hollander says that the anonymous letter was clearly from an insider, “The Letter

was almost certainly written by an internal source familiar with those involved, the details of

the relevant files, and in all likelihood, the fraudulent methods used.” [HP, p.34] Wouldn’t it

stand to reason that an insider would know the hierarchy and would be familiar with the roles of

the respective senior management and offices? The insider obviously also disagreed with

2 In 2010, in conjunction with the internal Claims Conference staff investigation, Karen Heilig discovered the

documents. She arranged, for the first time, for their translation into English.


5

Hollander’s assertion that Brozik would have no authority over Domnitser or he or she would

not have sent it to him.

The plain fact is that Brozik, while clearly not a manager in New York, was the second most

senior staff member of the Claims Conference worldwide and certainly the most respected and

knowledgeable about the Article 2 Fund.3 Brozik knew and behaved that way, the anonymous

tipster insider knew and behaved that way, Domnitser knew and behaved that way, and

Taylor/Kagan knew and behaved that way.

2. Specifics of the Investigation of the 2001 Letter

a. Moscow Red Cross research

Brozik, having received the tip-off letter, called his staff member, Gafsi, into his

office and assigned her the task of investigating the letter. “Mrs. Gafsi was given a

copy of the Letter, with instructions to examine the files mentioned in the letter and

their contents. She was not asked to conduct any additional investigation beyond

that of the files themselves, nor was she asked to enact any of the measures

recommended in the Letter.” [HP, p. 39]

Why didn’t Brozik tell her to “enact any of the measures recommended in the

Letter”? The anonymous tip-off letter states: “You can check for yourself…” and

“The following cases can be easily checked and proved non-eligible if you asked for

original/authentic documents and not copies…” and even “If you request this

information from the Red Cross again you will see the real document, not the one

included in her case.” (Anonymous tip-off letter, June 6, 2001) To this day, I cannot

fathom why Brozik, who was clearly directing the investigation and spent

considerable time on it, did not do that.

Even after receiving Domnitser’s response, Brozik had Gafsi investigate further:

“Ms. Gafsi’s notes asserted that the principal accusations presented in the Letter had

been left unanswered, and that it would be prudent to conduct a more extensive

examination of the files. As noted, Ms. Gafsi recorded her notes in the body of Mr.

3 As an example, virtually every gathering of senior staff regarding the administration of the Article 2 and Hardship

Funds prior to the meeting in May 2002 had been held in Frankfurt and the minutes that were distributed after the

meeting were usually in German.


6

Domnitser’s letter and forwarded them to Dr. Brozik.” [HP, p. 48] Even in light of

that, Brozik did not instruct Gafsi to write to the Red Cross archive.

b. Sending Letter to Main Suspect

After Gafsi prepared the chart indicating that there appeared, to her, to be serious

irregularities, Brozik forwarded the letter to Domnitser, the very person accused in

the letter. In my opinion that was a mistake. When confronted with far less

incriminating evidence in 2009, I took the following steps: (i) informed my boss,

Julius Berman, (ii) brought in outside investigators, (iii) informed federal authorities,

and, (iv) conducted a covert internal investigation, in conjunction with federal

authorities, which lasted for months.4 The reasons for this are manifold, as I learned

from working closely with law enforcement official, including: (i) securing

documents as tipping off the alleged perpetrator allows time for them to destroy and

alter documents, (ii) preventing flight, (iii) minimizing chances of intimidation of

potential witnesses, and (iv) giving the investigator time to unearth the truth without

interference from alleged perpetrator. In our 2009 investigation, each of these items

occurred and had we not conducted ourselves as we had, the investigation by the

Claims Conference staff, Proskauer, and the FBI would have been hampered. So, I

can only conclude that writing to Domnitser as Brozik did was a mistake.

Rather than acknowledge that it was a mistake by Brozik, Hollander states,

“However, since Ms. Diedrich refused to speak with us and Dr. Brozik is no longer

alive, we have no first hand source to inform us…why they forwarded the Letter to

Mr. Domnitser (the main suspect), rather than to a more senior figure at the

organization who could perform an independent investigation. We can only assume

that this was due to the fact that, as mentioned above, Mr. Domnitser had no real

acting superior…” [HP, p. 35]5 Even if Brozik didn’t know who Domnitser’s

superior was, he well knew who his own superior was. Why didn’t he send it to

4 While not forcing the Claims Conference, the FBI did make it clear that keeping the events unknown would be

beneficial in their investigation. As such, the staff set up an alternate location to review hundreds of cases and

pursue leads to unearth the complex web of how the fraud was being perpetrated and ultimately to discover who was

involved.

5 Hollander’s main assertion is that Domnitser was unsupervised. Hollander is completely wrong and I will deal

with this issue later in this paper under section (E). Management Issues and Control Mechanisms.


7

Taylor? Hollander goes to great lengths to portray the relationship between Taylor

(and myself as well) and Brozik as fractured. “… it would appear that upon Mr.

Taylor’s assuming his position, replacing Mr. Saul Kagan (with whom Dr. Brozik

had been on good terms), a heightened degree of distance (to put it mildly),

stemming in part from disparities in language and attitude, was established between

Mr. Brozik and the New York office.” [HP, p. 24] I am shocked at the dramatic

nature of the statement which certainly does not characterize a relationship of mutual

respect and accomplishment.6 Even taking Hollander’s version as true -- which it is

not -- why didn’t Brozik send it to Kagan instead of Domnitser? By Hollander’s

own words, Brozik had a good relationship with Kagan and although he was no

longer Executive Vice President, he was a full-time employee who came to the

office every day. Why didn’t Brozik send the letter and research that his office

compiled to Rabbi Miller, who was then Chairman, or to the Chairman of the

Executive Committee, or to the Chairman of the Audit Committee, or to the

Chairman of the Control Committee or to Avraham Melamed, the General

Controller, etc.?

Brozik’s decision not to take any of these steps has nothing to do with anyone in the

New York office.

3. Frankfurt Files

Hollander goes out of his way to praise the organization of the files in the Frankfurt

office. He makes note of it, writing: “… records of various correspondences, all

kept in excellent and accurate order, which were left behind by Dr. Brozik.” [HP, p.

25]. Hollander makes a point of saying it again seven pages later: “In addition, the

well-organized and meticulous documents and files presented to us, left behind by

the late Dr. Brozik…” [HP, p. 60]

Unfortunately, the so-called unusually perfect nature of the Frankfurt files is belied

by the facts.

Taylor says that he sent the Tan Report7 to Brozik to follow-up. This seems

6 I shall deal with this issue in (B). Other Issues in the Hollander Paper as well.

7 The Tan Report was the investigation done at the behest of Julius Berman, then Claims Conference pro bono

Counsel.


8

consistent with what we know so far, that is, that all of the investigation was based

in Germany, under the direction of Brozik. However, the Tan Report was not found

in the Frankfurt office files. Hollander uses the lack of documentation of the Tan

Report in the Frankfurt office as grounds to imply that Taylor’s memory is not

accurate. “… the well organized and meticulous documents and files presented to

us, left behind by the late Dr. Brozik, do not include a draft of the [Tan] Report, or

any further correspondence on this matter. Moreover, those who worked with Dr.

Brozik in the Frankfurt office at the time of the affair and who testified8 before us,

claimed that the [Tan] Report was never received in Frankfurt.” [HP, p. 16]

“Although we cannot determine unequivocally what happened to the Report, given

the evidential material before us, we find it more reasonable to surmise that it was

never seen by Dr. Brozik.” [HP, p. 61]

Hollander has missed some key facts.

a. Shredding of Documents

A significant amount of material from the Frankfurt files was shredded in

2008, which was several years after Brozik’s death in 2004.9 Brozik sat together

with the Head of the Logistical Center, Ms. Hannelore Diedrich in 2001,

discussing the letter when it first arrived and together they met with Gafsi to

instruct her to investigate. Mrs. Diedrich was the second in command under

Brozik to deal with these issues. She retired from the Claims Conference in

2008 and spent days (in fact, we were informed that it was over the course of

two weeks) in the office before her departure shredding documents. Depending

on what documents were shredded, it could be a violation of the Claims

Conference policy. We can’t know because we don’t know what documents

were shredded. In fact, while she was doing this for two weeks, nobody from the

8 I note for the record that I would not characterize my casual conversation with Hollander as having “testified.” I

can’t speak for the others. Ironically, even when I testified at the trial, there was opportunity for cross-examination,

that is, allowing both parties an opportunity to get at the truth, which I note though several people are accused of all

type of acts, we were deprived in this Hollander paper.

9 Among the dozens of guidelines governing the policies and procedures of the Claims Conference is a document

retention policy. We have no indication that Hollander reviewed any of the relevant procedures as none are

referenced in his paper.


9

Frankfurt office informed anybody outside Frankfurt that this was going on.

This mass shredding of Frankfurt files was only revealed by the Frankfurt office

during the investigation in 2010. Hollander “surmises that it [Tan report] was

never seen by Dr. Brozik” based on two facts: (i) “the well-organized and

meticulous documents and files presented to us, and left behind by the late Dr.

Brozik…” and (ii) that Frankfurt staff “claimed that the [Tan] Report was never

received in Frankfurt.” Diedrich was the most senior person dealing with Brozik

on this issue, she shredded massive amounts of documents in 2008 and she

refused to speak to Hollander.

b. Convenient Use of Lack of Documents

In fact, in reading the Hollander paper, it appears that there are two places in

which documents are noted for not being in the Frankfurt files. Firstly, as noted

above, and secondly, noted in the absence of Brozik following up on the second

Gafsi investigation (that is, the notes she made in which she expressed

skepticism about Domnitser’s response to Brozik).

In the first instance, the lack of documentation leads Hollander to surmise that

the transfer of information did not occur; that is, if it is not in the files, it

probably didn’t happen.

However, after Gafsi made notes in the margins, which suggests that she isn’t

convinced by Domnitser’s answers, she explained her concerns to Brozik.

Hollander writes, “We found no evidence that Dr. Brozik passed on Ms. Gafsi’s

notes (in response to the Domnitser explanations), although he probably realized

at that stage that Domnitser’s answers were not satisfactory… Perhaps due to the

findings of the Frankfurt office…” [HP, p. 50] Tellingly, in this case, the lack of

documentation that Brozik passed on any of Gafsi’s concerns is not used “to

surmise” that he didn’t. Rather, despite any lack of evidence, document, or as

Hollander calls it “testimony” they speculate that Brozik did pass along the

information. If the files are as meticulous as Hollander offers, one would have

expected to find a summary of Gafsi’s findings being sent to Taylor or Berman

or somebody.


10

4. Follow-Up

It is unimaginable to Hollander – or at least not mentioned even as a possibility –

that Taylor entrusted the entire investigation to Brozik as he was the most senior and

knowledgeable person on the Article 2 Fund. In 2009, when we investigated the fraud,

we had a significant amount of research done by our Frankfurt office. We didn’t know

who in the New York office was complicit and for good governance we had people from

another office review cases. That may well be among the motivations of Taylor to keep

the investigation based in Frankfurt.

5. NY Staff Meeting – Why is the date important?

The Hollander paper [HP, p.59] describes a meeting between the head of the

Logistical Center, Deidrich, and Domnitser that took place in New York. However, the

report does not include the single most critical element - the date of that meeting. It

took place, in May 2002, after the Tan report September 2001. The exchange was

expressly about the cases in the 2001 letter, as noted in the testimony10

provided to the

court. Therefore, it is absolutely clear that the Logistical Center in Frankfurt

was responsible for dealing with the follow-up of the cases in the 2001 letter and was

doing this in May 2002. Unfortunately Deidrich, the head of the Logistical Center did

not apparently, after that unsuccessful meeting, pursue the matter further with any senior

staff.11

6. Role of the Logistical Center

Hollander states “over the course of our investigation we came to understand…

the Logistical Center did not have any authority to intervene in the discretion of

supervisors or the directors of the department.” [HP, p.58] That would be a compelling

argument as to why the Frankfurt office was not handling the investigation. However, it

is simply not accurate. In fact, Kerstin Schlueter, the current head of the Logistical

Center, testified to such in the trial. Numerous emails can be produced to verify this

issue, especially from the Tel Aviv office concerning the Logistical Center.

10

In this case, the use of testimony is correct in that it was under sworn oath.

11 It should be noted that although Diedrich had this conversation with Domnitser in New York, in the presence of

Schlueter, neither Diedrich or Schlueter ever mentioned anything of the matter to any other senior manager

including Heilig or myself. Both Heilig and I participated in the overall meetings but were not present for this

specific exchange.


11

7. What did I know?

From Hollander’s report, it should be clear that I never saw the anonymous tip-

off letter or Brozik’s request to Domnitser to address the issues. The one, and only item,

I was copied on was Domnitser’s answer(s)12

to Brozik. As Hollander admits, “… Mr.

Domnitser divided Ms. Gafsi’s table (which had been composed in German) into

sections. His reply, in English, appears immediately after each section, so that a reader

who does not understand German, will find it difficult to determine whether his remarks

constitute a substantive response to the accusations (which, as noted, appear in German),

or not.” [HP, p.46] For the sake of clarity, I do not understand German. Even on that

one document, the context should be clear. Domnitser sent it to Brozik and copied

Taylor and Kagan, aside from me. All three of those people were senior to me.

Naturally, I had no knowledge and never saw Gafsi’s comments to Domnitser’s reply or

the Tan report. Ultimately, Hollander concludes, “It seems that Mr. Schneider, aside

from having been copied on some correspondence but not all of the correspondence, did

not play an active role in the handling of this issue.” [HP, p.49] It is also correct that I

have no memory of the documents on which I was copied and never saw the others until

our investigation in 2010.

8. Lessons

The plain truth is that there is one person to blame: the convicted criminal.

Domnitser stood trial, was convicted and will go to prison. All the main players –

Brozik, Taylor, Kagan, and Berman all missed it. And, I am sure that each regrets it.

But, people are fallible. Domnitser was a good and convincing liar. Not everything he

wrote in his letter to Brozik was false. Further, he buttressed his credibility by taking

responsibility for the one of the five cases. It was a clever ploy and it worked.

B. Other Issues in the Hollander Paper

1. Blame the staff

The Hollander paper seems to go to great lengths to blame the New York

staff, which I find perplexing and inexcusable. A total of two and a half

hours, on what I understood to be about the 2001 letter, is not sufficient time

12

There were two faxes to Brozik but only one of substance. I was copied on both.


12

to discuss the management and control issues of over a decade. Woefully

inadequate time was spent with me discussing the issues of what the paper

calls “managerial culture and control systems.” I have since learned that the

total interview time with each of Karen Heilig and Gideon Taylor was less

than one hour. Obviously, most of the time was spent on the specific 2001

letter events. So, reasonably one could not draw conclusions. Yet, the paper

does. In fact, that is the main conclusion which is repeated over and over

again. To rebut these sweeping allegations which were based upon one

person’s impressions as opposed to the facts, please see section E.

Before I get there, let me review some of the other problems with the

Hollander paper:

2. Controlling or Hands off?

The Hollander paper seems to present differing, in fact, conflicting

descriptions with regard to me. One view portrays me as a control freak,

whose “centralization” prevents proper control systems. Referring to the

Article and Hardship Funds, Hollander writes “…as with all the other

domestic matters, continuing to be held by Mr. Schneider in a centralized

manner.” [HP, p. 21] Later, he again states that the organization was

“characterized by unreasonable levels of centralization.” [HP, p. 71] At the

same time, however, the Hollander paper writes, referring to Schneider,

“…the area of the organization’s personal programs did not effectively benefit

from his hands-on management.” [HP, p. 20] It was quite a trick for me to be

simultaneously centralized /controlling and hands-off.

3. Organizational Chart

The one and only piece of evidence seemed to be presented to support the

allegations that there was no supervision of Domnitser is the fact that an

organizational chart from 2001 was not available. I don’t think it

unreasonable that organizational charts are not available after 12 years. Even

bank, financial and tax records are required to be kept for 7 years. This is

almost twice as long. Interestingly, the information about the New York

office organizational structure 12 years ago “emerged from the interviews we


13

[Hollander and his assistant] conducted with various individuals in Frankfurt

and Tel Aviv.” [HP, p.16] Again, wouldn’t Heilig, Taylor and Schneider be

the best sources? Or, perhaps, some lay leaders who served on the Personnel

Committee?

4. Alert to Mr. Domnitser’s Superiors

“It hardly needs to be explained that Mr. Domnitser’s partial and inadequate

replies, coupled with Ms. Gafsi’s comments and Mr. Tan’s opinions should, at

the very least, have served as an alert to Mr. Domnitser’s superiors, had

anyone been functioning in this capacity. However… these signs did not

receive attention or instigate action. Accordingly, the fraud continued – and

was perhaps even expanded – for eight years after the receipt of the Letter and

the ‘investigation’ of its most serious allegations.” [HP, p.56]

It is obvious that those who did know about the letter ultimately were

hoodwinked by the criminal. They believed Domnitser. But the paper itself

makes clear that Heilig, who was Domnitser’s direct supervisor, was not

involved in the 2001 letter incident. “In 2001, Ms. Karen Heilig served as the

legal advisor to Mr. Taylor in matters regarding negotiations. At the time

when the Letter was received, she did not have any involvement in its contents

or its handling.” [HP, p. 27] I, who by virtue of the fact that in 2002 -- after

the letter incident -- was Chief Operating Officer had also not seen the letter.

Hollander states, “We could not find any written evidence that Mr. Schneider

received the Letter at this point…” [HP, p. 43] In fact, that sentence to be

accurate should read, “at any point.” Further, neither of us had seen or even

knew of the existence of Ms. Gafsi’s comments to Domnitser’s reply and

neither of us had seen or knew about the existence of the Tan Report. Thus,

Hollander concludes, wholly illogically, that letters, comments and reports

that we did not know existed did not “receive attention or instigate action.”

5. Unseemly Characterization

The paper details that “Brozik did not spare his criticism of Mr. Taylor and

Mr. Schneider.” And, further goes on to point out that “…it would appear that

upon Mr. Taylor’s assuming his position, replacing Mr. Saul Kagan (with

whom Dr, Brozik had been on good terms), a heightened degree of distance


14

(to put it mildly), stemming in part from in language and attitude, was

established between Mr. Brozik and the New York office.” [HP, p.24]

The relationship between Brozik and Taylor (or even for that matter to a much

less extent between me and Brozik)13

is not a proper scope of this inquiry and

I will not address what is written or what I believe to be a mis-

characterization. What is relevant is that for the five years that Brozik and

Taylor worked together, they achieved great things for the Jewish people and

Holocaust survivors.

6. Basic facts

Several basic facts in the Hollander paper are wrong. While not going to core

of the issues, they highlight the limited time and ability to master even the

fundamentals, to say nothing of the key complicated issues.

“During the course of the FBI investigation, it emerged that in 2001, an

anonymous letter…” [HP, p. 2] The FBI was not involved with the

discovery of the letter. The CC staff, in its unearthing of the fraud, found

the letter on our own. In turn, we brought it to the attention of the FBI. It

is important to note that there was no subpoena on the CC at the time. It

was the totally voluntary and consistent with the tremendous efforts of the

CC staff in 2009-2013 in dealing with these matters, that the letter was

found and given to the FBI.

13

As for me, I did not have a significant amount of interaction with Brozik. The one major disagreement I

had with him was about the issue of computerization. Brozik was adamantly against it. Beginning with the

slave labor program, I insisted on computerization. Even before the negotiations were completed, we were

building systems so that we could be up and running a soon as funds were available. In contrast to how

programs were managed up until that point and previous to my involvement. Subsequently, with the other

funds, including Article 2 and Hardship Funds, I felt that the process must be computerized, with a

database which among things, would allow for tracking productivity, monitoring statistics and maintaining

complete transparency and records for an audit trail. Ironically, the Hollander paper does credit the

computerization with leading to the exposure to the fraud in 2009, which is partially accurate.


15

The description in paragraph 10 does not even mention the Swiss Banks

Settlement. The Claims Conference was responsible for distribution under

five classes within the settlement.

“…during this period, discussions and final decision making relating to

the establishment of the CEEF program took place…” [HP, p.11] This is

also not true. The agreement with the German Government for the

establishment of the CEEF was from 1998 and implemented by the

Frankfurt office soon thereafter.

“It may be noted in brief, that the audit conducted by the CPAs was an

accounting and bookkeeping audit – which is not relevant for our

programs.” [HP, p. 78] CPA audits contained review of specific randomly

chosen (by the auditors) individual Hardship and Article 2 files in New

York. The issue of audits never came up in any conversation with

Hollander.

Paragraph 80 “…in doing so, they performed their natural and obvious

duty.” The USAO does not think it was obvious as they called the

cooperation of the Claims Conference extraordinary.

C. Merhav/Goot Report

1. In the Select Leadership Report, page 8, under the heading “Was there a

Cover-Up?” the report states: “Indeed, the formal charge (complaint) issued

by the court in those proceedings in November 2010, refers (in paragraph

108), to the Letter and Mr. Domnitser’s responses to it. Whilst that complaint

was apparently given to the two lawyer members (since deceased) of the

Taskforce established by the Claims Conference in the wake of the fraud, it is

not known whether their attention was directed to paragraph 108.”

This comment is outrageous given the fact that neither the Ombudsman nor

any member of the Select Leadership Committee ever asked me if their

attention was, in fact, drawn to the existence of the letter or paragraph 108.


16

The report continues: “However, it was not given to the third member of that

Task Force, Mr. Roman Kent, nor otherwise disclosed to him.” That is false.

Kent was given the document. Again, I was never asked about it.

Nor was I asked which, if any, other Board and/or committee members were

sent the complaint.

Yet, it continues: “We surmise that the members of the Task Force were not

directly aware of the Letter, nor of the Report.” Again, false. Had I ever been

asked, I would have told them. To make the issue even more galling, the

information that two of the three members of the Task Force were sent the

complaint, I have since discovered, was received in an email from Karen

Heilig. Karen, given what she knew and remembered answered as best she

could. However, she did not know what information I had given to whom or

what information I had discussed. Precisely for that reason, she continued in

her email to say that, “You should also speak to Greg and ask if he gave or

discussed the letters with Sheldon or Fritz.”

Yes, they should have.

2. The concluding sentence of that section, “Was there a Cover Up?” of the

Select Leadership Committee Report states, “The failures were in fact much

more prosaic – part of the litany of lack of diligence, competence, and

judgment that, as the Ombudsman has shown, characterized this event

throughout.”

I don’t know what event is being referred to. However, as it appears in the

section related to the events post-2009, I vehemently object to this language

and accusation. First, the Ombudsman’s report did not comment on post-2009

events and therefore nothing relevant to the topic has been shown by the

Ombudsman. Second, I have been at the forefront of the efforts since our

discovery in November 2009. Nothing – not one thing - about those efforts

can be characterized as lacking diligence, competence, or judgment. Indeed,

quite the contrary has been true.


17

D. Due Process

On July 4, I wrote to Merhav and the then Select Committee members to protest the

outrageous breach of due process. In part, I wrote:

On the evening of July 2, 2013, I received a copy of the Report of the Select

Leadership Committee and the Ombudsman Report, both of which were

dated July 2, 2013.

I received the two reports via email from Robert Goot at 6:31 pm. The

email was a forward of an email from Goot to you, Reuven, with the

following text: “As discussed the documentation is now ready to submit to

the Chairman of the Claims Conference.” In no direct communication to me

was it mentioned that as a matter of common courtesy or professional

ethics would a draft copy of the reports be sent to me for review and

comment to be taken into consideration before the reports were finalized.

For the record to be clear, I had requested during a meeting with you and

Robert Goot, on June 26, that the parties named in the report be given such

an opportunity as is standard practice in the Western world. I was refused

by the two of you for almost all of the conversation, although as a final

comment, Robert did say that there were two options: named parties being

given the opportunity to view the report before its release to the Board and

named parties being given the opportunity to comment which would then

be taken under consideration before the report was finalized. You left it

with me that you would consider those two options. To date, neither of you

has gotten back to me - no member of the Select Leadership Committee or

Office of the Ombudsman has.

Having not heard from either of you for nearly a week, on July 2, 2013,

Karen Heilig wrote a letter to you, copying the committee members,

articulating her position that named parties are entitled to an opportunity

to comment on reports of inquiry and have those comments reviewed by

the authors. (Appendix 1) Three hours later, she received an email, a copy

of which was sent to me, from you informing her that the Select Leadership

Committee had decided that “4 CC persons” would get a copy of the report

and that she should have received it sometime after “around noontime IL”,

which I take to mean at 5 am eastern standard time. She immediately

responded that she had not received any material – although it was at that

point 12 hours after you said she was to have gotten it.


18

At no time was any transmittal letter sent to me. At no time was I informed

if I would be given the right to comment. At no time was I informed that if I

did comment it would be taken into consideration before a final version was

composed. At no time was I asked to send any comments. At no time was I

asked to comply within a specific timeframe. The only correspondence that

I have is a cc from the email mentioned above from you to Karen in which

you write, “the SLC had agreed that 4 CC persons will get the Ombudsman’s

report immediately after its completion…”

When I eventually did receive the reports from Robert, without any

transmittal note, I forwarded the reports to several people as Robert

requested on the phone. To this day, I do not know who the “4 CC persons”

are. I had assumed that the four were myself, Karen Heilig, Julia Gafsi and

Kerstin Schlueter; however, I would have no way of knowing and have not

confirmed that each has received the report.

Having now had 48 hours to go through the two reports of a combined 31

pages, I am informing you that the reports contain errors, omissions, false

assumptions, unsubstantiated allegations, and are defamatory in nature.

Given the scope of the report, the extensive nature of the problems therein,

and the extremely damaging nature of its contents as written, I must insist

that I, and others named in the report, be given adequate time to draft

comments for submission to the Ombudsman and the Committee and that

those comments be reviewed before a final report can be issued.

My letter was answered by Merhav and, in fairness to him, I attach the text as Appendix

2. However, I am left shocked by this process. The two reports were sent to me and, via

me, to three others on July 2.

Merhav writes, as attributed to Hollander:

Whenever we found contradicting testimonies or evidence to a fact claimed by someone interviewed by us, we gave him or her the chance to confront with it and to submit any explanation or additional evidence to prove his or her claim. To the best of our belief, there is no fact stated in our report that a person who might feel offended didn't have a chance to comment on it prior to finalization of the report.

That is simply false. I, for instance, did not see the report before July 2. Nor did I

speak to Hollander between meeting with him in New York and July 2.


19

E. Management Issues and Control Mechanisms

Throughout the Ombudsman’s Report, there are many references to the fact that the mandate

of the Ombudsman was the 2001 letter and surrounding events. “The mandate to which the

Ombudsman adheres restricted our examination of these matters to an investigation of the

manner in which the Letter and the Report were handled.” [HP, P. 6]. That was my

understanding when being interviewed by the Ombudsman and it was in that context that I spoke

openly and freely. I am therefore shocked to discover that much of the report (certainly

paragraphs 71 – 83 and various references to the alleged conclusions in those paragraphs

throughout the document) relates to issues clearly outside of their mandate. Indeed, they

acknowledge the point: “As noted, this subject does not fall within our mandate...” [HP, P. 71]. I

met with the Ombudsman for a total of approximately 2.5 hours. In that time, most of the

conversation was about the relevant issue: the 2001 letter and related events. Very little time

was devoted to general administrative issues over two decades and certainly it was understood by

me to be anecdotal as it was about items outside of his mandate. The administrative issues are

ones on which I have spent hundreds and hundreds of hours over the past four years with internal

staff and experts and consultants from several organizations, including but not limited to FBI,

USAO, KPMG, Accenture, Deloitte and the German Finance Ministry. (I know well that it has

been said that Deloitte was looking proactively to tighten controls and that FBI/USAO were

looking to investigate and prosecute a crime, etc; however, I, and a team of Claims Conference

staff, have worked with each of agencies and it is clear that the topics –outside of the mandate

but still mentioned by the Ombudsman – were reviewed by these agencies as well, in fact, far

more extensively– and with different conclusions. Why? Because proper time, focus and work

were devoted. The issues are complex to begin with but compounded by the fact that we are

talking about offices on three continents and over a span of two decades, it is incomprehensible

to me that anyone could expect serious analysis from a few hours with me and a one-day stop-

over in Frankfurt. Yet, even though it is (i) outside the mandate and (ii) woefully inadequately

reviewed, sweeping generalizations are made throughout the document. Had I known that

‘managerial culture’ and ‘control systems’ were topics for this report, I would have prepared


20

entirely differently – indeed, I would have prepared. There is significant amount of

documentation and information that would have been conveyed.

During the few hours and even fewer emails and calls with the Ombudsman, I provided

the following documentation: one memo from January 2002 appointing me as COO, minutes

from Executive and Control meetings in 2001, and a 2001 annual report. Few people in New

York spoke to the Ombudsman who could have shed light on administrative issues over the past

two decades. Having checked with Heilig and Taylor, I can affirmatively say that the subject of

‘control systems’ and ‘managerial culture’ could not have been a topic of discussion, between

the three of us combined and Hollander, for more than a total of 30 minutes. Further, not one

document was given on either topic. Yet, there is page after page of “findings.” I simply cannot

accept this rush to judgment.

There was no examination in the report on the control systems that were in place

throughout this period – the role of the General Controller, the role of the Control Committee,

the role of the German Government, etc. Nor is there any review of the extensive changes since

2001 as the scale of the organization expanded.

There were a series of ongoing administrative and technical changes throughout the

Claims Conference from 2002 onwards. These have been expanded and accelerated during the

last four years due to the change in circumstance and activities of the Claims Conference.

There was not even one example in order to be able to refute the charge but, again, as in

previous sections of this paper, even Hollander’s own report belies his assertions. The allegation

is clear: “…Mr. Domnitser effectively continued to function without any substantive supervision

from above.” [HP, p. 73] and “None of these directors supervised, examined and/or audited the

work of the department … [HP, p.67] and “Mr. Domnitser continued to treat the department as

his own domain, without any real superior and without any interference.” [HP, p. 66] and so on

and so on. However, there is on line that ought to give pause: “…until 2007 when the

computerization began…” [HP, p.63] It is clear that someone who has never built, tested, and

launched a massive database and processing computer system, with hundreds of users and even

more functionalities, would have no idea that such a process is an enormous effort and requires

years. I count Hollander among those who has no idea. The transition from paper files to

database for Hardship Fund and subsequently Article 2 Fund was a multi-year challenge – a


21

challenge which ended with going live in 2007. Thus, for the years prior, we were working

diligently in the areas of Hardship and Article 2 Funds. I am proud to have been the main

conceptual architect and driving force behind the project. And, as I have pointed out earlier,

accomplishing that task was against the wishes of many people named in this paper, including

Brozik, Gafsi, Shlueter and Domnitser. It would not have been possible for me, or anyone, to

have achieved that progress without being involved in the details of the funds, their

administration and working extremely closely with funds managers such as Domnitser. Again,

the unsupported allegation “None of these directors supervised, examined and/or audited the

work of the department.” [HP, p.67] is simply false. This one example should be enough to

negate the wildly inaccurate allegations in the Hollander paper. Had he taken the time, as have

Deloitte, the German government, USAO, FBI, and KPMG, he would know that.

Ultimately, I cannot escape the fact that Domnitser and his accomplices stole tens of millions of

dollars. And, while he was doing it, I was working closely with him – in the same office. There

is not a day that goes by in the grueling four years since I discovered the fraud that I don’t replay

events in my head, wondering what else I could have done.

I considered Domnitser a trusted colleague, like so many of us who worked with him including

Heilig, Taylor, Kagan, and Brozik. And so, when I say that I was “shocked at the discovery in

2009,” I mean it. I was lied to, fooled, hoodwinked, duped. I missed it. I am sorry.


22

Appendix 1

Heilig letter to Merhav

Reuven Merhav

Chair

Select Leadership Committee

2nd July, 2013

Dear Reuven:

I am writing to you regarding the Report of the Select Leadership Committee that you were

asked to prepare by the Chairman of the Claims Conference. I understand that the final Report

of your Select Leadership Committee will be discussed at the Board Meeting in New York on 9 -

10 July, 2013.

I submit that as matter of common decency and due process, the draft Report must be shown in

advance to any individual who is mentioned in or impacted by the investigative findings of the

Ombudsman or the recommendations of the Select Committee. Such persons should obtain

the report with sufficient time that would allow those individuals to review and comment on the

draft Report before the final Report is released. Under U.S. legal practice, draft investigative

reports are regularly made available to individuals affected by the report in order to allow those

individuals to comment and propose changes. See Council of the Inspectors General on

Integrity and Efficiency, Quality Standards for Inspection and Evaluation, at 17 (Jan. 2012)

(“When appropriate, inspectors should solicit advance review and comments from responsible

officials regarding the content of the report and should include the comments or a summary

thereof in the report”). Oftentimes, the comments permit the draft report to be revised so as to

include more precise and better supported findings. Generally, these comments and responses

to the comments are then incorporated into an appendix to the final report.


23

I understand that you are concerned with confidentiality. However, I am certain that anyone

given access to the report will agree to receive the information on a confidential basis by signing

a non-disclosure or confidentiality agreement.

This course of action will allow individuals to comment on the draft findings and/or

recommendations, and permit the Select Committee to deliver a better final product by receiving

appropriate feedback in advance. As a matter of fundamental fairness, individuals addressed in

the Report should have an opportunity to present a response, either as an appendix to the final

report or as a direct submission to the Board. In order to do this, the draft Report must be

shared in advance with the relevant individuals.

It is to be noted that those persons that met with the Ombudsman did so freely and voluntarily.

More significantly, all persons that met with the Ombudsman have given years of dedicated and

unswerving service and loyalty to the Claims Conference. Without this commitment, the Claims

Conference could not have achieved its important goals.

Therefore, I strongly suggest that the sharing of the report is consistent with the basic principles

of due process, justice and fundamental fairness. Thank you for your consideration.

Respectfully submitted,

Karen Heilig

CC: Abe Biderman, Roman Kent and Robert Goot.

Julius Berman, Greg Schneider


24

Appendix 2

Merhav Letter to Schneider

Dear Greg, I have read very carefully your mail and letter dated 5 July. It is obvious that these are difficult times for all of us as an organisation with a great history and commendable record; all of us have been proud of that record and have been working relentlessly, each and everyone in his or hers capacity and assigned mission, to help in achieving it. I am sure that these days are particularly difficult for you, as the top excecutive of the organisation, who has been in the eye of the raging storm for a long time, while doing his best to keep calm and perform your difficult, multi faceted task. Having saidthat, I wish to address the major points referred to in your letter:

Recognition: Throughout both reports, that of the Ombudsman and that of the SLC repectively, the work of staff, including your own efforts, has received genuine and full recognition, with particular attention paid to the extraordinary development which the CC has undergone during in the relavant years and afterwards. Special care has been given to commend the agile action of the CC after November of 2009, once the fraud has been exposed by the CC.

Scope and terms of reference for the Ombudman's an the Committee's work: The mandate of the SLC, dated 17 May, 2013, reads as follows -" to “formulate an appropriate course of action for the Conference with respect to the issues surrounding the 2001 letter”

.” That was the mandate given to the Ombudsman during our 5 June meeting; after studying the materials he came to the conclusion there was no point in confining the investigation to the 2001, without a close look into the issues surrounding it, as stipulated in the mandate, and that was accepted by the SLC; the result is well reflected in the reports.

Chance to respond to the ponts raised by the Ombudsman: That principle is valid and has beein duly kept, inspite of some technical delays, to which I'll refer later. First and foremost, let me quote what the Ombudsman has to say on the subject matter in a mail sent to me on 5.7.2013, and my mail sent to all concerned on thje night between 4 and 5 July: "I would like to clarify to you and to the select committee that our fact finding report was not a personal report . The main issues of the report are organizational rather than personal. Also, it must be emphasized that all the persons involved and mentioned in the report, had the opportunity to tell us everything they thought was relevant to the case. Whenever we found contradicting testimonies or evidence to a fact claimed by someone interviewed by us, we gave him or her the chance to confront with it and to submit any explanation or additional evidence to prove his or her claim. To the best of our belief, there is no fact stated in our report that a person who might feel offended didn't have a chance to comment on it prior to finalization of the report. (-) Shmuel Hollander", and "Subject: Advance review of report Let it be clear - we must have the responses of the people concerned, and if for whatever reason - be it dealing with a matter of highly technical and professional nature concurrently in three continents under great pressure without any substantial logistical support - I take full responsibility for any delay .

On that point I wish to add that on July 2nd I sent a letter to Chairman Berman, along with all relevant documens; in it I have stated that we have have sent, via Robert Goot's good


25

offices, to all concerend the materials relevant to them; as you know, there have been two snags - all that material has not reached JB due to a technical reason to the possible exsistence of which I have alerted him.

Since it came another way through you, and I trust you have conveyed it directly to JB and all others metioned. If you had a chance to look at the letter, you might have wondered how to go about it and asked. We all regcognize there was and is an urgency in the matter, but this was aggravated because everything went via Australia and Israel and NY, and given the time zone differences - 14 hours - there was a problem from the bginning. On top of that there was the PDF problem and my computer that went bust for 2days, and initially there was no draft of the O's report to be circulated, as due to the time pressure that was just out of the question.

To sum up this point - after all that's said - despite everything, chance has been given to address any questions. And it remains for you and for Karen and of course for Juli - to have their remarks attached as an addendum to the Ombudsman's report, which will be duly explained. Gideon is not interested in being mentioned, and Julia Gafsi OK ed.

And, one pure administrative point: we were given a almost impossible mission, to be completed in a very short time, given the gathering inside and outstid tempest. We not offered any basic adequate logistics, as becoming to 4 senior officers who work intensively. We had to do almost all the seretarial work ourselves, and had it not been for Karen some assistance from Ann we would have not managed at all. At no point was there any offer, suggestion or question from your part - from If something is needed. Even when the Ombudsman needed some admin assistance on a weeend, I had to negotiate it with the COO. Of course we got it, but basic logic would have told us to act otherwise.

So if after all that we, together with the Obudsman, managed to produce a worthy document, the mostwe can say is that our work entirely free and undisturbed; I note with thanks that when we were lookin for 'neutral' premises we got agood piece of advice from Mitiam Weiner, and Ann arranged the matter promptly. It may very well be that had we received proper comprehensive admin assistance, adjusted to our tight timeline, time zones and distances, some of the last minute snags might have been avoided.

Shavu'a Tov, Reuven

Claims Conference Select Leadership Committee Report

Documents

Transcript of Claims Conference Select Leadership Committee Report