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JewishJournal.com

July 22, 2011

Probe of Claims Conference’s accounting growing

http://www.jewishjournal.com/world/article/probe_of_claims_conferences_accounting_growing_20110722

The Claims Conference negotiating delegation, right, meets every year with representatives of the German Ministry of Finance and other German government officials to press a number of issues of concern to Jewish. Photo courtesy of the Claims Conference

The Claims Conference negotiating delegation, right, meets every year with representatives of the German Ministry of Finance and other German government officials to press a number of issues of concern to Jewish. Photo courtesy of the Claims Conference

Germany has hired its own accounting firm to investigate a fraud at the Claims Conference that has topped $50 million.

At board meetings earlier this month, the Claims Conference, which handles Holocaust restitution for Germany and Austria, disclosed that it expects to recover less than $1 million of the fraud, that the $50 million figure may grow significantly and that the German government has hired Deloitte & Touche to do a “systems audit” of the Claims Conference’s Frankfurt and New York offices, the New York Jewish Week reported.

The fraud, which was disclosed to the public last year, involved Claims Conference employees who filed false claims to obtain payments from the Hardship Fund. Investigation of the fraud, which is being conducted cooperatively by the Claims Conference leaders and law enforcement authorities, is ongoing. The Claims Conference had hired an outside firm, K2 Global Consulting, to review its processes once the fraud was discovered.

The Claims Conference board of directors was told that the $50 million loss uncovered so far is “nowhere near the extent of the fraud,” the Jewish Week reported.

In an interview with JTA, Claims Conference officials also clarified that approximately $19 million in funding to expand payments to a new pool of Jewish victims of the Nazis will come from the Claims Conference’s own coffers, not directly from Germany via the Hardship Fund, as reported by JTA on July 12.

The $19 million will enable Jews who fled the Nazis and remained in Eastern European countries after the war to receive one-time payments of about $2,660. Until now, only those who settled in the West after the war received the one-time payments, which came from the Hardship Fund established by Germany.

Rather than expand Hardship Fund eligibility to include this new class of people in the East, Germany facilitated the additional $19 million disbursement by increasing its allocation to homecare for elderly survivors by an equivalent amount. That allowed the Claims Conference to make the $19 million commitment from its own fund called the Successor Organization.

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