IN-DEPTH FEATURES
Allocating Justice?

One of the saddest legacies of the Jewish people is the money and property of the European generation that was stolen or left behind in Europe. In recent years, significant amounts of these resources have been returned to Jews. In some cases it is to the original owners or their heirs, but in most cases the money goes to public bodies that distribute it according to various criteria. Other sources of money are payments made by various businesses and governments.

The Claims Conference, created in 1951 primarily to advocate for compensation and restitution from Germany and Austria, distributes hundreds of millions of dollars each year, and its allocations are surrounded by fiery debates.

Critics have also been vocal regarding the composition of the Claims Conference board, magnifying a power struggle over restitution priorities, negotiating strategy with the Europeans, who should get restitution money, how large payouts should be and how quickly money should be distributed.

At the lead are critics who say that the Claims Conference is not representative of Holocaust survivors and, because the conference's permanent members are not elected, that the board is not answerable to the constituency it was founded to serve.

The Claims Conference board comprises 24 groups, all but three of which are founding members, meaning that they have been there for 50 years. Conference officials say the voices of the Jewish people are well-represented and that there are no issues decided at the conference that pit non-survivors against survivors. Two survivor organizations were added to the board in 1988 after intense lobbying by survivors.

Each group has equal voting power, with two representatives on the board. There also are 10 rotating ad personam members of the board -- prominent individuals, many of them Holocaust survivors -- chosen by the conference's chairman in consultation with its president, then approved by the board's permanent member organizations.

Critics like Roman Kent, chairman of the American Gathering of Jewish Holocaust Survivors and treasurer of the Claims Conference, who say there are not enough Holocaust survivors in the conference's composition, argue that there is a difference between individuals who happen to be survivors and those charged with representing survivors' interests. But the chairman of the Claims Conference, Julius Berman, dismisses such criticism.

Other disparities critics pointed out are that various countries have a large number of survivors, but the number of representatives from those countries on the board is surprisingly disproportionate.

Additionally, the conference includes the Reform movement's worldwide organization, the World Union for Progressive Judaism, and the Agudath Israel World Organization, but not Conservative or centrist Orthodox groups.

Critics also say that some smaller members, such as the American Zionist Movement, the Jewish Labor Committee and the Anglo-Jewish Association, whose committees are frequently inactive and whose organizations have miniscule annual budgets in comparison to other committees, hardly merit a seat on a board deciding billions of dollars in allocations.

Despite these groups' size, they have as much power in the Holocaust-restitution allocations process as the JDC, B'nai B'rith International, Agudath Israel, the WJC, the Jewish Agency and the European Jewish Congress.

Those larger groups serve hundreds of thousands of Jews, have multimillion- dollar budgets and are major players in contemporary Jewish life.

In response to these critics, the executive director of the Jewish Labor Committee, Avram Lyon, said, "When you walk into that room and sit down, you are there not as a representative of your organization. You're really there as a representative of the Jewish people.

"We ourselves are not terribly happy about the allocations process either, or how allocations are decided. It has been an issue that we have raised and we hope that they will address," Lyon said. "But to say that the organization [the Claims Conference] is not representative is a mistake."

Some of the smaller organizations include the Anglo-Jewish Association, a British group that has a paid staff of "one- and-a-half" and is primarily an education organization. It distributes about $275,000 per year in education grants, and its cash reserves are made up primarily from bequests made in the early 1900s.

The American Zionist Movement is an umbrella group for U.S. Zionist groups and has a staff of three and an annual budget of about $330,000. The Jewish Labor Committee has a nationwide staff of ten and an annual budget of about $750,000.

These groups were major players 50 years ago when the Claims Conference was founded, but today they are marginal.

In 2002, the last year for which records are available, the conference had revenues of $826 million and made payments of approximately $765 million. The conference also spends about $26 million annually on administrative overhead. It has a staff of about 200.

Sources of Money

The Claims Conference administers or manages many separate funds. Included in these funds are those of European governments, who use the Claims Conference to administer their own particular funds for Holocaust victims. The bulk of the funds is German money, given to survivors as some measure of compensation for their suffering under the Nazis.

The fund most under fire now is known as the Successor Organization. Its money comes from the proceeds from the sale of assets in East Germany originally owned by Jews but seized by the Nazis during World War II.

The fund was created in 1992 as the legal successor, or heir, to both claimed and unclaimed Jewish properties and assets seized by the Nazis in East Germany. Under the deal negotiated during German reunification which had taken place a few years earlier, any property that went unclaimed after a German-mandated deadline reverted to the Claims Conference, rather than to the successor state to the Third Reich (which is the Federal Republic of Germany) or to postwar non- Jewish owners.

Owners or heirs able to demonstrate ownership of these assets are compensated with the proceeds from their sale. Money from the sale of unclaimed assets is allocated along an 80/20 split where 80 percent goes to social-welfare groups that benefit survivors and 20 percent goes to Holocaust education.

Among the other funds that the Claims Conference administers or manages are:

* The German Slave-Labor Fund: A $5 billion dollar fund. Claimants able to prove they were slave laborers under the Nazis are paid $9,450. They receive two- thirds of that sum immediately, and will receive the remainder once all claims have been processed. The deadline for filing claims has passed.

Many beneficiaries of this fund are non-Jews. The Claims Conference administers only the Jewish portion of the payouts. So far, the conference has distributed more than $650 million. The source of the money is the German government and German businesses.

* Swiss Banks Settlement: Every Jewish slave-labor claimant also receives a one-time payment from the Swiss banks settlement of about $1,450. To date, the Claims Conference has distributed more than $200 million from this fund to former slave laborers.

The conference is consulted, but does not administer, the balance of this $1.25 billion fund, which is being overseen by Judge Edward Korman of U.S. Federal Court in Brooklyn. Survivor representatives have gone to court to argue that they are not getting enough of this money. Korman appointed a "special master," Judah Gribetz, to develop a plan for allocating this money.

Korman also asked the Claims Conference to administrator on behalf of the court a 10-year, $32.6 million program that provides emergency assistance to needy Holocaust survivors outside the former Soviet Union.

* Hardship Fund: Victims of Nazism who meet certain persecution-related criteria are eligible for one-time payments from the Claims Conference of about $3,200. The Hardship Fund has paid out more than $800 million since 1980.

* Article 2 and Central and Eastern European Funds Pension Plans: Jews who meet certain criteria, having been concentration-camp inmates for more than six months say, or ghetto prisoners for more than 18 months, may receive monthly pension payments from the Claims Conference if they also meet financial-need criteria.

The Claims conference so far has identified about 80,000 Jews eligible for such payments. Residents of Western countries receive about $320 per month; residents of Eastern Europe and the former Soviet Union receive about $160 per month.

* Successor Organization: As noted above. More than $1 billion has come into this fund since it was created in 1992, and more is added each year. So far, about $800 million has been allocated or paid out.

* International Commission on Holocaust Era Insurance Claims: Headed by former U.S. Secretary of State Lawrence Eagleburger, this commission helps identify and resolve claims that survivors have filed related to unpaid Holocaust- era life-insurance policies. ICHEIC determines the overall allocations. The Claims Conference administers payment of $132 million over nine years to welfare agencies that benefit survivors, which was set aside from unclaimed, or heirless, insurance policies.

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In addition to these funds, the German government has paid more than $50 billion to Jews worldwide under the original German federal indemnification law, which the Claims Conference helped negotiate in the years after the Holocaust, according to the executive vice president of the conference, Gideon Taylor.

The Criticism

At issue recently was the latest batch of allocations from the unclaimed assets in this Successor Organization fund, $74 million in grants that is divided between social-welfare projects that benefit survivors, constituting 80 percent of the allocations, and "Shoah documentation, education and research" projects, which get 20 percent of the grants.

Critics wondered where Birthright Israel, which is receiving nearly $1 million from that money to send youths from the former Soviet Union to Israel, fits in to this picture. A recent allocation of $150,000 to Birthright is one of the grants in the Claims Conference's $74 million allocation package from unclaimed assets this season that raised eyebrows, even among the conference's own board members.

The Jewish Telegraphic Agency (JTA), which published a series of articles on this issue, obtained in early February a draft list of the grants which had been approved by the Claims Conference board but had not yet been publicized.

"Some of the projects are not even Holocaust-related," the general secretary of the National Association of Jewish Child Holocaust Survivors said of the new allocations package. "At a time when there are not sufficient funds to take care of social-service needs like home care, everything that is available should be spent helping Holocaust survivors in their final days."

Among the funds allocated from 80-percent category that is supposed to benefit survivors, critics asked why money intended to benefit Holocaust survivors is being spent on things like capital improvements for Israeli hospitals, to the tune of some $6 million; the Hatzolah volunteer ambulance corps in Brooklyn; a "community improvement council" in Spring Valley, N.Y.; the installation of sprinkler systems in Israeli nursing homes; and a women's organization in Bnei Brak, Israel.

"Supporting Israeli hospitals is a noble and worthy cause, but it takes a leap to argue that it's related to direct assistance to Holocaust survivors," said Elan Steinberg, executive vice president of the World Jewish Congress, which is on the Claims Conference board.

"Does that mean when a Holocaust survivor shows up to the hospital, he gets free treatment?" he asked. "Holocaust survivors ride the New York City subways; does that mean we give a subvention to the transit authority?"

Julius Berman, the chairman of the Claims Conference, said that when it comes to Israel, the conference decided to take a slightly more expansive view.

"There was the feeling that if we can accomplish two things at once we ought to be doing it: No. 1, the survivors, and if there can be infrastructure aid to Israel after the survivors are gone, all the more power to them," Berman said. "At the same time, at the end of the road Israel has a facility that it can use for a variety of purposes in the future."

A year ago, the president of the Claims Conference, Israel Singer, who also is chairman of the WJC, proposed that unclaimed assets and some other monies won from Germany in restitution settlements be used to create a "Fund for the Jewish People," dedicated to supporting Jewish education and other underfunded Jewish causes unrelated to the Holocaust.

That idea was nixed by the Claims Conference board and survivor groups, which argued that Holocaust funds should be used exclusively to benefit survivors and for Holocaust education.

That, says Steinberg, who backed Singer's proposal, is why he was so upset to learn that some of the $74 million in grants this season, another $15 million is expected later this year, is going to projects that don't meet the criteria formally specified by the Claims Conference.

Steinberg pointed specifically to millions of dollars in capital-improvement projects in Israel, including grants to renovate internal-medicine departments in the country's hospitals, outfit nursing homes with new patient beds, install sprinkler systems in senior-care homes, purchase medical equipment and build new sheltered-housing units.

Gideon Taylor, executive vice president of the Claims Conference, says that every allocation in the $74 million package from unclaimed assets is intensively reviewed and that they go only to appropriate programs.

He explained that the Birthright Israel program received funds after promising that every participant visiting Israel would undergo a four-hour Holocaust education program.

The Successor Organization has collected more than $1 billion from the sale of Jewish assets in the former East Germany. About a quarter of that money has been distributed to actual claimants of specific assets, and about half of the total - - proceeds from the sale of unclaimed assets, has been distributed to groups along the 80/20 split.

Some survivor advocates contend that more of the unclaimed money should go to benefit survivors, with some saying it should be used for direct cash payments to survivors rather than to supporting social-welfare institutions that help them.

Others point out that because the money comes from the sale of unclaimed Jewish property, it belongs to the Jewish community as a whole and all Jews share the right to decide how it is used. That justifies using 20 percent for Holocaust education, they say. If we had representatives among the vocal critics, we would argue that the money should be directed toward the all-encompassing limud - - Torah education.

Conference officials say survivors already get direct payments from other funds set up by the German government. The Claims Conference administers those funds, which represent three-fourths of the total $800 million the conference handles annually, and distributes payments in a process that is relatively free of controversy.

Experts estimate the total living population of Jewish victims of Nazism at between 700,000 and 1.1 million.

Though many of the programs included in the $74 million package may raise eyebrows at first glance, closer scrutiny shows they are worthwhile and relevant to the Claims Conference's mission, conference officials said. Even the seemingly questionable allocations that critics cite constitute no more than one- fifth or one-sixth of the total $74 million.

But critics focusing on that slice point to projects that don't fit into either of the allocation categories from unclaimed Jewish property: essential services for survivors or Holocaust education.

Berman defended the allocations for capital-improvement projects in Israel, saying the money allocated for such projects corresponds to the proportion of survivors served by each facility.

With many of the programs, particularly in the category of grants to social- welfare groups that benefit survivors, critics question how the Claims Conference ensures that grant money actually goes to survivors, especially when survivors represent as little as a quarter of the population the institution serves.

In cases where the Claims Conference does fund more of a project's cost than the proportion of survivors served, it's because Holocaust survivors use up a disproportionate amount of the money, said Greg Schneider, chief operating officer of the Claims Conference.

For example, Rofeh International, which provides medical referrals and assistance to patients and their relatives who come to Boston for medical treatment, spends $456,000 on survivors out of a budget of about $1.2 million. That's about 38 percent of the budget, although survivors constitute only 18 percent of the group's clientele, according to Schneider. Rofeh is receiving a $100,000 grant in this season's allocations package.

Similarly, the conference is allocating $400,000 to the Hatzolah ambulance service in Brooklyn because a "shockingly high percentage of its patients are survivors," Schneider said.

Other apparent inconsistencies in this year's allocations package don't tell the whole story. Even if allocation descriptions are sometimes incomplete, conference officials say every program is carefully screened, and then scrutinized once the grant is awarded, to ensure that the funds are properly used.

Giving Away Successor Organization Money

Every year, the Claims Conference makes about $90 million in grant allocations from the Successor Organization fund. Through the end of 2002, the last year for which data was available, a total of $451 million was allocated from the Successor Organization to groups along the 80/20 split. An additional $90 million has been allocated in the past 13 months.

Aside from the grant money, by the end of 2002 about $260 million had been paid to survivors or heirs with proven claims to properties the Claims Conference had recovered from East Germany.

The conference also has set aside about $260 million in the Successor Organization fund for survivors' long-term needs, a move that has been criticized by some who argue that the conference should give away its assets as soon as possible because aging survivors need the money now.

In total, the Successor Organization has generated proceeds of more than $1 billion. An emerging problem, conference officials say, is that income to the Successor Organization generated by the sale of Holocaust-era Jewish assets is declining just as aging survivors grow more needy. Several recent studies on survivor populations around the world support those claims.

That's why they have set aside money for long-term care for survivors, who may be independent today, but in need of home care in the future, conference officials say.

Others say the Claims Conference shouldn't be setting aside money when survivors need it today.

"With regard to the amount of money being given to certain needs in the Jewish community, we believe some of the funds should be telescoped and front-loaded," said Israel Singer, president of the Claims Conference and chairman of the World Jewish Congress. "When Holocaust survivors are dying at a rate of 10 to 15 percent per year, we've got to move rapidly."

The conference officials, said however, that the bulk of the money goes to groups that feed needy survivors, provide them with medical assistance and improve their living conditions. Allocations are made in 37 countries, with much of the money going to survivors in Israel, the United States, the former Soviet Union and Eastern Europe.

Every application that comes in to the Claims Conference undergoes careful scrutiny, until the Claims Conference's 16- member allocations committee makes final recommendations to the board. Taylor noted that the conference follows a strict set of ethical guidelines to ensure that no board or committee member votes on or advocates for allocations to an organization or project with which he or she is affiliated.

The Claims Conference only releases funds to recipients after they have begun paying for projects, and also employs an audit firm, Ernst & Young, to vet grant applicants and awardees when necessary. The same firm audits the Claims Conference annually.

"We feel we're guardians of holy money," Taylor said. "We're very scrupulous and careful in how we allocate funds, how we transfer funds and monitor the implementation of the grants."

Some observers have called for the dissolution of the Claims Conference, saying the group should give away all the money it has as quickly as it can and put itself out of business.

But Taylor, who says any controversy over the allocations process is misdirected, said, "The question is what is the substance of what we do," he said. "Are we pushing for money from the Germans for home care or are we not pushing for home care? That's what people care about."

Despite the criticism, even the Claims Conference's most vocal critics maintain that the organization is doing important and valuable work.

"In spite of certain criticisms of the Claims Conference, I certainly subscribe to the good deeds which the Claims Conference is performing," Kent said. "The only one who cannot be criticized is the one who does nothing. The Claims Conference is doing a lot of good things."