April 20, 2024
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Claims Conference Sued Over East German Properties

The Conference on Jewish Material Claims against Germany, popularly known as the Claims Conference, is under fire—from some of the very people it was created to serve.

The Conference, which handles restitution claims for Holocaust survivors, is already reeling from a major corruption scandal. It now faces a lawsuit in German courts by a group of survivors from the former German Democratic Republic (East Germany) and their heirs. At issue: millions of dollars worth of Jewish-owned properties confiscated by the Nazis and that, since Germany’s reunification, held by the Conference. The organization has given survivors and their heirs a “last-chance” deadline of December 31, 2014 to file claims to the properties in order to receive compensation. The plaintiffs charge that the properties have been undervalued and that the deadline is too arbitrary.

The controversy is rooted in the original 1952 agreement between the newly-formed Claims Conference, Israel and West Germany to make restitution to survivors for their suffering under the Nazis. (In a sad coincidence, the Conference’s founding director Saul Kagan, who helped negotiate the agreement, died earlier this month.) The agreement did not include East Germany, whose Communist leaders argued that as an “anti-fascist” state, they had no connection to the Nazi regime.

But when Germany was reunified in 1990, the Conference and the German government reached a new agreement, under which East German survivors and their heirs became eligible for property compensation. The eligible parties had until the end of 1992 to file claims. The agreement also made the Conference a “Successor Organization,” which gave it title to any unclaimed properties.

Though tens of thousands of property owners and heirs filed claims before the deadline, many others did not. As a result, in 1994, the Conference set up a “Goodwill Fund” of $940 million for claimants who had missed the deadline. The money in the fund came from the proceeds of unclaimed properties that had been sold by the Claims Conference.

Over the next two decades, the Conference repeatedly extended the deadline for applying to the fund. Then, in February of this year, the Conference published, online, a list of still-unclaimed properties which runs to more than 1,400 pages and contains 45,000 names and addresses. The organization also announced that it was creating a new, $67 million fund for claimants, who had until the end of December 2014 to apply for compensation.

But the plaintiffs claim the properties are worth far more than $67 million. They also assert that survivors and heirs, many of whom are old and sick, should have more time to file their claims.

Martin Stern, a British-Jewish businessman now living in Israel, is not taking part in the civil suit, though his grandparents and great-grandparents owned property in Berlin. But Stern, who has long been a vocal critic of the Claims Conference, agrees with the plaintiffs that the Conference has drastically understated the value of the properties.

“Everyone who’s examined this has said that the real value is somewhere between $1.5 billion to $4 billion,” he asserts. “$67 million amounts to three cents on the dollar.”

Unlike the plaintiffs, Stern feels that a year is not too little time for the claimants to file, but rather, too much.

“They are demanding that these people come forward in the next year,” he says. “Many of these people are going to die soon. I think the minute someone comes forward and can prove that this is the house he lived in, and he’s the only one left—pay him on the spot! He’s in his nineties!”

The suit has also provoked often angry charges and rebuttals about the Conference’s treatment of the East German survivors over the past two decades.

Critics accuse the organization of not doing enough over the years to locate claimants.  A 2010 report from the British Board of Jewish Deputies, the main representative body of British Jewry, asserted that the Conference had been lax in “publiciz[ing] the information it had and seek[ing] to assist and identify heirs who were rightful claimants.”

But the Conference’s Communications Director, Hillary Kessler-Godin, says that before the original 1992 deadline, the organization “conducted a massive research effort to identify all possible Jewish properties, which otherwise would have been forever lost to the Jewish people… they would have remained with the Aryanizers, the owners at the time, or reverted to the German government.” And the organization’s website notes that the Conference launched major advertising campaigns in Jewish newspapers around the world in 1998 and again in 2003 calling for claimants to contact the Goodwill Fund.

The suit represents a new embarrassment for an organization whose once sterling reputation had already been damaged by the corruption scandal. The Conference was defrauded of $57 million in an elaborate scam, perpetrated by several staff members and their cohorts, where a large number of people filed false claims of being Holocaust survivors. To date, 31 defendants have either been convicted or pled guilty; the last of the defendants, and the ringleader, were sentenced this month.

Critics have charged that the Conference took too long to act after learning of the fraud in 2009, though Claims Conference officials, including Julius Berman and Roman Kent, have noted repeatedly that the Federal prosecutor on the case, Preet Bharara, thanked the organization for what he called “their outstanding, ongoing assistance in identifying the participants in this scheme.”

Hilary Kessler-Godin, the Communications Director, told JLBC it is unfair to lump the scandal together with the lawsuit.

“The two issues are completely unrelated,” she said.

By Philip Berroll

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