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 Bidermans 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

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 b y 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. Gregs passion and integrity are well appreciated by our German

Greg Schneider July 7, 2013

government interlocutors. The lives of tens of thousands of Holocaust victims will be made easier in their old age due to Gregs 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. B. C. D. E. 2001 Letter and Related Events Other Issues in the Hollander paper Merhav/Goot Report Due Process 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
2

Greg Schneider July 7, 2013

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 Domnitsers 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. Broziks actions, as reported in the Hollander paper, directly undermine Hollanders 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. 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

But he didnt.

He specifically told

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

Greg Schneider July 7, 2013

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 didnt 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 Domnitsers 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 Domnitsers 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] Wouldnt 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.

Greg Schneider July 7, 2013

Hollanders 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 didnt 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 Domnitsers response, Brozik had Gafsi investigate further: Ms. Gafsis 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.

Greg Schneider July 7, 2013

Domnitsers 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 uswhy 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 didnt know who Domnitsers superior was, he well knew who his own superior was. Why didnt 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

Hollanders 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.

Greg Schneider July 7, 2013

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. Taylors 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 Hollanders version as true -- which it is not -- why didnt Brozik send it to Kagan instead of Domnitser? By Hollanders 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 didnt 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.? Broziks 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.
6

This seems

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

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

Greg Schneider July 7, 2013

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 Taylors 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 Broziks 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 cant know because we dont 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 cant 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.

Greg Schneider July 7, 2013

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 Domnitsers 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 didnt happen. However, after Gafsi made notes in the margins, which suggests that she isnt convinced by Domnitsers answers, she explained her concerns to Brozik. Hollander writes, We found no evidence that Dr. Brozik passed on Ms. Gafsis notes (in response to the Domnitser explanations), although he probably realized at that stage that Domnitsers 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 Gafsis concerns is not used to surmise that he didnt. 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 Gafsis findings being sent to Taylor or Berman or somebody.

Greg Schneider July 7, 2013

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 didnt 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.

10

Greg Schneider July 7, 2013

7. What did I know? From Hollanders report, it should be clear that I never saw the anonymous tipoff letter or Broziks request to Domnitser to address the issues. The one, and only item, I was copied on was Domnitsers answer(s)12 to Brozik. As Hollander admits, Mr. Domnitser divided Ms. Gafsis 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 Gafsis comments to Domnitsers 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.

11

Greg Schneider July 7, 2013

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 persons 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 organizations 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 dont 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
12

Greg Schneider July 7, 2013

[Hollander and his assistant] conducted with various individuals in Frankfurt and Tel Aviv. [HP, p.16] Again, wouldnt Heilig, Taylor and Schneider be the best sources? Or, perhaps, some lay leaders who served on the Personnel Committee? 4. Alert to Mr. Domnitsers Superiors It hardly needs to be explained that Mr. Domnitsers partial and inadequate replies, coupled with Ms. Gafsis comments and Mr. Tans opinions should, at the very least, have served as an alert to Mr. Domnitsers 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 Domnitsers 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. Gafsis comments to Domnitsers 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. Taylors assuming his position, replacing Mr. Saul Kagan (with whom Dr, Brozik had been on good terms), a heightened degree of distance
13

Greg Schneider July 7, 2013

(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 mischaracterization. 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.

14

Greg Schneider July 7, 2013

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. Domnitsers 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.

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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 dont 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 Ombudsmans 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.
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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.

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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 Ombudsmans 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.
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E. Management Issues and Control Mechanisms

Throughout the Ombudsmans 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 stopover 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
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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 Hollanders 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
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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 dont 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.

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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.

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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

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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 24

Greg Schneider July 7, 2013

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

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