Executive chairman of the Claims Conference is furious. A documentary film alleged the organization denied Holocaust survivors money that was rightfully theirs. In a first interview since its broadcast, Reuven Merhav explains why he is suing for libel
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Rings found in Buchenwald by U.S. troops (photo: USHMM)

‘The lie is being perpetuated as the truth’

PUBLISHED IN |  Sep 26, 08

For weeks, Reuven Merhav slept only fitfully. Distraught by the film made by Orly Vilnai-Federbush and Guy Meroz, “Musar hashilumim” (“The Morals of Restitution: The Struggle Continues”), he woke up at three o’clock every night and wandered about his home in a daze. The well-known words from the verdict in the trial of Rudolf Kastner – who in the 1950s was accused of having collaborated with the Nazis in Hungary – resonated in his mind. Judge Benjamin Halevi had declared that Kastner “sold his soul to the devil.”

Filed in Jerusalem District Court on September 4, the suit states that “the film is a cruel and distorted calumny,” is “replete with false factual allegations,” and that “the spirit of the film is sometimes anti-Semitic.” The timing of the television broadcast in Israel – on the eve of Holocaust Remembrance Day this year – “turned the Claims Conference into the enemy of the Jewish people.” The defendants have not yet filed a response.

Merhav wondered whether it would not be better to just wait for the storm to pass. In the end, he decided against restraint. As chairman of the executive committee of the Conference on Jewish Material Claims Against Germany – better known as the Claims Conference – the organization which for the past 55 years has conducted the negotiations with Germany on restitution for Holocaust survivors, he channeled all his energy into filing a libel suit of NIS 4 million against the filmmakers. The film, which charges that the Claims Conference has “more than $1 billion” in its accounts and is withholding it from needy survivors, was in his view unconscionable.

In a first interview since the film’s broadcast (it has also been screened at festivals abroad), Merhav told Haaretz that the disparity between the actual work of the Claims Conference and the way the Israeli public sees it is making him lose sleep. “I am not afraid of a court confrontation, or of a reprisal of the Kastner trial,” Merhav says. (It was actually Kastner who had sued for libel, but he soon found himself on the defensive.)

“The alternative is to allow the film to stand as historical truth and for the tremendous project known as the Claims Conference to be branded in the public consciousness by two journalists. That will not happen. The lie is being perpetuated as the truth, and if we do not uproot it completely and find a way to convey a message to the public, then it is as if we are burning down the clubhouse. The thing is that the clubhouse itself is not important. The Claims Conference itself is not of the least importance. But its historical responsibility will be undermined, and its ability to go on helping those who are truly in need of help will be affected. And then what? Everyone will be delighted, but there will be no help for the survivors.”

A personal matter

Reuven Merhav

Reuven Merhav

Reuven Merhav (born Markowicz) was 16 years old when the Claims Conference was established in 1952. Born in Haifa, the Holocaust cast a shadow over his life: His father, Walter, managed to flee Germany in 1935, but lacked 500 pounds sterling in order to obtain a certificate to allow his own father, Julius, Reuven’s grandfather, to leave for Palestine.

“I am with the Claims Conference because I have been scalded personally,” Merhav says. “My father never talked about it at home, but we knew he had not succeeded in getting Grandpa out. In April 1942, Grandpa was transported from Breslau to Theresienstadt and perished there half a year later. My father was sad his whole life. It just ate him up.”

More than 60 years after the Holocaust, Merhav is taking part in the negotiations with the German finance ministry on the criteria for awarding grants to Holocaust survivors. On the way there, he did a few other things. He served for 30 years in the Shin Bet security service and the Mossad espionage agency, was director general of the Foreign Ministry, was active in promoting Israel-China relations, and laid the foundations for Operation Solomon, which brought Ethiopian Jewry to Israel in 1991. Nevertheless, he says, what he is doing now has a personal aspect to it: The finance ministry building in Berlin is located on the site of Hermann Goering’s Air Ministry, only 400 meters from the train station at which his maternal grandmother was herded onto a train to Auschwitz.

The organization Merhav heads is very different from the body that was created in the early 1950s, in conjunction with the reparations agreement signed between prime minister David Ben-Gurion and German chancellor Konrad Adenauer. The West German government undertook to pay a monthly allocation to survivors who immigrated to Israel after the agreement was made.

In the wake of the fierce public controversy the agreement stirred, Ben-Gurion decided to distance Israel as much as possible from the negotiations. The result was the establishment in New York of the Conference on Jewish Material Claims Against Germany, headed by then-president of the World Jewish Congress, Nahum Goldmann. Since then, Germany has paid more than $60 billion to some 278,000 survivors. These reparations were transferred directly from Germany to the survivors’ bank accounts. At first, Germany objected to compensating survivors behind the Iron Curtain, but under pressure from the Claims Conference eventually agreed to pay them as well. The condition set by the Germans was that the payments would not be made directly any longer, rather through the Claims Conference instead.

Thus, in 1980, when West Germany agreed for the first time to compensate survivors who had immigrated from the Communist Bloc to the West, the Claims Conference began to act also as an executive agency. If until then the organization only conducted negotiations with Germany, now it had to involve itself also in more technical aspects: It had to receive the public and to authorize claims on the basis of criteria set by Germany. The funds continued to be of German origin, under the scrutiny of the Federal Ministry of Finance, and were paid out according to authorized requests. In this way, since 1980 Germany has paid, via a number of tracks (the Hardship Fund, the Article 2 Fund, the Central and Eastern European Fund, and the Program for Former Slave and Forced Laborers), a total of about $4.8 billion to hundreds of thousands of survivors.

Just a conduit

Adenauer signs the Luxemburg agreement, 1952 (photo: Moshe Sharet Heritage Society)

Adenauer signs the Luxemburg agreement, 1952 (photo: Moshe Sharet Heritage Society)

Until this stage, few if any allegations were raised against the Claims Conference, as it had no discretionary power and served as a conduit for funds from the German government to the survivors. The complaints began when the organization was given the power to make decisions and when an independent budget was placed at its disposal.

That happened after the fall of the Iron Curtain and the unification of Germany, when the new government in Berlin allowed Jews who had held assets in East Germany before the war to make claims on them. Some 9,000 Jews whose property had been confiscated by the Nazis submitted independent claims that were recognized. Concurrently, the Claims Conference submitted about 120,000 claims, some of them involving property without heirs. Since 1992, approximately 12,000 claims, valued at a total of 1.8 billion euros, have been recognized.

“Then the big question arose of what to do with this money,” Merhav explains. “The first thing was that people who for technical reasons were late in submitting a claim in Germany were allowed to demand the money. Those claimants received 750 million euros, or about 40 percent of the total.

“A committee was convened [in 2000] with the participation of Supreme Court justices Moshe Bejski and Menachem Elon, and historian Anita Shapira – people with no vested political interests, who were not about to stick their hand in the till. They recommended that 80 percent of the money be allocated for welfare assistance to Holocaust survivors throughout the world and 20 percent be allocated for Holocaust-related education, research and commemoration. Because of Israel’s importance as the center of the Jewish people, it was decided that 55 percent of all the money would be transferred to Israel.”

In 2008, the Claims Conference earmarked more than $100 million for international projects, of which $63 million went to Israel, $11 million each to Russia and Ukraine, and $16 million to the United States.

The “allocations policy” for distributing funds, as it is called, is the source of most of the criticism against the Claims Conference. Apart from the filmmakers that Merhav is suing, a state commission of inquiry chaired by retired Supreme Court justice Dalia Dorner last June recommended examining the assistance to Holocaust survivors. “Every amount of money should be channeled to specific aid for Holocaust survivors,” the commission stated. Because the Claims Conference is not an Israeli body, it was not included in the commission’s mandate, but the commission nevertheless referred to it. At the beginning of September, a parliamentary inquiry commission, headed by MK Ophir Pines-Paz (Labor), launched an investigation into the same issues.

‘More than $1 billion’

Guy Meroz

Guy Meroz

There is no doubt that the Claims Conference suffered its worst image battering in the film by Vilnai and Meroz. The film claims, for example, that the organization seized control of assets in former East Germany and is not transferring them to the legal heirs. Another argument is that the allocations policy is dubious at best, and in less-than-best cases serves to transfer money to cronies. Senior members of the Claims Conference are depicted as wasteful and profligate, and above all it is claimed that the organization is holding “more than $1 billion” of survivors’ money in its bank accounts.

The Claims Conference offers different data. A spokesperson stated that since 1995 some $960 million has been transferred as per the allocations policy. The Claims Conference presently has $474 million available to it, and a simple calculation, based on the estimate that there are 500,000 living survivors, shows that each of them will get a one-time payment of just $1,000.

“There was no logic to distributing the money on a one-time basis,” Merhav says. “Accordingly, the Claims Conference decided to invest the money in services for the survivors. It decided not to reinvent the wheel, but to operate through existing organizations, such as the Holocaust Survivors Welfare Fund, which receives more than half of the allocation to Israel, and provides social services to survivors.

“At the allocation rate of $100 million a year, the money we have now will run out in 2013. Survivors will continue to live among us until 2028, and if we want to continue allocating $100 million a year, we will need [another] $1.5 billion. I believe that we will get most of the money from Germany, which is aware of its responsibility in this regard. But what validation will we present to the Germans? We can conduct negotiations only on a basis of moral validity. It is impossible to negotiate if your credibility is undermined and a domestic parliamentary commission calls you a liar or a thief or both. It is perfectly fine to investigate, but to undermine basic credibility, to give the public information that is completely wrong and to establish a commission of inquiry on the basis of what Pines-Paz calls an investigative report [referring to the documentary film] – which is an investigative report like I am the third swan in ‘Swan Lake’ – cannot but leave us indignant.

“We in Israel know what our commissions of inquiry are worth,” Merhav continues. “But abroad we are measured according to their criteria, and people think it’s serious. The German ambassador to Israel asked me if it’s serious. I told him gently that it’s not quite like the Bundestag. MKs come to a meeting of the commission, stick their head in for a minute, declare that we have to give money to Holocaust survivors, and two minutes later there is a statement to the press. And everything gets translated. The next day I enter the finance ministry in Berlin and they tell me, ‘There is a parliamentary commission of inquiry.’ Are we going to take that? No. That is why we are suing for libel, in order to challenge the false and lying presentation in the film. It was not easy for the Claims Conference to make the decision to sue. I explained to them that otherwise we are just committing suicide, like kamikazes; otherwise, that movie will become historical truth.”

Still, the Dorner Commission report was also critical of the fact that part of the allocations do not reach the Holocaust survivors. In 2008, for example, you transferred more than $10 million to build geriatric wards in Israeli hospitals. But survivors are not the only patients in those wards.

Merhav: “The money for building hospitals is earmarked for Holocaust survivors, many of whom have immigrated to Israel from the [former] Soviet Union since the 1990s. When they arrived in Israel, the result was a huge and immediate jump in the population of the elderly needy, and the welfare and nursing systems collapsed. The survivors who are in the worst condition cannot live at home, and when the authorities wanted to move them to geriatric wards in hospitals, they discovered that they were like stables. The Claims Conference helped out, together with the Ministry of Health and the health maintenance organizations, with the intention of allowing these people to have a dignified existence at the end of their lives.

“That was an objective need,” Merhav continues. “It’s not that someone gave someone money in an envelope, or did someone a favor. As long as the survivors can live at home, the extra nursing hours truly help. The moment they have to be hospitalized in a nursing facility, logic dictates that it is preferable to improve the hospital wards. In any event, the Claims Conference invests money in building wards only if at least 30 percent of the patients are survivors, and even then it provides only 20 percent of the funding. The Conference input is only in proportion to the survivors.”

Another claim is that there is no good reason for the Claims Conference to be based in New York, that it should be relocated to Israel. Do you agree?

“The Claims Conference is a Jewish-American organization. That is the source of its strength. The suggestion to move its headquarters to Israel stems from a failure to understand the economic and political clout of an international organization that is based in New York. With all respect, New York has not exhausted its power as an international, financial and political Jewish center. And I say that as a proud Israeli.”

The members of the Claims Conference convene in New York. What do they know about the needs in Israel?

“The allocations in Israel are determined by local experts. The great majority of the money that reaches Israel is controlled by Israeli institutions, such as Amcha [an organization assisting survivors and their families] and governmental bodies. There is an advisory committee for investments in Israeli infrastructure projects, with representatives from the health, social affairs and finance ministries. As for investment in research and documentation, we are advised by [historians of the Holocaust] Prof. Yehuda Bauer and Prof. Yisrael Gutman. They are people of recognized repute. In addition, survivors have a 50-percent representation on the allocations committee, and they know the relevant needs.”

The film alleges that people in the Claims Conference are doling out funds to cronies.

“That is of course not true. The allocations first have to go through professional advisory committees, which consist of leading experts. Only afterward are they voted on. There is an ethical code for the voting procedure, which bars a person from voting when his organization is being discussed. At the end of the process, a thick volume is published with all the allocations for a particular year. That is a book worth perusing. All told, there are a limited number of bodies that deal with Holocaust survivors, and the Claims Conference is acquainted with them.”

It is argued that the conference is an antiquated body, with organizations that do not represent the true demographic makeup of the Jewish people. Isn’t it time for a structural change in the Claims Conference?

“Absolutely. The last board of directors meeting, in July, established a special committee that will submit by July 2009 a proposal for changes in the representation, tasks and strategy of the Claims Conference. I want to increase the Israeli representation, so that 18 of the 36 votes will belong to Israelis; at the moment it is 12. There should also be more Russians. It is untenable for us to deal with 200,000 Russians without their being represented.

“All in all, this will be a change of structure in an old organization, and that is very difficult. But there is a big difference between that and what is now being said about the Claims Conference. I sometimes have complaints about the executive in New York, and I do quite a lot of pounding on tables. But it is out of the question for the State of Israel, where superficiality has become a standard, to undermine the possibility that the survivors will get what is coming to them.”