Spitzer Demands WJC Reforms

In a stinging report detailing a long history of fiscal improprieties and lack of accountability at the World Jewish Congress, New York State Attorney General Eliot Spitzer concluded this week that the charity “lacked appropriate financial controls to safeguard charitable assets.”The 35-page report, issued as a signed agreement between the attorney general’s office and the WJC, barred Israel Singer, who ran the organization almost single-handedly for many years, from any position of “financial management or oversight.”It stipulated that he pay back “inappropriate disbursements” totaling more than $300,000 that he received over the years in the form of “insurance for family members, car lease payments and personal credit card charges, as well as undocumented accrued vacation and sick leave, some of which already have been repaid.”Singer must return $132,000 to the WJC in the next 90 days.Two weeks ago, in a move widely seen as a proactive effort by the WJC to announce a series of internal reforms before the Spitzer report was released, Singer was named chairman of a new WJC Policy Council, an advisory group of about two dozen internationally known leaders that will meet once a year to deal with policy and global politics.

WJC press releases since then have referred to Singer in that capacity rather than as chairman of the governing board, the lay position he held since stepping down in 2001 after 15 years as secretary general, the top professional position.During that time Singer was considered the power behind the throne of Edgar Bronfman, the Seagrams heir who has been president of the organization for 25 years, but who allowed Singer to run the operation on a daily basis.As both critics and supporters of Singer and the WJC have noted, the organization was run as a kind of mom-and-pop operation for many years, chiefly supported by an annual gift of $2 million from Bronfman, which once represented two-thirds of the group’s budget.“My worst failure is that I’m not an organizational type,” Singer told The Jewish Week in September 2004, when the controversy over alleged financial improprieties came to light.Over the past 15 years, though, the WJC has conducted an aggressive direct mail fundraising campaign emphasizing its efforts to combat anti-Semitism. The charity now raises more than $11 million from more than 400,000 donors in the U.S., yet remained primitive in its operation, with its records not computerized, no accounting manual and no written policies regarding employment, travel or entertainment.The attorney general’s report focused on “deficiencies” in governance and fiscal controls, though it found no criminal conduct and said the “shortcomings did not compromise the core mission” of the group or result in “other identifiable losses of charitable assets.”Much of the report deals with Singer’s actions, including his controversial transfer of $1.2 million from the WJC’s American affiliate, known as the American Section, to a Swiss bank account in 2003. It was the discovery a year later of the account, and questions raised by it, that led to articles in this newspaper and others about internal problems at the WJC. The articles in turn led to the attorney general’s investigation in late 2004.The probe concluded that Singer had intended for the funds to be used for his pension fund, as he has maintained, but that he was not open about it, even with his colleagues.“A central source of the weakness in WJC’s financial administration was the absence of any oversight of financial matters by its governing bodies,” the report noted, adding that until August 2004, when news of the Swiss account became public, “WJC had no active body overseeing administration and financial management. Instead, WJC’s senior personnel handled finances informally without any administrative oversight or internal controls.”The report said that Singer’s handling of the $1.2 million “without the approval of any governing body of the WJC” and his appointment of Tzvi Barak, a friend and attorney in Israel, as custodian without any established agreement, “violated his fiduciary duties as a trustee of charitable assets and reflected significant weaknesses in the financial administration and internal controls at WJC.”Barak was in possession of the funds for more than a year, the report said.The report did commend the 70-year-old organization, long a champion of Jewish rights, for the series of internal reforms instituted over the past several years, chiefly under Stephen Herbits, a longtime business associate of Bronfman.

Herbits was brought in 16 months ago to clean up the operation and is now secretary general of the WJC.Emphasizing the positive aspects of the attorney general’s report, Herbits told The Jewish Week on Tuesday that he welcomed it as a confirmation of the new procedures put into practice during his tenure.“The reforms are working, and we are fundamentally stronger than we have been in years,” he said, asserting that the charges about lack of governance are “old news.”“That chapter is closed and it’s all about the future,” Herbits said.Herbits said he has full confidence in Singer as the WJC’s longtime “policy expert,” noting that the report faulted him on only two aspects of the $1.2 million transfer.How the rest of the Jewish community will respond to the criticism of the WJC and Singer, and how, or if, it will affect his position as president of the Conference on Jewish Material Claims Against Germany and head of an international Christian-Jewish interfaith group remains to be seen.Singer is perhaps best known for playing a leading role in assuring restitution for Holocaust survivors and securing hundreds of millions of dollars in repayment from Swiss banks.

Several Jewish leaders contacted after the attorney general’s report was issued chose not to comment or speculate on the fate of Singer, who is considered brilliant, arrogant and powerful by colleagues.One Jewish leader eager to speak out was Isi Leibler, the former vice president of the WJC and its most vocal critic over the past several years.It was Leibler, a former Australian businessman living in Israel, who called attention to the $1.2 million transfer and urged that there be an outside audit of the organization, which he insisted lacked proper checks and balances.He told The Jewish Week the attorney general’s investigation “exposed in detail the chaos and malpractices underlying the administration of Israel Singer, which he desperately sought to cover up. It has forced the WJC to institute the reforms that I had been calling for and put an end to the system which enabled two individuals to run a publicly funded international Jewish organization like a personal fiefdom.”Leibler said he felt vindicated after he and several other WJC officials were “demonized and expelled” for having called for an independent audit.

Leibler was ousted from his lay post last year, and on Tuesday, the day the attorney general’s report was released, he was hit with a lawsuit by the WJC in Israel for allegedly slandering the organization. The suit for more than $10 million charges that Leibler’s complaints damaged the WJC’s reputation, resulting in a reduction of some $3 million in donations, and caused the group $1.5 million in legal fees.Herbits told The Jewish Week the WJC had grown tired of Leibler’s constant “vilification, attacks and dozens of unfounded allegations.” And he asserted that calls for reform within the WJC go back to Bronfman in 2001, not Leibler in 2004.The WJC filed a defamation lawsuit last year against Daniel Ganzfried, a Swiss journalist, for articles he wrote about the controversial Swiss bank account. The organization is also pursuing legal efforts to prevent Ganzfried from publishing a series of reports on its internal troubles that are said to cast the WJC in a negative light.The London Jewish Chronicle published a story in November saying that Herbits was “considering legal action” against The Jewish Week for publishing an article about the Spitzer investigation dealing with allegations of a “slush fund” of about $2 million provided for Singer by Bronfman.The attorney general’s report found no evidence of such a fund.

It did fault the WJC’s direct mail solicitations for not being registered with the Charities Bureau and for not making good on assurances that Bronfman would match certain pledges.Other former senior personnel at the WJC also came under criticism in the attorney general’s report.

Elan Steinberg, a longtime executive director who resigned in September 2004, and Avi Beker, who headed the Israel branch from 1985 to 2001 and succeeded Singer as secretary general of the WJC in 2002 for a year and a half before resigning, were cited for receiving improper disbursements they are being asked to return.Steinberg was also restricted to an advisory-only position in the WJC in the future, though he is no longer affiliated with the group.The report speaks of the top officials flying first class, staying in five-star hotels and, in Singer’s case, accruing 450,000 points on his personal American Express card for travel expenses that could be applied to frequent flier miles or other benefits.The attorney general’s agreement with the WJC is for five years and calls for meetings with WJC for the organization to report on the progress of “membership, mission, governance, financial oversight and compliance with the policies and procedures instituted in August 2004.”As the investigation dragged on, there was much speculation over whether it would ever be concluded, given that Spitzer is running for governor and reportedly was under intense pressure from high-placed political and business associates of Bronfman to drop the case.

A spokesman for the attorney general’s office told The Jewish Week in June that Spitzer “would not walk away” from the case and that the result would likely call for reforms in the WJC’s financial control and board oversight.That came to pass, though the investigation took at least six months longer than expected.