February 23, 2006 | Read Time: 4 minutes
The New York attorney general’s office has prohibited the former chairman of the World Jewish Congress, Israel Singer, from holding any position involving the “financial oversight, management, or supervision of fund-raising activities” at the organization.
The World Jewish Congress is an international Jewish advocacy group, best known for its role in recovering billions of dollars taken by European banks from Jews during World War II. It is based in Geneva, but its American affiliate is in New York.
The action involving Mr. Singer came as part of a settlement agreement between Attorney General Eliot Spitzer and the charity. The agreement requires Mr. Singer to repay $132,000 to the organization, and prohibits the organization’s former executive director, Elan Steinberg, from participating in any management of the WJC’s financial activities.
Now some lawyers who specialize in nonprofit affairs are questioning whether Mr. Spitzer’s actions went far enough, given how he has punished other charities he has investigated. They say that in similar situations the attorney general has often required that board members be replaced, and they wonder whether political considerations might have played a role in his decision. Mr. Spitzer is running for governor in a state where the Jewish vote often plays a key role. His office vehemently denies, however, that the outcome was affected by any factor other than the facts of the case.
Mr. Spitzer’s office spent 15 months investigating allegations of financial improprieties at the World Jewish Congress and concluded that the organization suffered from an “absence of any oversight of financial matters by its governing bodies.”
Employees were frequently paid in cash, financial records were kept on paper rather than computerized, and documents were often missing, according to the settlement agreement.
At the heart of the investigation was the transfer of $1.2-million by Mr. Singer from the World Jewish Congress’s bank account in New York first to a Swiss bank account and then to an account in London under the custody of an Israeli lawyer, Zvi Barak.
Mr. Barak had no official relationship with World Jewish Congress at the time, although he had worked with Mr. Singer on the group’s efforts to recover billions of dollars that European banks took from Holocaust victims.
The attorney general’s investigators determined that for more than a year the money was under Mr. Barak’s personal control, without any formal agreement stating that it belonged to the World Jewish Congress or explaining the terms of the arrangement.
It added that the funds were intended to be used to establish a pension fund for Mr. Singer, and concluded that despite the organization’s negligence in overseeing its finances, “these shortcomings did not compromise the core mission of the WJC.” In the end, the agreement stated, the congress did not lose any charitable assets.
Concern About Approach
Despite that finding, several lawyers who work with nonprofit groups said they felt the attorney general had been overly lenient with the congress.
Speaking on condition of anonymity because their law firms sometimes handle cases involving Mr. Spitzer’s office, the lawyers pointed to several cases in recent years in which the attorney general replaced the boards of charities for failing to properly oversee financial activities, including actions involving the Black United Fund of New York and the Grand Marnier Foundation.
In 2003, Mr. Spitzer’s office reached an agreement with the Black United Fund, installing a new board after an investigation found that the group’s funds were being invested in real estate and other ventures at the same time that it had fallen behind in payments committed to the local organizations it pledged to support.
In 2004, the attorney general settled a lawsuit with the Grand Marnier Foundation by requiring three board members to give up their seats and return $1.5-million in what regulators said was excessive compensation.
The lawyers pointed to several factors they said could have influenced the outcome of the World Jewish Congress case: The congress president is Edgar M. Bronfman, the billionaire former chief executive of the Seagram Company, whose family has donated tens of thousands of dollars to Democratic and Republican candidates in New York over the past decade. The congress’s lawyer is Robert Abrams, former attorney general and an influential player in the state Democratic Party.
But Juanita Scarlett, a spokeswoman for Mr. Spitzer, said the cases presented very different circumstances from the World Jewish Congress situation. What’s more, she said, the World Jewish Congress took quick action in response to Mr. Spitzer’s suggestions.
For instance, at the prompting of the attorney general’s office, the World Jewish Congress board made a number of changes in the way it oversees the charity’s finances, she said.
She insisted that the attorney general’s only consideration in determining the terms of the settlement agreement was the facts of the case. “You can’t compare this to other cases; we look at things on a case-by-case basis,” Ms. Scarlett said. “In this case, the congress has put in place what we think are appropriate corrections.”
Avner Tavori, spokesman for the congress, said the organization got no favorable treatment from Mr. Spitzer. “We’ve been through a grueling process with them,” he said.
