World Jewish Congress Adopts Governance Reforms
Attorney General Spitzer today announced an agreement that resolves an investigation of possible financial improprieties at the World Jewish Congress (WJC) and its American affiliate.
Under the agreement, WJC, an association formed under Swiss law but based in New York City, and its affiliate, American Section, a New York not-for-profit corporation, will formalize a series of reforms undertaken during the course of the Attorney General's investigation.
"Today's agreement recognizes the obligation of all charitable organizations - particularly those funded through the donations of members of the public - to safeguard their assets through effective financial oversight and accountability," Spitzer said.
The Attorney General's office, which regulates all not-for-profit entities raising funds and/or maintaining charitable assets in New York, began an inquiry of WJC in late 2004 after receiving reports of possible misuse of funds.
After an extensive review of financial records and interviews with dozens of persons, the Attorney General's office concluded that the organizations lacked appropriate financial controls to safeguard charitable assets and failed to keep adequate records regarding their fund-raising activities. The investigation did not reveal criminal conduct.
The investigation focused particularly on an unusual transfer of funds by WJC's former Secretary General and Governing Board Chair, Israel Singer. In early 2003, Mr. Singer transferred $1.2 million from a bank account controlled by the American Section to bank accounts in Europe. The purpose of the transfers was to establish a pension fund for WJC employees. However, Mr. Singer's actions were not approved by any governing body of WJC and were undertaken without appropriate measures to protect WJC's ownership interest or ensure return of the monies.
Neither WJC nor American Section suffered losses from this transaction, but it did highlight major deficiencies in the organizations' administration and helped spark the adoption and implementation of previously-absent financial controls.
The investigation also revealed a series of inappropriate disbursements to senior to WJC employees. These disbursements consisted of payments for 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. In the case of Mr. Singer, the inappropriate disbursements totaled over $300,000.
Earlier this month, Mr. Singer stepped down from his chairmanship of the Governing Board to chair WJC's newly created Policy Council, an advisory body. Under the agreement, Singer and Elan Steinberg - who currently is not affiliated with WJC or American Section but previously held senior positions at both organizations - will be able to assist WJC in efforts promoting its mission but will have no connection to the financial management, supervision or oversight of fund-raising activities of WJC, American Section or any affiliated entity.
The agreement recognizes and makes permanent other reforms instituted by WJC and American Section during the course of the investigation. These include:
- Creation of an audit committee and Chief Financial Officer position;
- Computerization of all financial records;
- Creation of an employment manual outlining official procedures and policies;
- Implementation of travel and reimbursement procedures; and
- Creation of a new fund-raising entity to improve solicitation practices.
The Attorney General commended WJC for undertaking these reforms and cooperating with his office's investigation.
As part of the agreement, WJC and American Section will make periodic reports to the Attorney General's office on their compliance with the reform requirements.
WJC was founded in 1936 to foster the unity of Jewish people and fight persecution that was occurring in Nazi Germany. After the war, the organization was a leader in obtaining restitution for victims of the Holocaust.
The investigation was conducted by Section Chief Carolyn T. Ellis and Assistant Attorney General Tamar Eisenstat, with supervision from Bureau.