A new Claims Conference report on the mishandling of a 2001 warning about internal fraud called for a restructuring of the Holocaust restitution organization, saying best practices and competence were missing.

But on July 7, two of the four members of the committee tasked with reviewing the 2001 episode disavowed the report and resigned.

The committee was asked to review how the Claims Conference acted after receiving an anonymous letter in 2001 identifying several highly problematic restitution claims. Top Claims Conference officials who looked into the allegations, including the current chairman of the organization, Julius Berman, failed to detect that a broad fraud scheme was underway that would reach $57 million before it was stopped in 2009.

“Best practice and competence were missing in respect of this matter,” the report said of the 2001 episode. It said there was a “real need for improvements in the Claims Conference’s administration, management and governance, generally.”

The report was produced for the committee by Claims Conference ombudsman Shmuel Hollander. After receiving the report, two of the committee’s four members disavowed it and resigned, saying the report was seriously flawed and they could not stand by it.

The two remaining committee members — Reuven Merhav, chairman of the executive committee of the Claims Conference, and Robert Goot, chairman of the governance committee — stood by the report. The Forward, which broke the story, posted the report online July 8. — jta