By Canaan Liphsiz

Ahead of a potentially messy libel case, the world’s richest Holocaust restitution organization, the Conference on Jewish Material Claims against Germany, has offered to give Israeli survivors money in exchange for their public support and a vow to refrain from criticism, Haaretz has learned.

The survivors, represented by the Centre of Organizations of Holocaust Survivors in Israel – an umbrella group – refused the offer of the U.S.-based Claims Conference, calling it an “insulting bribe meant to silence legitimate criticism.” Some are demanding that the Centre break ties with the Claims Conference.

An advocate of the Claims Conference said the offer was made because of “irresponsible and damaging behavior” by people from the Centre of Organizations.

The dispute erupted after the Claims Conference offered a no-interest, 12-month loan of $200,000 to the Centre of Organizations in an internal, unsigned contract, obtained by Haaretz. The loan, intended “to prevent the Centre’s economic collapse,” is conditioned on the Centre “aligning itself” with the Claims Conference and refraining from voicing any criticism.

The Claims Conference represents world Jewry in negotiating compensation for victims of Nazi persecution and their heirs. It also administers compensation money and funds institutions providing social welfare to Holocaust survivors, including the Centre of Organizations. Israel is home to some 250,000 Holocaust survivors, many of them poor.

The final clause in the proposed contract stated that, should the umbrella group take the money and then criticize the Claims Conference, it would be required to repay the debt immediately, and the Claims Conference would halt future funding.

The Claims Conference gives $50 million annually to the Centre’s Welfare Fund, an independent body. A spokesperson for the Claims Conference said the final clause does not pertain to this annual funding.

Representatives from the 51 groups that make up the Centre of Organizations met to discuss the proposal on Wednesday. “We were outraged,” one representative told Haaretz. Another said: “It’s obviously an attempt by the Claims Conference to prepare for their libel suit against journalist Guy Meroz.”

Last year the Claims Conference sued Meroz over his documentary “Musar Hashilumim” (“The Morality of Payments”), which aired in May 2008, and accused the organization’s leaders of withholding funds from survivors until after they had passed away. The case has not yet reached the court.

“Welfare organizations in Israel are on the brink of bankruptcy and the Claims Conference is trying to take advantage of this,” a source said. “It’s worse than offering a bribe: It’s a dictatorial attempt to silence opposition.”

But Mordechai Hareli, a representative of the Centre of Organizations, said the offer “cannot be defined as a bribe.” Hareli, who called Meroz’s film “sensationalistic,” added: “I highly value the Claims Conference’s work from 1951 until today. I don’t know where we and this country would be now without the Claims Conference. But that doesn’t entitle them to trample us.”

He added that had the authorities in Israel “properly taken care” of Holocaust survivors, then “survivors would not have to beg the Claims Conference in the first place.”

The Claims Conference said the Centre of Organizations is asking for funding to cover “operational costs,” not welfare projects. The Claims Conference called this funding request “highly unusual” but said it was considering agreeing anyway, considering the absence of other funders.

A Centre of Organizations board member countered by saying the Claims Conference had funded operational costs for years, before pulling the plug two years ago. “Now it’s conditioned on servility,” he said.

A source close to the Claims Conference’s leadership said: “People from the Centre of Organizations have recently lashed out at the Claims Conference, damaging both bodies. It’s unthinkable for the Claims Conference to be expected to fund a body which behaves like this without making sure it acts responsibly for the common goal of helping survivors.”

Head of the Centre of Organizations, Noah Flug, declined to comment.