Taking Personal Responsibility: Worldcom

By Rabbi Jay Kelman

The conviction of former Worldcom Inc. chairman Bernard Ebbers on multiple counts of fraud and the like raises the question of executive responsibility for actions of others in the company. Mr. Ebbers’ defence was that he did not understand the accounting irregularities conducted by his Chief Financial Officer. From a Jewish perspective what is most interesting is the fact that the case revolved around the believability of his claim of ignorance of the goings on in the company which he headed. There was never a claim that he himself perpetrated fraud, rather that he ‘pushed’ his staff to achieve better results leading them to doctor the books.

While the Torah is meant to serve as a moral guide, the Torah court system is one that deals primarily in legal issues and from a legal perspective one can only be held accountable for crimes that one actually perpetrates. Thus Jewish law prescribes (in theory) a death penalty for the hit man who kills, while the organized crime leaders who send him, would escape such a fate. The CEO who directs fraud to be committed by others escapes legal liability whereas the underling who carries out such orders must bear the full brunt of the law.

While secular law seeks to punish the ringleaders of criminal activity, Jewish law turns its initial attention to the perpetrators of the illicit activity itself. The moral failings of the ‘bosses’ are to be dealt with by G-d at the appropriate time; one can be liable in the heavenly court but absolved in the earthly court. No such luck awaits the low level employee following the bosses’ orders; the Torah demands that one take personal responsibility for ones action, and pinning the blame on another is a moral failing with legal implications. As the Talmud phrases it when the Master (G-d) tells you something and the servant (man) tells you something to whom shall you listen? It is therefore the CFO of Worldcom Inc. as the actual perpetrator of criminal activity who should receive the greater ultimate punishment.

Nevertheless Jewish law recognizes the legal right of a secular government to establish law and order as they see fit. If that means greater jail time for overseers of crime, so be it. Furthermore while the Jewish legal system itself does not allow for vicarious punishment, Jewish courts do have extra judicial powers that may be used, provided there is a strong likelihood of correcting a social wrong. Thus if evidence existed that jailing criminal ringleaders would actually serve as a deterrent to others, Jewish law would recommend looking beyond the legal issues in order to focus on the social one of reducing crime by all means possible.

This article originally appeared in the March 5, 2005 Money Matters column of the Canadian Jewish News.

Rabbi Jay Kelman is a founding director of Torah in Motion, an educational institute dedicated to inspire Jews to engage with the challenges and opportunities of the modern world through the prism of Jewish law, values and traditions. Rabbi Jay teaches ethics and Rabbinics at the Community Hebrew Academy of Toronto. Rabbi Kelman served for nine years as Rabbi at Beth Jacob V’Anshei Drildz and was a practicing accountant, earning both his Chartered Accountancy (Canada) and CPA (USA) designations; working in the International tax Department of a large international firm.

Suing For Bad Advice

By Rabbi Jay Kelman

Can one sue for bad advice? In the specialized marketplace in which we operate we are all dependant on advice of other, be they accountants, lawyers, real estate agents or doctors and Rabbis. What if their advice turns out to be wrong, causing one a financial loss?

Offering well intentioned advice is a wonderful mitzvah; yet unless one is eminently qualified to do so and one can do in an impartial way, looking out for the best interests of the ‘client,’ it is best to remain quiet. Jewish teachings have long recognized that there is an inherent conflict of interest in the advisory role. The advisor is interested in enriching themselves, whether financially or otherwise, while the client is interested in getting solid unbiased advice. This in of itself does not present a moral issue, provided the advisor has “fear of G-d” engendering an ethical sensitivity that will ensure that he or she keeps the clients’ interests uppermost and tries to eliminate all known biases. While no one likes to pay for poor service, there are times when one must do just that.

Jewish law looks at two main criteria in assessing liability: the professional credentials of the advisor and whether services were rendered free of charge. Additionally, as a general rule, liability is only imposed if the loss is due to an error of competence that should and could have been foreseen by a professional advisor. Errors of judgement or analysis in which there was no clear incompetence would not be actionable. Thus an accountant dispensing tax advice which, unknown to him, was against the law would be liable for any penalties incurred. However that same accountant who suggests an investment that goes awry would not be liable for losses incurred.

Interestingly Jewish law posits that an expert, i.e. licensed professional, is to be held less accountable than a layperson for any errors caused. While such a professional is liable if he is being paid for his services, services offered on a pro bono basis are free from potential lawsuits. You get what you pay for. However that exact same advice offered by a non-licensed professional would incur a legal obligation to compensate for direct financial losses. Only if the non professional makes it perfectly clear that their advice should not be relied on will they be absolved of payment.

This article originally appeared in the January 5, 2005 Money Matters column of the Canadian Jewish News.

Rabbi Jay Kelman is a founding director of Torah in Motion, an educational institute dedicated to inspire Jews to engage with the challenges and opportunities of the modern world through the prism of Jewish law, values and traditions. Rabbi Jay teaches ethics and Rabbinics at the Community Hebrew Academy of Toronto. Rabbi Kelman served for nine years as Rabbi at Beth Jacob V’Anshei Drildz and was a practicing accountant, earning both his Chartered Accountancy (Canada) and CPA (USA) designations; working in the International tax Department of a large international firm.

Should we charge guests for Yom Tov seats?

By Rabbi Jay Kelman

Money and religion often makes for a volatile, albeit necessary mix. Jewish law requires that all members of the local community contribute to the building and maintenance of a shul, school, mikva, library and the like regardless of the amount of usage they make of it. In fact a minority can force an unwilling majority to allocate funds for such a purpose, despite the protestations of the majority that they are happy to say, pray in somebody’s house (or not pray at all).

While the Jewish community no longer has the coercive powers to tax its members, guidelines developed over the centuries that are still applicable on a volunteer basis. Recognizing that while each member of the community can benefit equally from services provided but have different economic means, Jewish law has generally allocated half of basic synagogue expenses on a per captia basis and half based on ability to pay. The costs of synagogue “extras” such as fancy windows or a beautiful social hall should be borne mainly by the wealthier members of the congregation.

Rav Moshe Feinstein (d.1986) ruled that one is not allowed to leave a synagogue with its large dues structure and establish another shul with cheaper dues. This ruling applies, even if the nusach (style), tunes, or even ideology of the new shul is more in line with its founders (provided the established synagogue practices do not violate Jewish law).

In theory a community is within its right to deny non paying (well to do) members the right to daven in their shul, not just during the high holiday season but all year. However before implementing such a harsh policy, one must determine if overall religious observance will be enhanced thereby, taking into consideration such factors as to whether alternative “free” services are available.

However the requirement to pay “membership” dues only applies to residents of a community. In keeping with communal hachansat orchim(welcoming guests), visitors should be welcomed without expectation of fee. This approach, I believe, should be adopted worldwide so that membership in one shul entitles one to seats in any other shul. Imagine what that would do for the sake of Jewish unity.

This article originally appeared in the September, 2003 Money Matters column of the Canadian Jewish News.

Rabbi Jay Kelman is a founding director of Torah in Motion, an educational institute dedicated to inspire Jews to engage with the challenges and opportunities of the modern world through the prism of Jewish law, values and traditions. Rabbi Jay teaches ethics and Rabbinics at the Community Hebrew Academy of Toronto. Rabbi Kelman served for nine years as Rabbi at Beth Jacob V’Anshei Drildz and was a practicing accountant, earning both his Chartered Accountancy (Canada) and CPA (USA) designations; working in the International tax Department of a large international firm.

Improper Use of Company Resources

Each week Rabbi Yoel Domb writes about issues of business ethics related to the Torah portion of the week.

One of the most common ethical issues in the business world is the use of company resources by employees. Where do you draw the line between an employee utilizing corporate resources for the benefit of the company and using them solely for his own personal gain? For example, an employee may have access to a company car during the day and at night, but whereas in the day he rarely travels for the company, he is constantly using the car for social engagements at night.

There are really two aspects involved here: 1.) The tax issue 2.) the personal benefit issue. In terms of taxes the company will claim that the employee receives the car as part of his job and thus they are entitled to deduct it as a company expense even if not all of his journeys are for the company. Needless to say the tax authority will demur, claiming that only company -related activities can be deducted as expenses. In a landmark legal case in 1959 the Israeli tax authority sued the Dan bus company, claiming that the clothes which had been given to the employees were not just a uniform, but constituted a taxable allowance. The court distinguished between clothes which basically served the employer, which were deductible, and those which could technically be used only for the employee’s benefit, which were not .

This problem transcends the legal arena if we take into account that a company is supported by shareholders who expect the employees to utilize resources and facilities for the good of the company. Similarly, a government office which is supported by taxpayers money should ensure that this money is put to good use and not wasted on employees needs. On the other hand, it is impossible to totally eliminate personal benefit. For example, if an employee continues to wear his work clothes while driving home in a company car, he is using company facilities for his own benefit.

In Parshat Tezave the priestly garments are described in detail. The Torah emphasizes that these garments are “for honor and for glory,” so that the high priest should look dignified and regal as befits his illustrious position. The Torah also states another function of these clothes: “to sanctify him (Aaron, the high priest) for My service.” The implication of this dual purpose seems to be that a high priest’s duties do not end when he completes the Divine service. He is on show at all times and must maintain his regal attire accordingly. However, even the high priest is forbidden to wear these garments when he leaves the Temple (Rambam, Klei Hamikdash 8:10), as they were donated for holy use and cannot be utilized for his own benefit.

There are differing views regarding a regular priest who has completed his service. Rambam (better known as Maimonides) maintains that since the clothes were given in order to derive benefit from them, the priest is permitted to wear them for the rest of the day, as long as he is in the Temple . The commentators (see Ri Korkos ,ibid 8:11) infer from this that he is allowed to put the priestly garments on again even if he took them off after completing his service . However,Tosafot (Yoma 69a) says that a priest may not put on his priestly garments after taking them off, and is only permitted to continue wearing clothes he worked in.

The source of this dispute appears to be another Talmudic statement: “There is no law of sacrilege regarding the priestly garments, since the Torah was not given to angels.”(Kiddushin 54a)The law of sacrilege requires atonement for any profane benefit derived from holy objects. However the Torah recognizes that priests cannot divest themselves of their clothes immediately upon concluding their service and therefore they may continue to wear them. Rambam sees this as a definitive ruling which allows the priest to derive any benefit from the clothes, while Tosafot contend that this is only permitted because of human fallibility but does not grant a sanction to derive other personal benefit from the clothes.

The above discussion shows us that the Torah was cognizant of the inherent problem in allowing individuals to use public resources, and sought to establish guidelines which would define when the individual can use such resources. Ultimately each company and each office must maintain its own rules, but the message is clear: The employee should not consider company property to be his own, as we learned from the Torah’s prohibition against priests taking home their garments, since these were designated for hallowed service. Yet he may use the facilities even when not directly involved in company work, since “the Torah was not given to angels.”

Rabbi Yoel Domb is a graduate of JCT and a member of the faculty of the JCT Bet Midrash. He was awarded a fellowship from the Center for Business Ethics for the academic year 2000-2001. He is currently researching topics of business ethics in Jewish Law and is preparing a curriculum to facilitate the teaching of these topics in Rabbinical seminaries (Yeshivot).

 

Encouraging Early Retirement

Each week Rabbi Yoel Domb writes about issues of business ethics related to the Torah portion of the week.

Two recent legal cases in the Israeli courts focused on what has become a painful problem for many people- the need to retire at a certain age. In one case, a 61-year-old lady who had worked for 30 years in the same office claimed that she was being fired due to her age, as there was no other reason for replacing her with a younger worker. She was subsequently awarded damages for age discrimination. In the other instance a 65-year-old made a very similar claim-that she was being fired because of her age and that this constituted discrimination- but the court coldly dismissed her case. The judge concluded that while Jewish law does not make any provision for official retirement, Israeli law does state 65 as the age of retirement, and therefore the dismissal of a worker who reaches that age cannot be construed as age discrimination. (See: Tel Aviv labor court -200256/99 and 912492/99, cited in “Law Review”-legal sources for lawyers )

It has become an accepted practice in most countries to fix a specific age at which workers must retire. There are a number of legitimate reasons for this: Most people wish to spend their final years in a less intense environment than the workplace, while employers usually want to get rid of older workers because their strength and productivity wanes with age, and a younger worker can inject fresh energy and creativity into the work. The problem arises when an effervescent older person wants to continue with his job, while his employer still wants to replace him with a new worker. Dismissing such a worker even when it is legally correct can cause the worker much anguish and insult, and may not necessarily be the correct thing to do. A more sensitive approach might advocate gradually reducing his level of activity while utilizing his immense experience in a consulting position. In this way the worker will preserve his dignity and sense of worth even into old age.

Interestingly enough, in the U.S. a 1986 amendment to the Law of Age Discrimination eliminated mandatory retirement altogether, meaning that employees can legally claim discrimination at any age if they are forcibly retired, except in a select few professions. Thus, if the above cases had taken place in America, the 65-year-old would probably have received compensation as well.

What is the Torah’s position on this topic? Does the Torah recognize retirement as a necessary aspect of life? In Parshat Behaalotcha the Torah delineates the ages at which the Levites can perform their service:

 

“This is for the Levites: From twenty five years old and upwards they shall go…. to the service of the tent of meeting; and from the age of fifty years they shall go out of the ranks of service, and shall serve no more. They shall minister with their brothers at the tent of meeting, to keep the charge, but shall do no work.”

 

The first verse seems to establish both a lower age limit and an upper one for the work of the Levites. Yet the second verse emphasizes that they can still perform some tasks, although not official “work.” Rashi, quoting Chazal (Sifrei Behaalotcha 5), says that the Levites cannot continue to carry the holy items in the Tabernacle such as the Ark, but they are allowed to sing (as required with certain sacrifices) and to perform other tasks. Clearly a Levite is not considered “over the hill” when he reaches fifty, and yet provision is made for the fact that he lacks the strength he used to have and must therefore do easier work.

Another approach to this problem of aging could be to allow others to assist an older worker in performing his tasks. The Rashba was asked by an elderly cantor whether his son could help him by reading from the Torah since his eyesight and strength of voice had diminished. The congregants evidently did not enjoy the son’s voice as much as his father, but the Rashba emphasizes that since the congregation knew that no man can maintain his strength and ability all his life without sickness or other difficulties, he is entitled to have his son assist him with his duties. Thus the Rashba recognizes the right of an aging worker to continue his work with assistance.

One apocryphal source may prove the irrelevance of age in discharging duties. The Talmud (Chulin 24) states that a priest may work “until he is old.” Rabbi Chanina explains that when a person trembles from old age he cannot perform his duties. The Talmud, however, adds another interpretation of old age from the laws of purity: Whoever can stand on one foot and take off or put on his shoe is still considered young. It is recounted that Rabbi Chanina was eighty years old and could still doff his shoes in this way, and he attributed this to the devoted care he received from his mother as a child.

Possibly this story is brought to illustrate that many old people can still perform many complex tasks even if they are technically “old,” and we should not flippantly terminate their employment just because they reach a certain age. If necessary, we can make their work easier by providing assistance or by assigning them to easier jobs, like the elder Levites. Thus we can fulfill the eternal words of King David:

“They shall flourish more in old age, and be fresh and full of strength.” (Tehilim 92)

Rabbi Yoel Domb is a graduate of JCT and a member of the faculty of the JCT Bet Midrash. He was awarded a fellowship from the Center for Business Ethics for the academic year 2000-2001. He is currently researching topics of business ethics in Jewish Law and is preparing a curriculum to facilitate the teaching of these topics in Rabbinical seminaries (Yeshivot).

Associating with Evil

Rabbi Yoel Domb writes about issues of business ethics related to the Torah portion of the week.

There are many people who work for a company or business concern whose values they cannot conform with. For example, they may work for an advertising company which promotes cigarettes for juveniles even though they would intuitively prefer not to encourage people to smoke. Alternatively, they are employed by a company which plagiarizes other brand name products and sells cheap imitations, or they may have to devise technology whose only purpose is to assist the mass distribution of pornographic material. While many people will argue that their presence in such firms does not imply their identification with its values, they may suffer moral angst when confronted with the consequences of their company’s policies. Can these people be held responsible for their company’s decadent behavior? Will the company’s behavior have a detrimental effect on them as well?

An answer to these questions emerges from Parshat Lech Lecha, which deals at length with Avraham’s association with his nephew Lot. Lot is at first attracted to Avraham’s rejection of his forebears’ idolatrous practices, but later on he is blinded by dreams of material comforts and a life of pleasure without spiritual demands. Rabbi Zalman Sorotskin draws attention to the unusual phraseology at the beginning of the Parsha:

“Avraham went when G-d spoke to him, and Lot accompanied him; Avraham was seventy five years old when he left Charan”.

Avraham had not intended to take Lot along. He had received the Divine command to journey to Israel and intended to go alone. Lot, however, joined him, knowing that “Avraham was seventy five years old” and childless and Lot hoped to inherit Avraham’s wealth.( This is why Avraham’s age is mentioned at this juncture.) Avraham obviously discerned his nephew’s true intentions, but he hoped to groom Lot to be his true spiritual successor.

The watershed point at which Avraham realized that Lot would not succeed him is a seemingly minor incident. Avraham’s shepherds initiated a fight with Lot’s shepherds. Chazal explain that the fight was not merely over land rights, since as Avraham pointed out “all the land is before you”-there was room for everyone. However, Lot’s shepherds let their animals graze in all fields, while Avraham’s shepherds were careful to prevent any theft by their animals and only let them graze in open territory. Lot’s shepherds contended that the land had anyway been promised to Avraham and because Lot would eventually succeed him he should be able to graze his animals anywhere. Avraham’s shepherds saw this as theft, and in response to this, Avraham declared to his nephew:

“Please separate from me! If you go left, I will go right, and if you go right, I will go left”.

Avraham’s reaction appears to be radical and exaggerated. Instead of using quiet diplomacy to persuade Lot to rectify his moral standards, Avraham opts for a complete separation from his kinsman. Avraham must have felt a sense of total failure and bitter isolation upon seeing his star protegé choosing to live in Sodom, which represented the antithesis of all that Avraham stood for. Why did Avraham send Lot away, and not try to influence him towards the correct path?

Moreover, Lot’s shepherds had a salient point: if the owners of these fields had really wanted to protect their fields from trespassing animals, they should have expressed their objections or built a fence around their fields. Indeed, this point is made by the sage Abaye, when he is sent by Rav Yosef to rebuke the shepherds of the Tarbu family for letting their goats graze in his fields. (Bava Kama 23b). Abaye’s response is that the shepherds will claim that Rav Yosef should have built a fence if he wanted to protect his fields. There are even authorities who uphold Abaye’s argument as halacha (see Rach, Bava Kama ibid). If Lot’s shepherds may have been justified in their arguments, why was Avraham so insistent on a complete separation from his nephew?

The Netsiv in his preface to Bereishit ponders why the forefathers are described as “honest” people (Bamidbar 23:10, see Avodah Zara 25). He explains that there were many righteous people in Jewish history who studied Torah but were not scrupulous in their dealings with others less pious than themselves. The forefathers, however, exhibited exemplary honesty and justness even when dealing with evil nations. We can glimpse Avraham’s sense of propriety from his impassioned plea to G-d to spare Sodom from destruction, even though he eschewed their way of life. Similarly, Avraham’s refusal to take anything from Sodom when he rescues its king in battle demonstrates his abhorrence of taking money for performing a good deed.(contrary to the prevailing norm at the time of “to the victor go the spoils”).

Avraham viewed himself as a leader and as a role model for all the other nations. At this moment he had no progeny of his own, and therefore hoped to leave behind him a powerful legacy of honesty and fairness. Thus he could not allow himself to be associated with even the slightest trace of deceitful behavior. Lot’s shepherds may have had a legal point, but in a country with so much available land there was no justification for grazing in other people’s fields. Avraham therefore separated from Lot in order to maintain his name and his personal values.

Correspondingly, every Jew has inherited Avraham’s legacy of integrity and therefore cannot allow himself to be besmirched by associating with corrupt and sinful practices. If however, he is not directly involved in anything deceitful but merely provides services for wicked people without having to endorse their actions, this could be compared to Avraham’s willingness to assist evil people when they genuinely needed his help. It would be advisable, however, to keep a low profile even in such situations, just as Avraham refused to accept any remuneration from Sodom, so that his money should not be associated with them. Ultimately he should endeavor to associate only with righteous people, as Shlomo Hamelech says “That you may walk in the ways of good men, and keep the paths of the righteous”.(Mishlei 2)

Rabbi Yoel Domb is a graduate of JCT and a member of the faculty of the JCT Bet Midrash. He was awarded a fellowship from the Center for Business Ethics for the academic year 2000-2001. He is currently researching topics of business ethics in Jewish Law and is preparing a curriculum to facilitate the teaching of these topics in Rabbinical seminaries (Yeshivot).

“All I Need to Know about Business Dishonesty I Learned at School”

by Dr. Meir Tamari

Evidence seems to be mounting that cheating on exams in schools has reached epidemic proportions in almost all Western countries. A recent issue of the READERS’ DIGEST describes in gory details the extent of cheating in the United States, and other countries have similar records. It is perhaps easy to dismiss cheating on exams as a form of youthful pranks or misdemeanors. Yet even a cursory examination will show, that in actual fact the mind frame behind such cheating is a preparation for dishonesty in business. The motivation, the evaluation of the action, and the spiritual framework within which cheating on exams exists, all promote unethical behavior by workers, by employers, and by consumers. From the seemingly small beginnings of such cheating ultimately grow the white collar criminals of the future as well as the dishonest behavior regarding money and wealth. Any concerted effort in the field of ethical education in business must, of necessity, therefore concern itself also with this phenomenon in the school systems.

Rationalizing Dishonesty

Many students, who would never actually steal money or goods from their neighbors or stores, find it hard to see in their cheating an example of theft. They are not taking any tangible or physical objects as the person from whom they copy retains the exam or term paper. There are many actions in business life that are easily rationalized along the same lines; copying of software and reproducing cassettes, nondisclosure of pertinent financial information or of defects in goods or services sold, and some aspects of advertising. Jewish law, however, recognizes a form of dishonesty beyond theft which it includes in the concept of “geneivat da’at”, literally stealing the mind or creating a false impression. The student cheating is stealing the mind of the examiner and of the public authority that grants accreditation and certification. Furthermore, in later life, using the same unearned grades, employment is obtained, thus deceiving the employer.

There are many cases where the cheating on exams is actual theft, whereby the person from whom the answers are copied loses their relative advantage. For example, where a short list for admission to university or employment exists, the cheater may easily displace the other person thereby causing them loss.

“Every body Does It!”

A major factor determining the scope of cheating in school is the degree of clearly expressed disapproval by parents, peers, school authorities, and the general public. In those societies, where such disapproval exists, the cheating becomes a marginal phenomenon, so that even if it exists, it does not lead to widespread unethical behavior in the future. Conversely, where parents condone the action of their children or where the school fails to punish the culprit, or to show in any other way its disapproval, a clear message is given encouraging unethical behavior. The same message is given when the financial affairs of parents or teachers or communal leaders are conducted in an immoral fashion. Any immorality or unethical action on the part of adults encourages a student to follow suit. So cheating on taxes, abusing employers facilities or goods, evading one’s financial obligations, exploiting one’s workers, or for that matter any and all of the myriad possibilities for unethical business behavior, tell the student that all methods for achieving one’s aims, in this case, unjustified grades, are justified. Surely this is a preparation for dishonest and unethical business practices in the future!

Jewish law provides numerous examples for expressing public disapproval for unethical behavior. For example, one who reneges on a contract or does not fulfill their obligations, is considered to be lacking in faith in G-d. So Mi Shepara: “He who claimed His debt from the generation of the Flood and of the Tower of Babel and of the people of Sodom, will surely punish one who does not keep his word,” — was recited in the synagogue in the presence of the offender and his family.

Secret Crimes

In many cases today, cheating in school is done openly and is not longer the secret crime that it was in other times or other societies. This removes a major deterrent to dishonesty, namely the fear of discovery and punishment. The same is true of the many areas in business where unethical practices are conducted publicly and thereby become acceptable norms. It is this acceptability of economic immorality that distinguishes corruption from the fraud, condemned by society and practiced secretly. There are no secret crimes in Judaism since all is known by G-d.

The Perpetrator’s Moral Problems

Over and above any effect that cheating in school may have on future employers, on fellow students, or on the scholastic achievements of the cheat, Judaism stresses the moral damage done to the perpetrator. This applies to all ethical and immoral actions, making restitution and punishment only partial considerations. Far more important is the necessity for the guilty person to rectify the moral imbalance through recognition of the fault and determination not to repeat it. Until this is done, the account with Heaven remains unpaid.
Dr. Tamari is the former chief economist of the Office of the Governor at the Bank of Israel, and the founder of the JCT Center for Business Ethics and Social Responsibility.

Accountability and Auditing

Each week Rabbi Yoel Domb writes about issues of business ethics related to the Torah portion of the week.

The concept of accountability implies that a person who assumes a position of responsibility should at all times be able to justify his behavior and actions while holding that position. Ideally a person should be his own best attorney, and should never need external aid in acquitting himself before the public. However due to the fallibility of human nature and the tendency of most people to act inconsistently, it is imperative that a separate system of checks and balances should exist which can effectively monitor and scrutinize the actions of individuals. The realm of fiscal accountability requires special attention because of the very common human proclivity to waste resources or misuse them. For this reason the profession of auditing exists, to gain an external view of how a firm or organization is operating and to assess its fiscal situation.

The problem here is where to draw the line between trust and supervision. If a person would feel that at all times his actions are under close supervision he may act in a way which is contrary to the goals for which he was chosen. However, if he is given free reign he could also make irresponsible decisions. Is it not enough for us to know that the person is trustworthy and meritorious, and hence we can assume that he is working in the best interests of the public? Dr. Ernst Nebenzahl, the late Israeli State Comptroller for 20 years and president of the Jerusalem College of Technology, insisted that “trustworthiness is a necessary requirement for a public servant, but it is not sufficient. In addition there must be proper supervision, and an organized supervisory system.”(Quoted by Miriam Ben Porat, memorial brochure to Dr. Nebenzahl)

In Parshat Pekudei we find detailed accounts of every contribution to the Tabernacle and what it was used for. Moreover the Midrash (Shemot Rabba 51) comments that Moshe did not do the accounting on his own, but rather enlisted Aharon’s son Itamar to help him. This is inferred from the passive form “was brought to account” (“poked”) rather than the active, “counted” (“pakad”). The Midrash praises Moshe for this, citing the verse (Proverbs 28:20) “Man of faith, prince of blessings.” At first glance the Midrash seems to say that through his sterling conduct Moshe brought blessings to the nation, but possibly the Midrash means that through his willingness to undergo the external audit of Itamar, Moshe himself merited the people’s blessings. Parenthetically we should add that Moshe had forgotten certain items when balancing his books, and needed Divine help to account for all the contributions to the Tabernacle. (Tanhuma 7)

From this source we can see an unequivocal viewpoint favoring close supervision. Yet the very next Midrash quotes another verse which emphasizes the opposite view. In Kings I, XII, we read concerning contributions to the Temple: “They would not take an account from the people whom they gave money to distribute to the workers, because they worked on trust.” This source seems to teach us that honest people in sensitive positions should not have to furnish explanations for the way they allocate funds. Indeed, the Talmud (Bava Batra 9a) derives from here that “we do not make accounts in charity matters (asking what was done with the funds-Rashi),” and this Halacha is quoted by Maimonides and the Shulchan Aruch,the Code of Law(Yoreh Deah 257,2).How can we reconcile this with the previous Midrash?

Rabbi Levi, son of Gershon (Gersonides) was a thirteenth century polemicist and commentator who sought to resolve this contradiction. He maintains that even though there is no legal obligation to account for one’s actions, there is still a moral need to give a clear account in order to prevent any suspicion. The concept of preventing unfounded suspicion is also a biblical idea- The Mishna in Shakalim 3:2 writes that the person responsible for emptying the collection boxes in the Temple did not enter the room with a doublet (which could conceal cash in its folds) or with shoes, because if he became rich people would assume it was from the collection boxes ,and if he became poor people would assume he was punished for absconding public funds. The Torah states that “You should be clean before G-d and Israel” (Numbers 32:22), specifying that personal integrity must be transparent and not just between man and his creator. The rule that we do not question what was done with charity money does not negate the need for a collector to give detailed accounts. On the contrary, it should be in his interest to prevent any suspicion and unfounded criticism of his good name.

We can now perceive that a delicate balance is necessary here. Judaism believes in trust and good faith but expects the individual who has gained the public’s trust to establish of his own accord an effective auditing system. Such a system would ensure that he has not erred and would maintain his reputation in the eyes of the public.

Rabbi Yoel Domb is a graduate of JCT and a member of the faculty of the JCT Bet Midrash. He was awarded a fellowship from the Center for Business Ethics for the academic year 2000-2001. He is currently researching topics of business ethics in Jewish Law and is preparing a curriculum to facilitate the teaching of these topics in Rabbinical seminaries (Yeshivot).

 

Reneging on a Deal

Each week Rabbi Yoel Domb writes about issues of business ethics related to the Torah portion of the week.

Is a Jew allowed to renege on a business deal? For example, if Reuven entered a shoe store and bought himself a pair of shoes, and later decided that he doesn’t really need another pair of shoes, is he allowed to return them? Even assuming that the store will take the shoes back and refund his money, does the Torah allow Reuven to renege on the deal simply because it doesn’t suit him?

Shimon ordered a new closet from his furniture store. He paid half the money up front and promised to pay the rest on delivery. Later that week Shimon found a better closet for a similar price. Can Shimon request a refund and cancel the previous transaction?

Modern business society favors a liberal approach to transactions, and therefore allows the buyer to renege on the deal even after he has paid for the item. Nearly all stores will accept an item back, and will provide either monetary reimbursement, or a store credit. This policy is based on the assumption that people may change their minds after purchasing an item, and may even wish to return the items they bought.

Undoubtedly there are customers who take advantage of this policy to buy items and “check” them before returning them to the store. If the store refuses to accept the merchandise, the customer may threaten to expose the store’s refusal or to patronize a rival store. Although there is no legal flaw in the customer’s conduct, his actions may be ethically questionable. His intent may have been to take advantage of the store and use its merchandise for a short period, which is tantamount to stealing.

What is the common denominator of the above cases? In each case the buyer is showing bad faith by canceling his transaction, since the agreement was made unconditionally. By paying for the item and taking it home, the buyer is giving his word that he is not just trying out the item. By returning the item and demanding reimbursement, the buyer is effectively breaking that agreement.

In this light we can now understand Chazal’s stringent approach to a monetary purchase. If a buyer reneges on a deal after he has paid for it, he is allowed to receive his money back but also receives a powerful curse: “He who punished the generation of the flood and the people of Sdom and Amora and the Egyptians at the Red Sea, He will punish those who do not keep their words.” (Bava Metsia 44a; 47a)

What is the meaning of this analogy to the generation of the flood? According to the Torah, the generation of the flood was tainted with immorality and depraved behavior. Moreover, the Egyptians were punished for oppressing the Jewish nation and not for their lack of integrity! Why then do we invoke these nations when admonishing one who does not fulfill his word?

The thirteenth-century commentator Rabbeinu Asher ( the Rosh) pondered this question and explained that “the generation of the flood were steeped in corruption and did not fulfill their words….and the Egyptians too did not fulfill their words, since they constantly promised to release the Jews and then reneged on their promises.”(Tosfot Harosh, Bava Metsia 47) The Rosh sees the corrupt and mendacious approach of these nations as the source of their downfall. Indeed, despite the lurid description of the generation of the flood- “for all flesh had corrupted its way on earth”, the final decree of the flood was due to man’s insatiable desire for theft (Bereishit 6:13; Rashi). In the Midrash (Bereishit Rabba 34) we find that the people stole in small amounts in order to bypass the law, because such amounts did not need to be returned in a normal legal process. Thus the people were actually punished for using legal loopholes to achieve their goals of cheating their friends, and not for theft. Correspondingly, we
can now understand the Rosh’s interpretation that they did not “fulfill their words”. These artful men made many verbal promises, and reneged on them as soon as they could benefit from their reversal.

From the above analysis we see that reneging on one’s business transactions should not be taken lightly. Doing it causes mistrust among people and financial loss for salesmen and also it also creates an atmosphere of opportunist exploitation of the law. Ultimately it can lead to fiscal corruption, which in turn leads to a breakdown of the societal order. Shem Mishmuel (by Rabbi Shmuel of Sochatchov) explains that when a person steals, he blocks the sensitivity to crime which is innate in a human heart, and thus he opens the way to committing other transgressions. Therefore theft, even in small amounts and degrees, should be scrupulously avoided.

A Jew is characterized by his loyalty and honesty. As the prophet Zephania says “The remnant of Israel shall not do iniquity, nor tell lies” (3:13). A Jew must uphold both his words and the honesty of his business transactions, knowing that integrity is the fabric of a just society. If he keeps his word with other men, G-d will keep His word with him and will protect him in all his actions, as it written in Tehillim: “No good thing will He withhold from those who walk uprightly. O Lord of hosts, happy is the man who trusts in You”

This column presents general principles for approaching business ethics topics. For specific guidelines, please refer to a halachic authority.

Rabbi Yoel Domb is a graduate of JCT and a member of the faculty of the JCT Bet Midrash. He was awarded a fellowship from the Center for Business Ethics for the academic year 2000-2001. He is currently researching topics of business ethics in Jewish Law and is preparing a curriculum to facilitate the teaching of these topics in Rabbinical seminaries (Yeshivot).

Preventing Price Gouging

Each week Rabbi Yoel Domb writes about issues of business ethics related to the Torah portion of the week.

Anyone who was not totally exhausted from the exertions of Pesach cleaning probably noticed that the prices of many household items sharply increased prior to the festival. When the shopkeepers were questioned about their exorbitant prices, they claimed that two factors caused the increase: – manufacturers were eager to capitalize on the pressing need for kosher Pesach products and marked up their regular prices accordingly, while Kashrut inspectors also demanded extra wages for Pesach supervision. Most people responded to this information with calculated indifference, not realizing that the issue was already addressed by Chazal, who provided a bold solution to the problem of price gouging.

In this week’s portion the Torah details the sacrifices brought by a woman who has given birth, including the obligation to offer a pair of doves. It once happened in Jerusalem that the price of a pair of doves rose to a gold dinar, which obviously was far above the regular price. Rabbi Shimon Ben Gamliel promptly entered the Beth Din and taught that if a woman had five children she is only required to bring one offering and may then partake of sacrifices. At this point the price of a pair of doves fell to a quarter of a silver dinar each. (Mishnah,Keritut 1:7) At first glance it appears that Rabbi Shimon contravened a law in the Torah for the welfare of society. Rashi (Rabbi Shlomo Yitschaki,1040-1105) explains that this was a temporary enactment. Rabbi Shimon feared that woman would be discouraged from bringing their obligatory sacrifices due to the high price. This which leave the women in an impure state, and this could lead to their eating other sacrifices while impure. He therefore intervened and forced the prices down in order that these sacrifices should continue to be brought.

The Talmudic sage Shmuel adopted a similar tactic to protect consumers against price gouging for earthenware pots. Many people followed the opinion that earthenware pots in which Chametz was cooked before Pesach cannot be used again after the holiday, and consequently bought new pots after Pesach. (During Pesach the custom was to cleanse the other pots which could be ritually cleansed and use them.) The vendors sensed the surge in demand for earthenware pots after Pesach and naturally raised their prices. Shmuel was disturbed by this price hike and threatened the vendors that unless they reduced their prices he would issue a ruling that the old pots could be used after the festival. This caused an immediate drop in prices of earthenware pots.

The sagacity displayed by these prominent leaders reflects a finely tuned moral concern for economic exploitation and a willingness to use their legal clout to combat such injustice. The Torah’s deep concern for the weak and the downtrodden found its expression throughout history in the economic sphere, as Rabbis often intervened to prevent monopolies from charging unnecesarily high prices. In the sixteenth century the Gentile fisherman created a cartel which raised the price of fish in Moravia. This caused great distress to Jews who have a custom of eating fish at their Shabbat meals The Tsemach Tsedek , the leading halachic authority at that time, knew that releasing Jews from observance of this tradition would not help the situation because the rich would continue to buy fish irrespective of the cost while the poor would continue to insist on eating fish on Shabbat just like the rest of the community. Therefore he took the drastic measure of pronouncing all fish “treifa” (unfit to be eaten) for that week and the monopoly disappeared. (responsa Tsemach Tsedek no.28)

In our own times Rabbi Simcha Alter, the Rebbe of the Ger Chasidic sect, realized that apartment prices in the popular towns of Jerusalem and Bnei Brak were becoming prohibitively expensive. He also noticed that weddings were becoming very lavish and the halls were taking advantage and charging steep prices. Rabbi Alter decided to establish Takkanot (regulations) which would enable less affluent people to purchase an apartment and have an affordable wedding party. The first regulation put the maximum permitted cost of a wedding at 8,000 dollars, while the second allowed couples to purchase an apartment worth 40,000 dollars or less. This latter decision forced his Chasidim to leave the costly towns and search for cheaper housing, and as a result of this they set up flourishing communities in Chatsor, Arad and Ashdod, without paying exorbitant fees to contractors.

Perhaps it is time to follow in the footsteps of our sages and initiate a ceiling on prices for Pesach items before we are forced – in the spirit of the Tsemach Tsedek’s dramatic decision- to declare them Chametz and refrain from buying them until the price becomes more reasonable.

    Sources:

  • Case Studies in Jewish Business Ethics, Aharon Levine, 2000, pp 223
  • With All Your Possessions, Meir Tamari, 1998, pp 93.

Rabbi Yoel Domb is a graduate of JCT and a member of the faculty of the JCT Bet Midrash. He was awarded a fellowship from the Center for Business Ethics for the academic year 2000-2001. He is currently researching topics of business ethics in Jewish Law and is preparing a curriculum to facilitate the teaching of these topics in Rabbinical seminaries (Yeshivot).