Business ethics 88.
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My understanding of the most recent scandal is summed up in the following sentence: "The State Comptroller is recommending a criminal investigation of Ehud Olmert for acting out of a conflict of interest as Minister of Industry, Trade and Labor by directing a government grant to a company whose lawyer was a personal friend."
This sentence has a number of problematic elements that I want to detail here. Part of my job is to be a watchdog for good ethics in public life, but that doesn't mean applauding any means used to attack perceived corruption.
Before I begin, I want to emphasize that I am not defending Olmert's actions. I don't have any way of knowing if he acted improperly, and all Israeli voters will have to personally weigh the considerations when they go to the polls. If the decision was made out of private rather than public interest, there was a breach of trust. But the procedure described in the opening sentence, which is my understanding from news reports of what is going on, suffers from significant lacunae.
First of all, we must recognize that conflicts of interest in public life are unavoidable. It's not unethical to have a conflict of interest - ethics codes typically demand merely that conflicts of interest be disclosed and resolved in favor of the public interest, not the private one.
As a member of the Council for Public Sector Ethics I heard a presentation of an important study that concluded that overly stringent rules on conflicts of interest can paralyze government. Some municipalities had rules that contracts could not be given to close relatives of the mayor until they discovered that in their city there was no one to collect garbage who was not a relative. Furthermore, the Ethics Code for US representatives points out that sometimes conflicts of interest are really confluences of interest. In our case, a person is qualified to be a Minister of Industry, Trade and Labor if he has knowledge and experience in business and unavoidably many acquaintances in this area.
Furthermore, we must define conflicts in a circumscribed way. We would usually consider being friendly with a lawyer of a company several times removed from having a conflict of interest. The classic case of a conflict of interest is when the public servant has a direct interest in the company, which is often extended to close relatives. It's certainly not a conflict of interest if a company principal is a friend, and if the person is not even a principal but only an employee (the lawyer) we're far from a culpable conflict of interest. As I mentioned, if you don't have a few friends in business you're probably not qualified to be the minister.
The next point is that acting out of a conflict of interest is not a crime. Sometimes it merely obligates transparency and objectivity - at most, it is considered an ethics violation. Judges don't automatically disqualify themselves from judging a case just because they know some important executive in a company for one side, and even if they do it is still irrelevant because if one judge recuses himself there are plenty of other judges, but a government minister has no substitute. If Olmert was forbidden to intervene on behalf of Silicat Industries, then who exactly could they turn to? Are companies who hire friends of ministers bereft of rights?
I admit that the situation in this case is a bit more complicated than I make it out, because Olmert's friend Ori Messer was evidently hired because of his influence with the minister. This raises a greater suspicion of influence peddling because the company could just have used its regular legal staff. It also seems that Olmert's involvement was beyond what is usual for a minister - the report claims that these decisions are usually left to the professional staff. So Silicat Industries would presumably have gotten a fair hearing if they had used their own regular lawyer and were evaluated by the regular professional staff of the ministry, without any intervention of the minister.
The way around this impasse is very simple - that is, to state that there is a suspicion of breach of trust. This is a clearly defined crime consisting of the use of public trust for private benefit. Accusing Olmert of "acting out of a conflict of interest" is a classic example of what Professor Amnon Rubinstein has pointed out as a worrisome trend of judging cases and individuals according to vague and general behavioral standards rather than clearly defined transgressions. Breach of trust would be proven if it could be shown that the reason Olmert approved the grant was personal, rather than professional - whether or not he's friendly with the management. If such a suspicion exists, of course it should be investigated. But the accusation of "acting out of a conflict of interest" is really grasping at straws.
Another problem I perceive is that the job of the Comptroller is not to dig up dirt on public officials but rather to report objectively on poor governance in Israeli public life. The Comptroller is not a special prosecutor, and for a good reason. Special prosecutors, unless they have a narrowly defined agenda, violate the principles of due process and equal protection of the law. I have no doubt that if the police or prosecution decided to make it someone's full time job to dig up dirt on me or you, they would find some excuse to drag us into court - that's exactly why there are strict rules on how investigations are initiated. As I have often written, the comptroller has special powers of investigation precisely because he lacks authority; if he had any more authority his powers of investigation would constitute a clear violation of due process. Even if Olmert did violate the law, I am concerned that he may not have been granted the equal protection of the law. (The same holds for a number of other public figures who were subject to vendettas, some of whom were ultimately convicted and who may well have been guilty.)
The use of the authority of the Comptroller's office to conduct a highly publicized crusade for clean government in Israel is significantly eroding the ability of this office to carry out its true investigative and reporting function with any degree of credibility. Public crusading is the proper job of journalists, not comptrollers.
The current "war on corruption" threatens to paralyze the government of Israel, which is already without a President, Finance Minister and Tax Authority head - none of whom have been convicted of any crime. Are these individuals guilty? Maybe they are. Let them have their day in court. Are they slimy? That's certainly a possibility, though also far from proven.
It's impossible to run a country if public representatives are pressured to resign as soon as they are accused of a crime, especially if in addition they can be accused of crime without usual due process.
I'm not defending Olmert's actions in this case, I'm just stating that they should be evaluated using fair and transparent procedures. If there is a suspicion of breach of trust, ordinary investigative techniques should be used to disclose the suspicious acts and ordinary procedures used to investigate and try them. The Comptroller's special powers were not intended for this purpose. If there is a likelihood that he acted out of a conflict of interest, the press should give him both barrels and the voters should decide if they want such an individual as a public official.
The writer is research director at the Business Ethics Center of Jerusalem (www.besr.org), an independent institute in the Jerusalem College of Technology.