Morality, Ethics and the Principles of Responsibility – Do They Always Align?
Even those who adhere to the industry’s ethical code, are not necessarily operating in the client’s best interest. Why is regulation not the final say, and how do the Torah sages define the topic? “Do not put a stumbling block before the blind”: The Real Estate Edition
Opinion Piece, published November 1, 2018 in Calcalist’s Real Estate Section
Ethics is a moral code – a system of attributes, values and norms that together comprise a desired behavior, according to the rules of justice and the ideals of “right” and “wrong”. Professional ethics is the code of values and norms that apply to a particular area of business.
The purpose of professional and moral codes is to unequivocally establish the rules of conduct that supersede the personal considerations and values of each individual. The goal of the professional code is not to test whether the person involved is moral or principled; rather it is to present a set of uniform rules, whose violation may lead to being ousted from the profession.
This all works in theory, but reality often presents challenges to which no systematic code can respond. In these cases we must rely on our own personal value systems to guide us to the right course of action.
Take, for example, the pilot who crashed a German passenger plane into the French Alps in 2015 – a suicidal act that took the lives of 150 passengers. The pilot was a psychiatric patient who had suffered a psychotic attack in the past, had been diagnosed with suicidal tendencies and had even been referred for hospitalization. Nevertheless, not one person out of the 41 doctors who had seen him over the five years leading up to the incident thought it necessary to report this to the airline company that employed him. Following the tragedy, according to the investigative committee’s report, the doctors refused to talk with the investigators. Apparently, they saw violating patient confidentiality as worse than not reporting the patient. Breaching patient confidentiality, an inseparable part of their profession’s ethical code, could have saved the lives of 150 people.
Wreckage of the Germanwings aircraft in the French Alps. Violation of the ethical code would have saved lives. Photo: Reuters
Denounce and Don’t Lead Astray
A common assumption is that professional ethics are more stringent than the requirements of law or general ethics, and are intended to help professionals maintain the “prestige of the profession”, protecting both those who practice it and those who use its services. But in the case of the suicidal-homicidal pilot, those very same ethical rules are what led the doctors to ignore the most basic moral conduct. The rigidity of those ethical rules ultimately harmed the professionals’ ability to make the choice that was right and moral according to the natural laws of justice.
The book of Leviticus, chapters 19-20, defines a moral and ethical code, which commands people to refrain from actively doing forbidden deeds and avoiding actions that exploit the weakness of others. it even commands people to take active measures to prevent harm occurring to another person:
Do not curse the deaf or put a stumbling block in front of the blind… Do not pervert justice; do not show partiality to the poor or favoritism to the great, but judge your neighbor fairly. Do not do anything that endangers your neighbor’s life… Do not hate a fellow Israelite in your heart, rebuke your neighbor frankly so you will not share in their guilt. (Leviticus 19:14)
The commandment of “do not do anything to endanger your neighbor’s life”, which was partially adopted into Israeli law, forbids someone from standing aside while another’s life is at risk. Our rabbis extended this sentence to cover any case in which a person was likely to incur harm of any kind, and in which an onlooker didn’t do everything in his or her power to warn them.
The sages interpret “do not put a stumbling block in front of the blind” as referring to anyone who is lacking information to make a decision on a given subject – “an uninformed person” such as the suicidal pilot’s employers or the airplane passengers.
In our field, this rule applies to investment managers, investment advisors, journalists, directors, lawyers, accountants, and even regulators, whose duty is to protect an investor who lacks all the relevant information.
At first glance, “Do not do anything that endangers your neighbor’s life”, is a “negative” commandment. Professor Nechama Leibovitch expands the meaning of this verse by deriving a “positive” commandment: one must take active measures to prevent another from stumbling and committing a forbidden deed.
Maimonides interprets the verse in that “blindness” can also refer to a low level of morality, and that the stumbling block is the temptation to do wrong. Meaning society must create an environment in which legislation, enforcement and prosecution will not act as stumbling blocks for the blind. This is precisely what we are transgressing: instead of creating a society that condemns acts of fraud and exploitation, we are enabling them.
Office towers. It is the job of those with knowledge to protect investors – proactively. Photo: CNN MoneyStream
Moral Duty Prevails
How did we get to a point where the saying “a good name is better than good oil” no longer holds any weight? Where a minister who was convicted of criminal activity is appointed as minister once again? Where private and institutional investors continue to invest with managers whose moral record is known to be problematic? Where not only is honesty not mandatory, but is no longer even an accepted option?
Is our collective memory so short-lived? Or is it that financial profit and short-term interests trumps everything else?
In my worldview and in the professional environment in which I operate, “do not do anything that endangers your neighbor’s life” also means that if we know that a person, whether due to lack of information or experience, might get involved with crooked people, or participate in an investment that is based on wrong or falsified data, we are obligated to proactively prevent them from doing so.
In the past, when I was caught in a conflict between what I saw as my moral duty and professional responsibility towards those who trusted me, I was forced to make tough decisions for which I paid a heavy price, but I don’t regret them. As an example, we were forced to bear considerable expenses for proceedings related to libel when we reported to investors, in detail, about an investment manager who, to put it lightly, did not measure up to the standard we expect of an investment manager. We later discovered that the situation was much worse than we had originally thought and that this manager had fraudulently acted against the interests of investors. We took all the necessary measures to protect our investors, with our sole motivation being our loyalty to our investors.
Elchanan Rosenheim. Photo: Profimex
I believed that my moral obligation overrides any legal obligation – and I knew that I would likely pay a heavy price for it. But my loyalty to the company’s clients and their interests took precedence over every other consideration. I therefore believe that we satisfied both moral and ethical duties as well as our professional commitments. If we would have acted under constant fear of lawsuits, we would betray our pledge of loyalty, transparency, and integrity to our investors.
The time has come to expose, to speak up against, and to proactively work towards eliminating this moral decline and the unbearable ease with which we are becoming accustomed to fraudulent behavior of both individuals and companies.
Ethical dilemmas will always be part of our lives. But if each one of us would do everything in our power to choose the ethical, moral choice – and denounce those who don’t – I know that we can create a better and healthier society for future generations.