Behind the Headlines: Pardon of Jewish Philanthropist Raises Questions About Ethics of Giving

Exactly two weeks before a controversial last-minute presidential pardon made him a household name in the United States, Marc Rich was sitting in the VIP section at a mega-event for Birthright Israel in Jerusalem. Surrounded by thousands of young, primarily North American Jews on free trips to Israel, Rich, one of 14 people who have pledged $5 million to the program, was apparently moved to tears.

“He loves Israel, you could see that he was so turned on being there,” said one Birthright official who sat near him at the event.

Rich, a commodities trader who fled the United States during an investigation that led to a 1983 indictment on 51 counts of tax evasion, racketeering and violating sanctions against trade with Iran, was one of 140 people pardoned by President Clinton on Jan. 20.

Rich, who is accused of evading $48 million in taxes, will now be able to return to the United States without fear of criminal charges.

His lawyers have argued that he was the victim of overly zealous prosecutors, but many critics believe his pardon is directly linked to the fact that his ex-wife is a major Democratic fund raiser.

In addition to raising questions about Clinton’s judgment, the case puts an uncomfortable spotlight on the many Jewish and Israeli causes, like Birthright Israel, that Rich supported.

Indeed, a recent New York Times article noted that the list of people who wrote letters supporting Rich’s pardon is “a virtual Who’s Who of Israeli society and Jewish philanthropy.”

Rich has given to a variety of major institutions in Israel, including Shaare Zedek Medical Center, Ben-Gurion University, the Israel Museum and the Jerusalem Foundation.

Rich also helped to bring dozens of Jews from Ethiopia and Yemen to Israel, Avner Azoulay, a former Mossad agent who runs Rich’s foundation in Israel, told Israeli media.

Efforts to reach Rich and Azoulay were unsuccessful.

The executive director of one Israeli non-profit said that despite its extensive giving, the Rich Foundation is “not very public” in Israel and that until recently there was not a lot of awareness about Rich’s legal status in the United Status.

The case also revives questions about the dilemma Jewish institutions find themselves in when faced with donors of questionable reputation.

Despite some related texts in the Talmud and Bible, ethics in fund raising is an issue around which there is little consensus in the Jewish world.

In the Rich case, no beneficiaries appear to be reconsidering his support.

Rich’s best-known beneficiary among American Jews is Birthright Israel, an international organization that has sent approximately 17,000 young Jews on free trips to Israel since its trips began last year.

The program has been widely praised for sparking Jewish interest among a largely unaffiliated group.

Michael Steinhardt, a hedge funds manager-turned-philanthropist who is one of Birthright’s founders, said the charges against Rich were “no source of concern.”

“Marc Rich is a well-established Jewish philanthropist and has given to many Jewish causes and I’m pleased he’s chosen to give to Birthright as well,” Steinhardt said.

Asked whether Birthright would ever decline money from a person deemed unethical or criminal, Shimshon Shoshani, Birthright’s chief executive, said, “Of course there are some cases, but in this case it was no case.”

“If municipalities in Israel accept money from Marc Rich and other organizations accept money from his foundation, I don’t see any reason why Birthright Israel International will not accept money from his foundation,” Shoshani said. “If somebody sees any reason they should tell me.”

Rabbi Mordechai Liebling, director of a project that aims to get “Jewish institutions to examine Jewish values in accepting money” does see a reason.

Liebling, who works for the Philadelphia-based Shefa Fund, describes Rich’s prominence in Jewish philanthropy as a “serious problem” and says the Jewish community “needs to stand for values and ethical business practices.”

“We are not helping” if Jews take money from someone accused of violating the law or exploiting people and “restore that person’s good name without that person doing teshuvah,” he said, using the Hebrew term for repentance.

In Liebling’s view, “it is a rare Jewish organization that thinks carefully about the source of a donor’s money.”

Rabbi Tzvi Blanchard, director of organizational development at CLAL: The Jewish Center for Learning and Leadership, is disturbed that none of Rich’s beneficiaries appeared to talk about whether he was a problematic donor until “it blew up as a public issue.”

“The dangerous thing is not that people make moral mistakes, but that we don’t talk about it,” Blanchard said.

While Liebling and Blanchard decry the lack of attention given to the ethics of taking certain gifts, others say Jewish organizations frequently struggle with the issue.

They say they weigh reservations about honoring certain donors against a desire to fund what they believe are good and needy works.

In recent years, there have been several prominent cases in which ethical issues came to the forefront. Among them:

Ivan Boesky, an investment banker, in 1987 was convicted of insider trading and sentenced to three years in prison. Boesky was a board member of the Conservative movement’s Jewish Theological Seminary, and had endowed the library. Boesky resigned from the board and JTS removed his name from the library, but kept his donations.

Michael Milken, who, with Boesky, was convicted of insider trading is now a prominent funder of Los Angeles Jewish causes, including a large Jewish day high school that bears his name. Milken, who served several years in prison but has been released, was also considered for a presidential pardon by Clinton but did not get one.

In a 1997 situation that involved no crime, Henry Everett, a board member of UJA-Federation of Greater New York objected when James Tisch was named the organization’s president because Tisch was president of Loews Corporation, which owns the Lorillard Tobacco Company, a company Everett charged had lied about the dangers of nicotine and was responsible for millions of cancer-related deaths. However, after a board discussion of the issue, Tisch prevailed.

Generally, said Blanchard, deciding whether to accept money falls “into questions of gray rather than black and white.”

“You want to give a person a chance to contribute to society. In Judaism there is a tradition of teshuvah — you don’t want to say because you did something wrong therefore you can’t return to our community and do good things,” Blanchard said.

However, said Blanchard, accepting money is different from publicly honoring a donor.

Reuven Kimelman, a Judaic studies professor at Brandeis University, said Jewish organizations face a difficult dilemma.

They “promote their cause by saying we’re doing something ethical,” but also have to weigh the good a large gift can do, even if its donor raised funds in a potentially unethical manner.

Others argue that, other than a few high-profile cases involving people accused of illegal activities, most situations where a donor’s ethics or propriety are questioned are not clear-cut.

Several point to disputes over whether Jewish organizations should accept money from the tobacco industry, gambling or weapons sales.

But many people “don’t want to raise these issues because they don’t know where the snowball ends,” Kimelman said.

Complicating the picture is that many companies have diversified holdings that include things like tobacco, while others have come under fire for what some see as exploitative labor practices.

“Analyzing the nature of business involvements can be a slippery slope,” said one large-city federation executive who did not want to be named.

“Most non-profits have come to the view that it’s desirable to avoid scrutinizing both the business practices and investment patterns of those that seek to serve the community,” the federation executive added.

But, he added, “obviously, illegality is a clear line.”

It is also not clear how one should apply relevant Jewish texts, said Rabbi Saul Berman, director of Edah, a modern Orthodox organization.

The Talmud says one is not allowed to accept contributions from a prostitute when building the Temple because receiving such money “would be approval of the behavior through which the funds were earned,” Berman said.

“A moral dilemma emerges about how far one should carry that particular model,” said Berman.

“Is this specific to prostitution? All forms of criminal activity? Non-criminal activity? Just the Temple or all institutions? Only when an institution is a teaching institution? Is it different when an institution simply supports the poor?”

“All are line-drawing questions that need to be struggled with,” Berman said. Many Jewish organizations “do in fact raise these questions internally,” but “that doesn’t mean they always come up with the answer that I’d like” or are willing to publicly acknowledge that this is an appropriate struggle.