Things Rub Forget to Tell Justice

At the start of the year 2001, Eitan Rub was appointed chief of the Customs and VAT branch. On the eve of his appointment Rub, who came to the job from the private sector, was required to settle all conflicts of interest between his private business and his new pubic service.

Rub reported the many businesses in which he was involved to the legal counsel of the VAT department, to the Civil Service Commission and to the Justice Ministry. One was his association, on a volunteer basis, with the Israel Basketball Association.

The story is described in a report by the State Comptroller, called "The membership of the head of the Tax Authority in Israel Basketball Association institutions". The comptroller found that while Rub had been forthcoming in his list of businesses, he had skimped when it came to his volunteer work in basketball.

To be more specific, Rub reported to Justice that his involvement in the Basketball Association had been "limited to the professional echelon - determining the identity of the coaches for the national team, professional discussions on the composition of the team, playing strategies, and so on. The Basketball Association does not engage in procurement, which is an issue for the teams."

Only professional matters

Rub declared to Justice and to the Civil Service Commission that he only served as the chairman of the professional board, and that he was in no way involved in its financial affairs, and that the association had no real economic activity.

Justice therefore decided to let him continue his activities at the association, as long as it took no more than two hours each week on Fridays only. It also forbade him to engage in the question of classifying basketball teams as nonprofit organizations.

Four years later, when the State Comptroller audited the Basketball Association, it found a different reality. It turned out that Rub was chairman of the professional board, and that his position brought him automatic membership in the association management, and its presidency to boot. In other words, he was a full partner in all the management decisions.

The Basketball Association is a sports institution, but it's also an economic entity. Among other things it gets a budget of NIS 20 million a year, it directly employs dozens of people and is responsible for the employment of hundreds of referees. It has files in VAT and income tax, a sponsorship agreements with some of the biggest companies in Israel, including leading communications companies, banks, advertising agencies, and television networks. Not only that, but the association's management roster includes not a few businessmen, who own basketball teams as well as other companies.

Not the whole truth and nothing but

Therefore, presenting the Basketball Association as an organization devoid of economic activity was inaccurate. As the State Comptroller put it, "The inaccurate and partial information that Rub delivered, directly and through his representative".

Inaccuracy and spottiness characterized other information regarding other activities. Even though Rub declared that he was not involved in the association's economic activities, the comptroller found: "Rub directly participated in some of the meetings of the association presidency, and under his direction, economic and commercial issues were discussed, and he continued to receive minutes of all their meetings, including a meeting that discussed taxation issues, without having the elements that could constitute a conflict of interest stricken."

The inaccuracy grew worse in 2005. Immediately after his appointment as commissioner of the united Tax Authority (income tax consolidated with Customs and VAT), Rub was required to expand his conflicts of interest agreement. Even before entering into this second agreement, Rub did not disclose the full scope of his activities at the Basketball Association, nor did he mention that he had been named to a new job: director in the league administration corporation. That was a subsidiary of the Basketball Association, that belonged to all the teams. Its sole purpose was to manage the basketball league, including economic management, marketing, and selling broadcast rights and sponsorships, in order to maximize the teams' profits. As we have already said, some of the people involved were also engaged in other businesses.

The Justice Ministry and Civil Service Commission were unaware of Rub's extensive activity with the Basketball Association, or to the implications. The second conflicts of interest agreement they signed with him in 2005 was much the same as the first one.

Nor did the Justice Ministry and Civil Service Commission know that as a member of the association, Rub got into all National League and National Team games for free. Rub also owned a prestigious subscription to all the home games of Maccabi Tel Aviv in the Euroleague. The subscription cost more than NIS 7,500.

Later Rub explained that his position required him to watch the games, and that he couldn't be required to pay for the subscription himself while fulfilling the job on a voluntary basis. To which the State Comptroller said, that it still did not explain why he also received free tickets to the Maccabi games in the Euroleague, which were worth a total of NIS 5,000.

In the summer of 2005, the State Comptroller exposed the true dimensions of Rub's involvement in the Basketball Association. When the facts were shown to him, Rub said that he upon taking the job at the VAT department, he'd undertaken three restrictions: to eschew anything involving economic or commercial aspects that did not directly affect the routine running of the Basketball Association (which means, budget). He'd also eschewed making any decisions on sports-related matters at VAT, and had restricted his involvement in basketball to his leisure time, insofar as was possible.

He said that during his four years at the Tax Authority he had compartmentalized himself from all decisions relating to any sports team. The tax Authority legal counsel confirmed that.

Rub's answer, said the comptroller, differed in at least two substantial ways from his declaration four years earlier. He had after all admitted to being involved in making decisions about the Basketball Association budget. He'd also claimed he would limit his work to his free time, but it turned out that most of the Basketball Association meetings were held in mid-week, not on Fridays.

Not touching tax decisions?

The comptroller also noted that Rub had undertaken not to be involved in decisions involving tax and sports, which indicates that he was aware of the potential conflict of interest between his public work and his volunteer work at the association, and therefore undertook a restriction to prevent it.

But the comptroller does not appreciate the way Rub simply set restrictions upon himself. "Given the rules of proper procedure and disclosure, Rub had a duty to lay out all the relevant information before the supervisory institutions, so they could determine an appropriate arrangement to prevent conflicts of interest."

He had no right to rule for himself, and anyway his participation in management meetings that discussed economic and commercial issues, as well as tax issues, indicates that he hadn't adhered to his own rules.

After the comptroller's report, the Justice Ministry looked into the second conflicts of interest agreement and into Rub's activities from 2001, and concluded that he had "deviated from the conflicts of interest arrangement".

"Given the difficulty Rub has evinced in executing the agreement so far, there is no place for Rub to continue serving as a member of the Basketball Association," the Justice Ministry concluded. It also decided to consider disciplinary action.

On October 30, 2005, a discussion was held at the Justice Ministry, in the presence of the attorney general. Decisions were reached, but the comptroller's report doesn't say what they were. The only thing we can know is that two weeks later, Rub suddenly announced his immediate resignation from chief of the Tax Authority.