The faculty of law at Tel Aviv University is justifiably proud of the sacred work done by its legal clinics. They make Sisyphean efforts each day to offer help to the weak and those whom system has left by the wayside, including refugees, Holocaust survivors and the poor. Many students describe their work in the clinics as the most significant activity they undertake during their university studies, a formative experience of self-fulfillment and involvement in a mission for society.
A few floors above the legal clinics is the office of Prof. Yoram Margalioth, a popular lecturer on tax law. His position is protected by the terms of his tenure - just like the rest of the senior faculty. He has also taught at the Interdisciplinary Center, Herzliya, and he served for six years, until recently, as an external director for the IDB Development Corporation. As such, Margalioth was an active partner in the Nochi Dankner club, which plundered public money and burned up hundreds of millions in retirement savings.
Margalioth’s term as a director was problematic even in comparison to the rest of those involved in the puppet theater called the board of directors of IDB Development, both because of his very appointment as external director and because he was described as a one “with accounting and financial expertise.” In comparison to “regular” directors, an external director is meant to keep his or her distance from the controlling owner so as to be a “guardian” of the company’s interests, and therefore indirectly of the public‘s interests.
By law, external directors serve in particularly sensitive roles in a company, including participation in its audit committee, which is meant to diagnose problems in the management of the business – and those were abundant at IDB. A director in this realm must have expertise in accounting and finance, and an in-depth understanding of the financial reports of a company, so that the board of directors will be effective in its supervision of the company’s executives and will see to the company’s interests.
In the years he served as a director – during which he was chairman of the audit committee, for a time – Margalioth was never heard objecting to the management of IDB or to the lack of proper corporate governance in the concern. It is clear that he did not resign or declare: “I will have no part of this.” On the contrary: The term of an external director is only three years, but after Dankner’s people saw how easy-going a director Margalioth was, he was granted another three-year term.
During that period Margalioth supported one of the most scandalous deals the Israeli economy has ever seen: pushing the bleeding Ganden Tourism company into the hands of the publicly held IDB, from the private hands of Nochi Dankner, Avi Fisher and others. Even in real-time, warnings were heard about the fact that Dankner and his partners wanted to free themselves from their private obligations and dump them on the publicly held firm of IDB. And yet the expert external director Margalioth did not object to this deal, or demand a more serious discussion of the matter by the board - and even ignored the serious circumstances in which the deal was done.
From the point of view of the TAU faculty of law, not only does Margalioth’s functioning at the time raise questions, but also his subsequent actions. His testimony in the proceedings concerning the sale of Ganden Tourism shows he is passing the buck to the appraiser of the deal. In his testimony, Margalioth said: “The most serious deal I ever made in my life was when I bought my house ... [How can] I deal with deals worth billions?”
Let us ignore the question of why, at the outset, an expert in accounting and finance like Margalioth did not pass on the cushy job for that exact same reason. Still, how can we reconcile such an attempt to shirk responsibility with the values the TAU faculty of law aspires to instill in its students and its goal of educating for excellence? What is the connection between Margalioth’s testimony and the term “accountability,” instituted by the former dean of the faculty, Prof. Hanoch Dagan?
The TAU law faculty does not make do with just preparing its students for the bar exams. The institution in general, and this part of it in particular, are partners in molding the legal, social and ethical viewpoints of many students. And that is not only because of the academic and intellectual capabilities of those who, in this case, teach in the law school, but also because of the personal and moral examples they embody, and the unspoken demand that their students be moral people. This is an asset the law school cannot afford to lose.
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