Madoff, Nolan and Israeli funds

By Geoffrey Alderman, February 26, 2013

Two decades ago I supervised a doctoral student researching aspects of corruption in British public life. This research coincided with mounting public concern over "cash for questions".Prime minister John Major asked Lord Nolan to chair an inquiry into the conduct of public life and "to make recommendations on how best to ensure that standards of propriety are upheld." My student and I were invited to give evidence to this inquiry, out of which came what are now known as "The Seven Principles of Public Life": selflessness, integrity, objectivity, accountability, openness, honesty and leadership.

I like to think that my student and I played some small part in the formulation of these principles, which are now applied widely throughout British society.

Core to this expectation is the belief that when someone in public life is accused of a serious offence they should step down from the office or offices they hold whilst a court of law or similar tribunal comes to a determination.

To do so is in no sense whatever an admission of guilt - far from it. It is simple common sense. For how can the duties of the office be properly discharged whilst the person discharging them faces serious allegations that may turn out to be true? The office is more important than the individual, and in a spirit of selflessness and integrity the individual should step aside until his or her innocence is established.

I remind you of the Nolan Principles as I invite you to consider some disturbing developments at Ben Gurion University, Israel.

BGU is a fine institution of higher education, one of the jewels in the crown of the Israeli university system. It has had its problems, chiefly (hitherto) concerning its troubled department of political science, about which Israel's Council for Higher Education issued a damning report in 2011.

But the matter that I now bring to your attention reaches far higher up the executive chain of command than a mere academic department. It touches upon BGU's board of governors, and in particular upon the man who currently chairs the executive committee of that board, Israeli lawyer Yair Green and Mr Green's alleged relationship with the infamous American-Jewish financer Bernard Madoff.

You may recall that three years ago Madoff pleaded guilty to eleven charges involving a variety of felonies, including fraud, money laundering and perjury. In the biggest "Ponzi" scam in history, Madoff operated schemes in which investors' money was simply moved around to create the illusion of huge profits. In reality the only profits that were made were those creamed off by Madoff and his associates. The frauds totalled almost $65 billion. Madoff is now serving prison sentences totalling 150 years.

But the Madoff scandal is far from over. Many people and many charities (including, it must be said, Jewish institutions and charities) lost huge amounts of money because of the frauds committed by him and by those who willingly assisted him in his crimes. The American authorities are determined to track down the criminal profits these frauds generated, so that - perhaps - some recompense can be made to Madoff's hapless investors. A court appointed "trustee," Irving Picard, has been authorized to unravel Madoff's schemes.

And in furtherance of his mandate, Picard has indicted Yair Green. Green has been a generous benefactor of Ben Gurion University. The fact that he sits on its board of governors should therefore come as no surprise, nor is this fact of itself troubling. But questions are now being asked about the ultimate source of the moneys he so charitably disbursed. Some months ago Channel Ten aired a disturbing documentary focussed on Green, his friend Madoff and their financial dealings. But he has so far rebuffed every call for him to resign his governorship of BGU. Scarcely less shocking, BGU is supporting him in his obstinacy.

Yair Green is innocent unless and until a court of law finds him guilty. Meanwhile, he should show us all that he is a man of integrity and selflessness and do the decent thing by retiring from BGU so that he can concentrate on preparing his defence.

Last updated: 11:45am, February 26 2013