Providing Misleading Advice

Non-disclosure, conflict of interest, easy credit all violate the biblical injunction not to "place a stumbling block in the path of the blind."

By Dr. Meir Tamari

An expert in Jewish business ethics explores the ramifications of the "stumbling block"  (lifnei ivver) ban as applied to the contemporary financial world. Here Dr. Tamari addresses issues that have arisen in prominent scandals in multinational corporations whose accountants acted both as auditors, responsible to the public, and as business consultants, responsible to the corporate client. (This is the second of two articles on applying this principle. The first is "Assisting the Perpetrator of an Evil Deed.")  Reprinted with permission from The Challenge of Wealth: A Jewish Perspective on Earning and Spending Money (Jason Aronson).

 

[One] view of the lifnei ivver concept refers to the injunction of giving misleading advice. This is not the same as providing business consultancy that results in a loss, but refers to the kind of information in which the recipient is blind either to the final effects of the advice or to the special interest that the consultant has in such advice. Consultants and advisers such as accountants, lawyers, insurance agents, investment advisers, and stockbrokers would seem to be obligated to review the advice given to their clients in order to obviate the possibility of putting a stumbling block in the path of the blind.

 

The Midrash relates to lifnei ivver by enjoining us, "Do not offer another advice that is detrimental to him. Do not tell him to leave a town early in the morning, knowing full well that there is a danger of him being attacked by robbers, nor [tell him] to leave in the afternoon, knowing that this will cause him to lose his way. Do not tell him, 'Sell your field and buy a donkey' when you intend to buy a field [and Rashi adds: to sell a donkey]." (Sifra to Leviticus 19:4)

 

Underlying the simple example provided by the Midrash and the commentators is an important and primary injunction, relevant to the whole gamut of financial and advisory services. In view of the modem explosion of these industries, lifnei ivver becomes more important perhaps than ever before in economic history. A number of examples of its present-day relevance should be considered here.

 

In many countries, commercial bankers serve as investment advisers to their depositors, yet at the same time buy and sell stock on their own account, issue their own stock to be traded on the stock exchange, and underwrite the issue of corporate stock to the public. They are also related through various devices to insurance corporations, mortgage banks, and even industrial or commercial enterprises. It may very well be that a conflict of interest exists between those functions and the advice given to their depositors, which if not revealed, would seem to be a case of lifnei ivver. One of the reasons for the regulation of the financial institutions after the Depression in the United States was to prevent such conflict of interest by restricting the activities of the commercial banks.

 

Banks, credit institutions, and large retailers maintain a sophisticated and intensive advertising campaign to encourage people to buy goods or services on credit, while concurrently consumer credit is made relatively easy to obtain. People unable to withstand the temptation of instantly gratifying their wishes, use such credit without any knowledge of their future resources or even the feasibility of repayment. Social welfare studies have shown that such ill-considered use of consumer credit in all its forms can be a major cause of poverty despite a relatively high income. Perhaps it is stretching the concept of lifnei ivver beyond its halakhic framework, but it would seem to the author that the implications of such advertising for those blind to the consequences of debt necessitate further halakhic examination.

 

This examination is, however, complicated by the problem of interest. One way in which consumers may be protected against the ill effects of credit is by making mandatory full disclosure of the real cost of delayed payment. This enables the consumer to evaluate more correctly the burden he is assuming. However, credit sales for a known interest rate are usually not allowed in Jewish law because they may constitute avak ribit [literally, "the dust of usury"] -- interest through commercial transactions, [which] is rabbinically forbidden (in contrast to interest charged on a straight loan, which is forbidden in the Torah).

 

An insurance broker recently described to the author how he had handled the problem of lifnei ivver in regard to advice given to his clients. Since his commission varied among the different policies and different corporations, he became concerned that perhaps the policies he was offering were more a reflection of his own potential earnings than the needs or benefits of the specific client. By programming all the data regarding the client and his family, he was able to let the computer choose the best policy and conditions, so saving himself from [violating the injunction of] lifnei ivver.

 

It is important to stress that irrespective of whether lifnei ivver is understood as giving misleading advice or as helping someone do acts harmful to himself or forbidden by Halakhah [the subject of the parallel article, "Assisting the Perpetrator of an Evil Deed"], a common element of secrecy exists. The Bible closes the verse in Leviticus 19:14 forbidding placing a stumbling block in the path of the blind by adding, "and you shall fear the Lord." Wherever this phrase appears in the Bible, it is understood by the Rabbis to refer to actions hidden from the human eye and operating in the recesses of the human heart. Since white-collar crime, economic oppression, and misplaced trust operate primarily in secret, this affirmation of the fear of God is Judaism's major defense against them.

 

Dr. Meir Tamari, former chief economist in the office of the Governor of the Bank of Israel, is director of the Center for Business Ethics at the Jerusalem College of Technology. His books include Al Chet: Sins in the Marketplace (Jason Aronson) and Jewish Values in Our Open Society: A Weekly Torah Commentary (Jason Aronson).