Boards face crackdown over trustee nepotism

June 2, 2006

Congress has promised to investigate a succession of scandals involving US university boards of trustees. The latest row involved decisions by the board of American University, Washington DC, to pay millions of dollars to its sacked president and to seek retribution on a whistleblower who helped expose him.

Benjamin Ladner was sacked over $500,000 (£0,000) in questionable spending. Yet the trustees gave him $3.75 million in severance pay. This has attracted the ire of Congress, which established the university by charter. The Justice Department and FBI are also reportedly investigating.

The pledge from Congress follows charges that trustees abused their positions.

At the University of Medicine and Dentistry of New Jersey one trustee allegedly forced the school to hire his relatives, pay for a lavish party for friends and rent one of its buildings for $1 a year to one of his political supporters.

Investigations at other institutions have led to changes in the way their boards operate.

Boston University, for example, enacted a conflict-of-interest policy to curb business relationships with its trustees and limited their terms to 14 years. This followed the discovery that the university had engaged law firms and management companies owned by its trustees, hired one trustee as a consultant to a spin-off company and rented real estate from others.

In the past two years, businesses owned by trustees of the University of Georgia Foundation were found to have received more than $30 million worth of contracts from the university; Auburn University was placed on probation by an accrediting organisation because of alleged conflicts of interest among its board of trustees; and law enforcement officials launched a probe at the University of Idaho.

The most prominent case was at Adelphi University, all but one of whose trustees were removed and made to reimburse the institutions hundreds of thousands of dollars after sanctioning excessive salaries and spending.

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