Rules are revised after big promise proves empty

Without checks on donor, university accepted a pledge of £2.5 million. Melanie Newman reports

September 17, 2009

Cardiff University has overhauled its procedures for accepting major gifts after an investigation into a donation promised by a businessman who had engaged in "fraudulent misrepresentation".

An internal inquiry at Cardiff found that its financial regulations had been breached when it accepted a £2.5 million pledge from Gerard Walsh, and that its procedures were not robust enough to deal with large gifts.

The report, obtained under the Freedom of Information Act, says that the "apparent linking" of the donation and a decision to award Mr Walsh an honorary fellowship raised "a number of ethical issues".

After several meetings with Mr Walsh during 2006-07, key individuals at the university formed the opinion that he had "considerable wealth" but was "reserved" and preferred to work through advisers.

In October 2007, Cardiff held a 50th-birthday party for Mr Walsh. He was billed for the event but failed to pay up, and the debt was eventually referred to a collection agency.

Despite this, in April 2008 Mr Walsh signed an agreement to fund the Cochrane Chair at the university for £2.5 million. In July, he was awarded an honorary fellowship for his work in public healthcare policy - the same month he defaulted on the first payment due under the agreement.

Shortly afterwards, press reports revealed that Cork City Football Club, which was owned by Mr Walsh's investment fund, Arkaga, was in financial trouble.

In October 2008, it emerged that Mr Walsh had been ordered to pay damages of almost EUR900,000 (£786,000) in 1997 after he passed himself off as the owner of a Lamborghini dealership and received deposits for cars that were never delivered. A high court judge found that Mr Walsh had engaged in "fraudulent misrepresentation".

Cardiff terminated the financial agreement with Mr Walsh in November 2008, although it did not withdraw his fellowship until May this year.

The report by an internal investigatory panel found clear evidence that the university's financial regulations had not been followed.

"In the panel's view, a favourable impression of Mr Walsh had developed in the minds of key individuals at the university, and this led them to conclude that it was unnecessary and inappropriate to carry out full due-diligence checks," the report says.

The university has now amended its regulations to specify the requirement for such checks.

The new procedures say that managers should consider using external agencies to conduct credit and money-laundering checks on donors offering more than £25,000.

The report concludes that "the apparent linking of a financial donation with the proposal to award an honorary fellowship raises a number of ethical issues and is something that the university needs to consider carefully in order to avoid the perception that such fellowships are being offered in return for financial contributions".

The report recommends a minimum gap of at least two years between a gift being donated and the donor being considered for a fellowship.

Please login or register to read this article

Register to continue

Get a month's unlimited access to THE content online. Just register and complete your career summary.

Registration is free and only takes a moment. Once registered you can read a total of 3 articles each month, plus:

  • Sign up for the editor's highlights
  • Receive World University Rankings news first
  • Get job alerts, shortlist jobs and save job searches
  • Participate in reader discussions and post comments

Have your say

Log in or register to post comments