"... these three individuals [David Evans, Collin Finnerty and Reade Seligmann,] are innocent of these charges."
North Carolina Attorney General Roy Cooper, Apr. 11, 2007
Friends of Duke University posts a letter from a Duke alum that gives reasons why BOT chair Bob Steel should resign. The letter appeared in today’s Durham Herald Sun under the head:
Steel shouldn’t serve as Duke board’s chairI want to comment on the letter. If you’ve already read it, scroll down to the double star line where my commentary begins.
To the editor:
While Duke has finally announced seven new members of its Board of Trustees, the university has yet to reveal results of May's election of leaders of the board. With two new vice chairs, including the first African-American, this certainly is newsworthy.
This secrecy has the result of shielding Chairman Robert Steel from scrutiny for standing for re-election. Yes he is a titan from Wall Street, and yes he's a loyal son and benefactor. But he has now accepted a key position in the federal Treasury Department. The potential for conflict of interest properly caused Steel to recuse himself from overseeing Duke Management Company, the arm of the university that invests more than $7 billion. This is a responsibility assigned to him by university by-laws and a key element of his job; unable to fulfill this requirement, he should have retired.
Duke has invested an unusually high percentage of its money in private equity and hedge funds -- two bets that have paid off big for several years. But day after day, we see how similar investments are wobbling. Even the major hedge fund run by Goldman Sachs, Steel's former Wall Street firm, lost six percent last year. Two tangled hedge funds run by the firm of another Trustee are in the financial news daily with loses likely to exceed $1.2 billion.
Duke faces critical decisions on investment strategy and as contemplated by the by-laws, the chair should give his imprimatur. In this context, Steel's re-election is inappropriate.
The writer is a Duke alumnus, '63, Duke Law '66.
What does it tell us about Duke’s current governance when the trustees still haven't revealed the results of their election of board leaders?
Many Duke alums share Rickards’ concerns. And so do many experts in the area of government ethics.
Last Dec. 1 The Washington Post reported [excerpt]
[W]atchdog groups and others have expressed concern about Steel's situation.KC Johnson last December took a look at both Steel’s “hands-on” role in Duke’s “throw them under the bus” response to the witch hunt and frame-up as well as the potential for conflicts of interest resulting from Steel's dual roles. KC's post, "The Steel Trap," is a "must read."
They worry that he will inevitably have to choose between his fiduciary duty to Duke, which has an endowment of $4.5 billion and about $3 billion in other investments, and his role at Treasury.
His position there makes him privy to often-sensitive price-moving information about U.S. markets, especially those involving management of the government's $8.6 trillion in debt.
They also doubt that a senior Treasury official, whose hours are grueling, would have enough spare time to also chair a major research university.
In addition, they question the propriety of allowing a top federal official to head an organization that in fiscal 2006 alone, according to Duke, received $1.1 billion in federal funds, including $45,543 from Treasury for a clinic for low-income taxpayers.
"It's a conflict of interest," said Thomas J. Fitton, president of Judicial Watch, a conservative government watchdog group. "In his role as the chairman of the Board of Trustees, there will be decisions he will make that will be in conflict with his role as a high-level government official."
Melanie Sloan, executive director of the left-leaning Citizens for Responsibility and Ethics in Washington, agreed. "The concept of having a government job is that you work only on behalf of the American people, and being a trustee creates a divided loyalty," she said.
Barbara Roper, director of investor protection for the Consumer Federation of America, added: "He's creating the very real possibility that he will face situations where he has not just the appearance of a conflict but the reality of a conflict and then will have to decide how to behave. There will always be questions about whether he handled that kind of situation appropriately."
Here’s part of what KC said:
In the lacrosse case, perhaps no person has played a more unexpected role than Board of Trustees chairman Bob Steel. In the contemporary academy, trustees are normally quite hands-off. But when they do involve themselves in University affairs, they more often than not focus on issues such as upholding standards, promoting intellectual diversity, or working to uphold the University’s financial well-being or overall reputation.Indeed it does not.
Since March, Steel has avoided all of these customary patterns.
He has been remarkably hands-on, vigorously defending the Brodhead administration’s actions to interested parties and journalists behind-the-scenes. His actions do not seem to have been designed to uphold either the University’s reputation or its long-term financial standing.
Occasionally, he has stepped out publicly, though in dubious ways. His most prominent role in this regard came when he rationalized the suspension of the season, pointing not to presumption of innocence, due process, or “victims’ rights,” but instead public relations. As he informed the New Yorker, “We had to stop those pictures [of the players practicing]. It doesn’t mean that it’s fair, but we had to stop it. It doesn’t necessarily mean I think it was right—it just had to be done.” That quote hardly inspires confidence of a BOT chairman providing moral leadership for the University.
Steel needs to resign. Does anyone think there are trustees on the board with enough courage, influence and love for Duke to convince Steel to do that?