Conflicts of Interest: Can we trust UW trustees?
Essay by Jeffrey Alan Lockwood
University of Wyoming professor
– November 12, 2013
Here’s a moral aptitude quiz. Tom Green, a city council member, owns a grocery store in town. The council must decide which businesses will be included in a publicly-funded economic development program. When the list of enterprises is put to a vote by the entire council, “retail stores” is the business sector identified for assistance — and Green’s Groceries is approved as the case-study for a systematic analysis to increase profitability. Did Mr. Green have a conflict of interest in using his public office to advance his private enterprise? If you said “yes,” you may be unsuited for a position on the University of Wyoming’s board of trustees.
Power Rules
Conflict of interest is a cottage industry in Wyoming. The general excuse is that in a state with so few people, our leaders will inevitably have personal, business, and political connections entangled with their public responsibilities. More realistically, the tight network among Wyoming’s power elite assures that when politicians are elected — or appoint their pals — the desires of the few are likely to conflict with the interests of the many. Wyoming may be a small town with very long streets, but the road to the country club is not open to the public.
The UW trustees constitute a perfect storm for conflicts of interest. The governor appoints these individuals to oversee the state’s largest public institution with a budget exceeding half a billion dollars. Quite appropriately, the trustees include leaders in various financial enterprises that are represented by the university’s School of Energy Resources and colleges of agriculture, arts and sciences, business, engineering, health sciences, and law. As such, the trustees have the potential to augment their wealth as individuals or to garner benefits for their business sectors at public expense. In itself, this is not a problem. In fact, it’s a good thing. If the trustees were not in a position to benefit from the research, teaching, and outreach by the university, then UW would not be doing its job. To the extent that the institution is of direct economic value to the state, the trustees (who all live in Wyoming) have a corresponding potential for conflict of interest.
Presumably in response to this risk, the university adopted a conflict of interest policy. Although the document is lengthy, the central concept is explicit:
“Trustees should not use the authority, title, or prestige of their office to solicit or otherwise obtain private financial, social or political benefit that in any manner is inconsistent with the public interest …[a conflict or apparent conflict arises] whenever a member of the Board, because of his or her outside business, professional or personal interest is in a position to affect, or gain from, the outcome of any transaction with the university.”
The policy is straightforward — and consistently violated. Trustees do not keep up-to-date disclosures on file, and 10 of the 12 claim to have no potential conflicts of interest. Either the governor is appointing people who are irrelevant to Wyoming business or the trustees have a peculiar understanding of “conflict of interest.” Given the backgrounds of most of the trustees, the latter is evidently the case. The only two trustees who list conflicts of interest are Jeffrey Marsh and Warren Lauer. When asked about how he understands the policy, Marsh replied: “I would assume you read the directive the same as I did when I completed the last questionnaire.” But it seems that his fellow trustees had some other interpretation, given that they surely have business interests similar to Marsh’s but assure the public that nothing in their portfolios could possibly “affect or gain from” programs at the University of Wyoming.
So let’s look a bit further into what is (or isn’t) going on with the people who ultimately call the shots.
Too Little, Too Late
The conflict of interest policy requires that:
” … each Trustee shall annually sign and submit to the secretary of the University a statement disclosing all material financial interests, known to the Trustee, of the Trustee or a family member, in any outside entity with which the Trustee knows the University has or is considering a transaction or other business relationships, or affirming that the Trustee knows of no such interests.”
So how’s that working? When the university’s Office of General Counsel finally provided the disclosures after much evasion, the reason for their foot-dragging became evident. The three newest trustees, appointed in March and having attended several meetings, suddenly remembered to file their disclosures two weeks after the documents were requested in mid-July. One of the other trustees (Larry Gubbles) also conveniently remembered to provide an update at this time. The other trustees were 10 to 23 months out of compliance which appears to be a long-standing tradition, according to former trustee Ann Rochelle.
The president of the board of trustees, David Bostrom (who was 22 months beyond his own deadline), explained, “The three new trustees apparently were not advised of the need to file the conflict of interest statements. … We have put in place a process to be certain that all trustees file annually and that new trustees are notified immediately upon their appointment.” That the entire board was delinquent in July and that evidently no trustee has filed an updated disclosure since that time (the new process notwithstanding) suggests how seriously the trustees take their obligations.
A Sheep in Wolf’s Clothing
The conflict of interest regulations further state that, “Trustees shall adhere to the highest ethical standards” — a principle that ought to resonate with UW’s new president, Robert Sternberg, whose tag line is “ethical leadership” as in: “… UW can strive to educate the future ethical leaders [by] admitting students to the university for ethical leadership qualities.” However, his concern doesn’t extend to the institution’s upper echelon: “I must say that I know nothing of the trustees’ conflict of interest policy. … This is not within my sphere of responsibility.” So whose responsibility is it?
The trustees have decided that their approach will solely depend on self-reporting. Each individual files a disclosure, but then nobody reads these documents. Everyone assumes that everyone else is aboveboard, although Ms. Rochelle was dubious on several occasions, including during the infamous Bill Ayers affair during which the university attempted to prevent a 1970s radical from speaking on campus. Pressure to censor Ayers came from major donors who Rochelle suspects had financial ties to some of the trustees. So, the policy might look like a principled wolf, but it’s more like a sheep with a wolf’s pelt that’s been pulled over its eyes.
Rick Miller, the university’s General Counsel, explains: “Board members individually or as a group do not inquire of their fellow members as to the contents of the disclosure documents. That’s simply not the process.” Nor is part of the process actually recusing oneself. Excluding Ms. Rochelle’s own recusals (once in consideration of her niece being a volleyball player during a discussion of the coach’s violations of NCAA regulations and once because she had a legal client who was considering actions against the University), she can recall only one instance in which a fellow trustee declared a conflict of interest.
Don’t look for the disclosures on the university’s website. Without an insistent effort to extract this information from the bowels of Old Main, nobody can see if the trustees are voting on matters that would serve their financial interests. It’s not much of a disclosure if 12 people promise to strip and then go into their closets, where 10 refuse to take off their clothes, while the two naked ones keep the door closed.
A Toothless, Neutered Sheep
Given the loopholes built into the conflict of interest policy, it’s difficult to figure out why the trustees wouldn’t simply file legitimate disclosures in a timely manner. One provision was called the “blind mouse” exemption by an attorney who reviewed the guidelines:
“In the ordinary course of fulfilling their responsibilities, Trustees will not be aware of all the transactions and business dealings of the University. Consequently, this conflict of interest policy applies only to transactions and business dealings of which the Trustee is actually aware.”
In other words, there is a perverse incentive for trustees to do their best not to know what their companies and the university are doing.
So, what if a trustee is caught violating the policy? The wolf’s skin also conveniently covers the sheep’s ass: “No transaction or action undertaken by the University shall be void or voidable, or may be challenged as such by an outside party, by reason of having been undertaken in violation of this policy or the principles set forth herein.” So if your business gets the short end of the stick because a trustee funneled university resources into his or her enterprise, tough luck. My attorney doubted that this provision could be enforced but the subtext is clear — the policy is meant to deny any consequences for violations. The blindfolded sheep is also toothless.
And if the policy isn’t weak enough, the trustees are committed to neutering the sheep. Let’s say that a trustee makes a living by cattle ranching or owns an environmental consulting firm. Should he or she divulge this venture? Well, could the trustee conceivably benefit from a UW program in the College of Agriculture or the Ruckelshaus Institute of Environment and Natural Resources? Not according to Mr. Bostrom. He contends that: “Just because a trustee is in a business area that UW is doing research and/or development in does not mean that a conflict or potential conflict exists. The facts and circumstances of each individual situation must be reviewed to see if there is even the possibility that the conflict or potential conflict exists.”
Of course the details need to be considered, but if the trustee has claimed no potential conflicts of interest, then there’s nothing to review. No disclosure, no problem.
Even if the trustees aren’t committed to President Sternberg’s other major principle — transparency — let’s be clear about a real trustee.
To Tell the Truth
The True Companies is an international conglomerate (primarily involving the exploration, drilling, production, transportation and purchasing of oil) worth more than $100 million. Dave True was named a trustee this March, and on July 24th 2013, he remembered — or was reminded — to file his disclosure in which he stated that he has no possible conflicts of interest. Keep in mind that the policy covers, “situation[s] which could … reasonably appear to compromise the integrity or effectiveness of the Board.” So Dave True, joint partner/owner of the True Companies, claims that, in his role as a trustee of a university with a School of Energy Resources and with plans for a multimillion dollar investment in energy research, he can’t conceive of how his business would benefit.
Taking this absurdity one further step, the Enhanced Oil Recovery Institute (EORI) within the School of Energy Resources has a mandate to provide assistance to individual Wyoming producers. Only if True believes that EORI is incapable of fulfilling its mandate could he deny a potential conflict of interest. But such a belief would require amnesia. According to Geoffrey Thyne, a former researcher with EORI, True Oil has directly and specifically benefitted financially from collaborating with institute scientists, who use public monies to generate solutions for private companies.
It would seem to be contrary to both the purpose of EORI and the goals of True Oil to preclude the potential for conflict of interest. To be clear, such a possibility is not inappropriate. In fact, it is evidence that UW is doing its job in terms of providing valuable service to industry. The problem is: Why would any trustee with an obvious potential for conflict of interest claim that no such possibility exists?
The Untouchables?
Dave True didn’t respond to my queries, so I’m left guessing why he and the others brush off the conflict of interest policy. Maybe they uniquely interpret the policy or simply don’t understand it (the latter being Ms. Rochelle’s best guess). Or given the concentration of power and wealth in Wyoming, perhaps they enjoy political immunity. Or they might just be unreflective participants in a subculture of presumed privilege. Whatever the explanation, the university appears nonplussed.
“There are times when the university needs to be a leader in the state,” suggests Ms. Rochelle. Perhaps one might even say an ethical leader to echo the leading principle of President Sternberg.
When I asked UW’s General Counsel if I correctly grasped the conflict of interest policy and its (non)implementation, Mr. Miller replied, “I think you understand the process, but are dissatisfied with it.” Fair enough. I’m not pleased with a weak policy that is disingenuously interpreted so that the trustees can exploit conflicts of interest without repercussions.
Even a blind, toothless, neutered sheep can say, “Bah!”
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Constructive conversation about conflicts of interest in government is important and we shouldn’t empower those who would distract us. Maybe it’s human to want to denigrate the messenger when the message is unwelcome. But propensity is not fate and criticizing character rather than action is a distraction. When we spin off, loose the thread, we miss the point. And sometimes this distraction is purposeful, intended to hijack or stall the discussion. That’s sly and dishonest. I’m tired of it and I think other voters are too. Government is how we collectively do what we can’t conveniently or effectively do individually. The integrity with which we govern ourselves, including the way we govern our University, is a significant statement about our culture. We can all take pride in that integrity or be humiliated by its absence. We ask of and entrust to government representatives – including the University of Wyoming Board of Trustees and staff – the performance of important tasks. How they go about this work both deserves and requires the attention of ordinary citizens – that’s participatory democracy. As important, we might notice, as students do, that the most informative lessons often occur outside the classroom. We teach by example. It’s honorable for government representatives not to betray the public trust by feathering their nests or by using insider knowledge and influence to benefit the select few within their circles. It’s honorable for representatives to take seriously the obligation to identify potential conflicts of interest and mindfully avoid even the appearance of impropriety. Citizens are correct to expect government representatives to cut square corners when doing the public’s business. It ought to be at least as important for them to be diligent, tell the truth, and act honorably as it is not to steal or destroy public property. Our representatives ought to be proud, rather than afraid, to do the public’s work transparently. If they can’t, they are conflicted and they ought to step aside. Period.
I, and some of my fellow disgruntled employees, say that our boss doesn’t have a conflict of interest – it’s more of a “coordination of interest.” Sounds like he is on his way to becoming a Trustee too.
Am glad to be able to read and understand better what’s happening at UW. Thank you all for your comments! Some suppositions remind me of other days and other times.
There’s no doubt that nearly all businesspeople are corrupt. To believe otherwise is at best naive and at worst idiotic. There are too many instances to count for any one reply to review the missing information from Lockwood’s article.
If academics are so “self-righteous” and businesses so independently “successful,” then why does the oil and gas industry, by way of one or other of the University’s Board members, continue to call for help from the University? The oil, gas, and coal industry puts enormous amounts of pressure on the University to improve programs they believe are “worthwhile” and “economically advantageous” (for whom? Them, of course).
The answer from the “honest” business community is: Industry seeks out the University to do the research and development they believe is too expensive for their precious company to afford. Why pay for the research and development and take away from huge profits, when you’ve got faculty, staff, and graduate students of a University who’ll do it for you (for free)? — But, yet, they’re still the first to complain about paying taxes!
R&D is, as any “honest” businessperson will tell you, the most expensive and time-consuming part of the business. It consumes nearly 60% of total revenue and chews up nearly 90% of profit. My guess is that if any Board member truly wants to come clean regarding their not having any conflict of interest, they merely need to point to their company’s financial statements. Should investment in R&D have dropped or maintained the same level over the last few years for any one line item, we know that there is a conflict of interest that ought to be disclosed.
I am not sure why any Board member would be dishonest. The last thing any Board member wants is a full financial audit of oneself or of one’s company, which is exactly what should happen if practices don’t change. Finding even one case, as Lockwood has, should instantly trigger disgust among the populace and a full financial audit.
To test for any conflict of interest among the Board of Trustees and his or her “businesses” is simple. The burden of proof shouldn’t be shouldered by Lockwood but by the Board member. Lockwood’s merely asking for the exculpatory information the “honest” businessperson seems so unwilling to give up, which makes him (and hopefully anyone) suspicious.
Mr. Northam it appears that you have shown your “true” colors by dismissing another person’s opinion whether it be right or wrong. This is very telling and perhaps substantiates your ideology-
So here is one more self-righteous academic seemingly calling foul because successful people who have actually produced something tangible in their lives happen to be placed on the board of trustees. Mr. Lockwood can’t seem to fathom the possibility that successful people might actually be honest.
Mr. Lockwood, if you have evidence of some sort of actual malfeasance on the part of a trustee then please bring it forward, otherwise I am afraid your criticism is little more than insipid and myopic.
Sincerely
CJ Ward
I was told by the people I stay in contact with at the University that many of the academics were getting highly stirred by the changes being made. I didn’t realize just to what extent they were unhappy. Interesting and thought inspiring read, but sadly comes across as very, very sour grapes.
I commented on another Wyofile article on this subject that the University of Wyoming has one of the worst cases of academic entrenchment I had ever witnessed. Some of the change in attitude and approach that President Sternberg and the Trustees are seeking are decades overdue. Will these changes be painful? Yes, if the academic staff lets them be so. Everybody needs to get into the mindset that the ivory tower needs a good cleaning, and that cleaning will make the university much, much stronger.
Dr. Goddik, can’t understand how you consider my employment at UW is a conflict of interest. I listed both my first and last names. As the only Mark Northam in the state, anybody can Google up what you seem to think I hid. Guess I must be corrupt?
I don’t know you, but your cynicism astounds me. Your comments about the BOT and now me are long on accusation and very short on substance. I hope this is not indicative of your medical practice.
Please, present some verifiable evidence of what you claim. Until you do, I will continue to respect a group of Wyoming citizens based on what I observe. You can continue to slander a group of people based on their associations. Good luck with the outcomes.
Oh, and Mark!! Even MORE interesting, you did no disclose YOUR conflict of interest, so let me help you, so you don’t come across as suspect:
https://www.uwyo.edu/ser/about-us/
“Mark A. Northam is the founding Director of the School of Energy Resources at the University of Wyoming.”
Mentioning that your livelihood depends on that company store doesn’t seem like something worth mentioning, to you? No wonder that you think they have no meaningful conflict
Mark, we have already seen political powers being willing to throw students, free speech and anything else under the bus, in order to make the mineral companies happy. To claim that these are fine upstanding citizens, “just because” rings rather hollow. There is such an incredible level of corruption in Wyoming, that anybody in any way associated with the political machine is tainted and a suspect.
So this is more than an oversight. If these statements are not in, or, as is shown in cases per the article, board members outright misrepresent themselves, claiming no conflict, then your fabricated outrage matters little. The board is tainted, and their actions are dubious. Your talk is cheap, but their actions speaks volume. The university and its board STILL appear part of the company store.
Once again, I am underwhelmed by Dr. Lockwood’s ability to make a mountain out of a molehill. Some well-meaning, service-minded individuals have been caught in an oversight. Apparently, the Trustees have agreed to be more diligent in their reporting of potential conflicts of interest. Mission accomplished. Thanks for pointing that out.
The sinister undertones in this essay – and indeed the headline – are unwarranted unless the author cares to claim and actually substantiate that a conflict of interest has been exploited by any member of the BOT for personal gain.
The key word throughout this piece is “potential”. It seems that it should be unnecessary to point out to such a learned man as the author that we all have the “potential” to commit any number of crimes. The existence of the “potential” is not sufficient to conclude that any of us has.
I know every one of the Trustees, and I am offended on their behalf.
There is very little conflict of interest in Wyoming, because that modality is the norm.
There is, however, a great deal of interest in conflict…
Ethics and honesty are such important currencies to those of us who have no power, money or influence. Thank you, Jeff, for being an educator interested in ethics and informative commentary. Integrity. It is precious commodity.
It’s refreshing to be reminded that logic and reason do not cease to function when one crosses Wyoming’s borders. Egregious violations of the public trust are always disappointing but, as Lockwood points out, they can hardly come as a surprise when they are so clearly and purposely mismanaged.
It’s certainly disappointing to see this happen at the University, but this doesn’t stop at UW. I hope we’ll have equal levels of disappointment the next time we discover that a state treasurer wrote a sweetheart deal for a hedge fund manager handling state money. Or when a state legislator votes in favor of a land deal involving an institution where he sits as a board member.
Thank you Jeff Lockwood.
Further evidence, that the university is just a part of the company store.
Once you’ve lived in Wyoming for a while, you realize that Wyoming is an oligarchy masquerading as a republic. In an oligarchy, the oligarchs don’t have to follow the same rules that everyone else has to follow. Ethical behavior is not a concern. Taking and hiding wealth from the commons is. For oligarchs, that’s all public service, including service on the UW Board of Trustees, is about–taking and hiding wealth from the commons. There’s no pretense that public service actually serves the public. Thanks to Jeff Lockwood for reminding us of that truth.