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Arvind Ganesan

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Higher Education's Dirty Little Secret

Posted: 03/16/11 01:17 PM ET

Libya's human rights crisis shined a much-needed spotlight on the relationship between universities and their more problematic funders. In this case, the London School of Economics (LSE) agreed to take about $2.4 million from the foundation controlled by Saif al-Islam Gaddafi, a son of the Libyan strongman, Muammar Gaddafi.

LSE is not alone. American University in Washington agreed to help a former Nigerian vice-president, Atiku Abubakar, and his wife, Jennifer Douglas, set up a university in Nigeria, despite persistent allegations of corruption against him. In return, American University received about $14 million in "consulting fees" between 2003 and 2007 for its work on this project. American University officials told U.S. Senate investigators that their due diligence on Abubakar uncovered some rumors of corruption, but they ultimately decided to proceed.

Later, the Securities and Exchange Commission disclosed that Ms. Douglas received about $2 million in bribes from Siemens AG, the German conglomerate, on behalf of her husband. Siemens paid a record $1.6 billion fine since this was part of a global bribery scandal, but the Abubakars were both abroad and outside U.S. jurisdiction.

Another case in point is Lincoln University, the oldest historically black college in the United States, which has an interesting relationship with Peter Odili, governor of Nigeria's oil-rich Rivers State from 1999 to 2007.

Human Rights Watch documented how Odili's administration, with a budget of about $1.3 billion in 2006, provided little money for primary schools or other basic services that state and local governments are supposed to provide. Instead, Odili channeled enormous sums directly to the governor's office -- tens of millions of dollars earmarked for entertainment, gifts, and the purchase of jet aircraft. Travel must have been important since he also allocated $65,000 a day to his office for travel and transportation. We concluded that a huge portion of the state's funds were lost to extravagance, waste and corruption.

In contrast to primary schools in Rivers State, Lincoln benefited greatly from Odili's generosity. By the end of 2006, he had become one of the school's largest donors, with at least $1.64 million in donations. During that year, it gave him an honorary degree, held a luncheon in his honor, and named a building after him.

Nigeria's federal anticorruption agency, the Economic and Financial Crimes Commission, says it has a strong enough case to prosecute Odili. But in 2007 Odili somehow managed to secure an outrageous court injunction -- widely condemned as a mockery of the judicial process -- that permanently barred the agency from investigating, let alone prosecuting him.

A year later, though, the commission said it had completed its investigation into Odili's "wanton looting of the treasury of Rivers State" and was ready to arraign him on corruption charges. The judge reaffirmed his injunction and nothing has happened since. In April 2008, Odili began a four-year term on Lincoln's Board of Trustees.

In the London School of Economics case, the donations from Gaddafi's son came in 2008, a year after the school awarded him a Phd. The university had also agreed to accept about $3 million in other donations from Libya. This scandal cost Sir Howard Davies his job as director of the university. The school disclosed that it had received about $500,000 from Saif's pledge that it would use for scholarships. It also said it will no longer accept Libyan funds, inevitable anyway since the British government had frozen any U.K.-based assets that belonged to Gaddafi and his family a few days earlier.

Universities are undoubtedly under pressure to find financial support and to maintain high standards, especially as government funding becomes scarcer. But that does not mean they should allow abusive and corrupt officials or their families to launder their images in exchange for money.

There should be better rules to keep this from happening. After all, the London School of Economics did not act until Saif's father literally began to kill his own people in a brutal attempt to cling to power. American and Lincoln universities have not fully explained their relationships with Abubakar or Odili. And schools in the U.S. have no legal obligation to investigate whether funds they might take are tainted by corruption.

One modest step would be to make universities investigate whether donors are implicated in abuses or corruption before accepting their money. If they do decide to go ahead, those donations should be disclosed and the information easily accessible to the public. There may be good reasons to keep some donations anonymous, but that rule should not apply to money from rulers or their family members who are implicated in abuses or pose a risk for corruption. Those relationships cannot be good for a school's reputation -- as the London School of Economics just learned.

Fortunately, governments can step in to ensure that schools are more transparent. Last November, the G-20 group of governments announced an anti-corruption initiative that includes a commitment to prevent corrupt officials from spending their funds abroad. They should include enhanced due diligence for universities as part of their efforts. That might give officials an incentive to spend money on their country's schools instead of using that money to get a building named after them abroad.


Arvind Ganesan is director of the business and human rights program for Human Rights Watch.