Communicating Conflicts of Interest to the Public

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According to the Chronicle, one-fourth of private institutions do business with their trustees’ companies. Potential conflicts of interest involving board members or high-ranking officials certainly are not limited to private colleges, however; North Carolina State University’s termination of Mary Easley and the uncovering of the University of Illinois’ previous board’s interference in the admissions process each represent highly publicized examples.

We asked Cindy Lawson, media relations expert and vice president for public relations and communications at DePaul University, for practical tips on what and how to communicate to the public when a conflict of interest involves a member of the board, in order to manage the impact on the institution’s reputation.

Be Forthright and Specific

“From my experience, the chances of an institution’s reputation remaining intact are far better when that institution is forthright and admits the conflict, shares as much information as it possibly can, and most importantly, describes the measures it is taking to ensure it doesn’t happen again, as opposed to trying to hide it, hoping that no one finds out, or worse — trying to deny it or cover it up once it is exposed.”
Cindy Lawson, DePaul University

In a case involving an unintentional conflict of interest — in which the individual did not realize there was a conflict until too late — Lawson suggests issuing a very direct statement:

  • State that a conflict of interest has occurred unknowingly
  • Note how the university and/or individual(s) involved have immediately rectified the situation by taking specific action (such as recusing themselves from deliberation and/or a vote, making financial restitution, etc.)
  • Clarify how the university is establishing or revisiting policies and/or monitoring procedures to ensure that a similar case does not occur in the future

In the worst-case scenario, in which the conflict of interest was blatant and required disciplinary action — as in violations of state or federal law, or cases in which an individual has lied or otherwise tried to cover up a conflict of interest, or in which a board member or high-profile officer of your institution has profited from the conflict — Lawson recommends providing as much information as possible to the public, as long as you are not violating personal privacy laws or a confidential contract. It is prudent to be as open with your constituents as possible, and to not appear secretive.

Lawson offers these four sample scenarios of possible conflicts of interest involving executive leadership or the board, and how the public relations officer and the institution should communicate what has happened in each case.

Scenario 1: Athletic Boosters

Lawson: Many universities have athletic boosters who are very influential members of both the university community and the larger communities in which those universities are located. Some are major donors. Sometimes these boosters are so enthusiastic in their efforts to recruit certain athletes, they may try to provide recruitment incentives (vehicles and other perks for athletic recruits), which not only represents a conflict of interest, but clearly a violation of NCAA compliance regulations. Because these types of incidents historically have been played out in the press, it’s really a good idea for the university to get ahead of these types of stories, to “go public” with what happened, and if appropriate, even to place sanctions on itself simultaneous to reporting its violations to the NCAA.

Scenario 2: Contracted to a Board Member’s Franchise

Lawson: A board member who owns a very lucrative food franchise in a state wants to obtain a public university’s food services contract. He makes a significant donation to the university, with the understanding that he would be given the contract. In this case, university officials and the donor are both engaged in a serious conflict of interest. Before the contract materializes, however, an employee blows the whistle about the negotiations under way. Deniability is an option that is discussed, especially since there is no contract, but an open records request certainly would reveal otherwise. The university chooses, instead, to not give the contract to the board member, as proof that no “backroom” deals had been made and to stop the rumors. The community believes that because the board member never got the food services contract, the rumors were simply rumors. However, to this day, faculty and staff at that institution are suspicious of all contracts, whether board members are involved or not.

In my opinion, the university should have gone public, admitting its wrongdoing, indicating that disciplinary action had been taken against the individuals involved (without naming those individuals), and discussing what systems it would be putting in place to ensure that something like this would not happen again. The university also might have announced that it was auditing all of its other contracts to ensure there were no other conflicts of interest and to ensure that no other inappropriate “arrangement” had been made. In doing that, the university might have engaged the services of an outside, independent auditor. Once the auditor’s report was complete, the university might have wanted to share the findings of that report, particularly if this one case was an anomaly and not a common practice. Taking these types of actions would indicate that the university was sincere in its efforts to uncover any improprieties or conflicts of interest and, at the same time, would restore a sense of confidence in the university.

Scenario 3: The Board Member’s Child

Lawson:  A board member’s child doesn’t have the grades or ACT/SAT scores to be admitted to a university. The student is denied admission. The board member offers to donate a significant amount of money to the university in order to establish a tutorial center for students who need remedial help — his/her child being one of those first recipients. The university agrees to do this. Other board members and/or legislators make similar deals (donations or agreements to put forward a bill on the university’s behalf) if their son, daughter, niece, nephew, child of a friend, etc. are granted admission to the university. Similar deals are made. Whether the public uncovers this or not, the university should rectify this situation, and make a public statement about new policies it has instituted to ensure that these kinds of conflicts of interest do not surface. In this case, and depending on the university (private or public), the circumstances and types of individuals involved (donors versus legislators), a university may or may not be in a position to reveal the name or names or to give specific examples. But the degree to which a university can be forthcoming more often than not influences the degree to which the issue becomes a major crisis.

Scenario 4: When a Public Statement Is Not Warranted

“Sometimes, conflicts of interest or potential conflicts of interest are discovered quickly and can be remedied before any damage is done. In these cases, a university statement probably isn’t warranted.”
Cindy Lawson, DePaul University

Lawson:  A public university wants to purchase some property that is owned by a board member. Because property purchases usually involve an amount that requires board approval, a conflict of interest exists for that board member. As such, not only should the board member recuse himself/herself from the vote, the board member should not attempt to influence the discussion and or the decision-making process. Because board meetings for public universities are public forums, and because the minutes of these types of meetings are usually published on a website, a public statement from the university probably is not necessary.

I worked at one institution where a board member donated several “old” boats, which were valued significantly higher than their actual “book” value, in order for the donor to take a larger tax deduction. When the matter came to the attention of the president of the institution, he fired the employee who made the “arrangement” with the board member, had a private discussion with the board member, and corrected the falsified paperwork before it was ever issued to the IRS. No public statement was issued, either about the dismissal of the employee or the board member’s attempt to falsify documents.

How Institutions Can Be Proactive

Lawson recalls the old adage, “An ounce of prevention is worth a pound of cure.” In the case of managing the potential for conflicts of interest, this means regular review of your institution’s conflict of interest policy, as well as ensuring that your conflict of interest identification and avoidance process involves more than just a written policy.

As a start, Lawson suggests considering:

  • Ensuring your conflicts of interest policy is applicable to all boards associated with the institution
  • Requiring mandatory ethics training
  • Offering periodic conflict-of-interest announcements and reminders of the policy at the beginning of each of your trustee public meetings
  • Including a frank discussion of the institution’s conflict-of-interest policy in the orientation for new board members