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August 10, 2010

The House investigation of Rep. Charles Rangel has focused in part on whether the congressman broke ethics rules while raising funds for a public service center at the City College of New York, but the panel’s recent report also suggests college officials were working hand-in-glove with Rangel as he solicited money from companies known to have business interests before a committee he chaired. Indeed, the House probe cites numerous instances where City College officials were very much in the room as a fund-raising campaign that investigators see as riddled with conflicts of interest unfolded.

By most anyone’s account, City College, of the City University of New York, has been put in an awkward position. Rangel – a New York Democrat and 20-term congressman – is a favored son of Harlem, and his desire to establish a center there that would steer more underrepresented minority students to public life dovetails nicely with some of City College’s own goals. But the manner in which money was raised for the creation of the Charles B. Rangel Center for Public Service now lies at the heart of Rangel’s headline-grabbing ordeal, which could conclude in Rangel’s reprimand or – he would argue – vindication.

At issue for an investigative subcommittee of the Committee on Standards of Official Conduct are fund-raising overtures Rangel made to several companies that were actively lobbying Congress on tax issues that Rangel was positioned to influence as chair of the powerful Committee on Ways and Means. One such company was AIG, whose lobbyist and officials met with Rangel and unnamed City College officials in April 2008, the subcommittee reported. In preparation for the meeting, City College officials prepared a memo stating that the objective was to “close a $10M gift for the Rangel Center to create AIG Hall.”

What’s notable about the meeting, as described in the House report, is that it indicates AIG officials worried aloud – in the presence of City College officials – about the appearance of financially supporting the congressman’s favored cause.

“AIG raised concerns about a potential donation, including the potential headline risk,” the report states. “[Rangel] asked AIG, at least twice, what was necessary to get this done.”

In its list of alleged violations, the committee cites rules that bar House members from soliciting anything of value from those whose interests could be affected by a member’s official duties, as well as rules that bar the direct solicitation of registered lobbyists.

The report does not address whether City College officials ever raised concerns about potential conflicts of interest tied to Rangel’s fund-raising efforts, and a spokeswoman for the college would not respond directly to that question. Gregory Williams, who was president of the college during the fund-raising push, also declined an interview request.

“This matter is before the U.S. House of Representatives Committee on Standards of Public Conduct. It would not be appropriate for me to make comments at this time,” Williams, now president of the University of Cincinnati, wrote in an e-mailed statement.

Photo: C-SPAN

Speaking to reporters March 3, Rep. Charles Rangel announces that he'll temporarily step down as chair of the powerful Ways & Means Committee amid an ethics investigation.

Rangel’s press office also did not respond to inquiries over several days last week, but the congressman has offered investigators a detailed defense.

While it’s unclear whether anyone at City College raised concerns about Rangel’s efforts, they certainly should have, said Paulette Maehara, president and chief executive officer of the Association of Fundraising Professionals. AFP members, who include higher education fund-raisers, are ethically bound to disclose conflicts of interest, and they should also ensure anyone working on their behalf is similarly free of conflict – even if the conflict doesn't involve the college's programs directly, she said.

“It is up to our member to say to the congressman, or to anyone else frankly, that [relationship] could be a conflict of interest and we need to discuss that; let’s work through that,” Maehara said. “If it were me, I would say, 'This is a potential conflict of interest, I don’t think it’s appropriate for you to solicit these individuals; perhaps you could open the door for me to solicit.' ”

The report cites “several instances,” however, where Rangel was alongside City College officials meeting with potential donors who were also lobbying Congress. In addition to AIG, these prospective donors included Eugene Isenberg, CEO of Nabors Industries.

The report notes that AIG was actively lobbying House members on tax issues during the period of solicitation. About three months after pledging $500,000 personally and $500,000 through his company to the center, Isenberg met with Rangel at the Carlyle Hotel in New York to discuss tax issues, the report states.

City College officials also attended meetings with Rangel, individuals and foundations that were improperly solicited with use of official congressional letterhead in violation of House rules, according to the investigation. These meetings were held with Donald Trump; David Rockefeller, director and former chairman of the Rockefeller Foundation; and representatives of the Ford Foundation, the report states.

Should College Have Intervened?

Many universities have gift acceptance policies, and City College's fund-raising arm is no exception. While the foundation assures gifts will be accepted in accordance with tax laws, nowhere in its eight-page policy is there an overt prohibition on gifts obtained unethically. Some institutions, however, have more far-reaching policies. Take San Diego State University, for instance, where the stated policy is that the university won’t accept gifts that may cause “adverse publicity.”

While some have argued there are potential legal violations tied to Rangel's actions – particularly as they relate to failure to declare rental income from a villa in the Dominican Republic – the charges related to City College are essentially concerned with codes of conduct, as opposed to strict matters of law. So was it incumbent upon college officials to ensure that Rangel followed House guidelines? That depends on whom you ask.

Robert Hartsook, a fund-raising consultant who works with colleges and other nonprofit groups, said that it’s probably unreasonable to expect fund-raisers to be weighing the ethical implications of every conceivable political interest a donor may have in supporting a project like Rangel’s center.

“I just think that’s an awful lot to ask of somebody,” said Hartsook, chairman and chief executive officer of Hartsook Companies, Inc. “I’m a practical guy. That kind of sounds like a good thing, but you kind of take the donor at [his word].”

But Woods Bowman, a former Chicago lawmaker who writes an ethics column for The Nonprofit Quarterly, said college officials should be concerned if someone working on their behalf is running afoul of the rules – be they legal or ethical.

“It’s a delicate subject to be sure, but the president [or whoever was in the meetings] had an obligation to say ‘You know, this may not be the best way to do this,' ” said Bowman, a professor of public service management in DePaul University’s School of Public Service. “Somebody should have taken Rangel aside and said ‘We really appreciate your help, but… .' ”

In his own defense, however, Rangel has noted that other members of Congress were not similarly rebuked when they raised funds for institutions bearing their names. In a statement to the investigative committee, Rangel mentioned Sen. Mitch McConnell’s center at the University of Louisville; the Robert C. Byrd Center for Legislative Studies at Shepherd University, named for the late Sen. Byrd; Sen. Trent Lott’s National Center for Excellence in Economic Development and Entrepreneurship at the University of Southern Mississippi and the late Sen. Jesse Helms’s center at Wingate University.

“We provide these examples, not as part of an ‘everyone does it’ defense, but rather to demonstrate that these activities have never been regarded as creating an improper benefit to a member,” Rangel’s lawyers wrote.

Photo: Elbert Garcia

Rep. Charles Rangel discusses public policy with the first class of graduates of City College of New York's Rangel Center Public Service Fellows May 17. The congressman's fund-raising efforts on behalf of the center are now at the heart of ethics charges against Rangel.

On Friday, The New York Times reported on several other lawmakers who have university endowments or programs named for them. In some instances these programs were financially supported by corporations with business before the members, but "none of the dozen lawmakers appear to have linked their office to the endowments as closely as Mr. Rangel," the Times reported.

Despite Rangel’s defense, every passing news story places the college’s name alongside the ethics charges the congressman can’t seem to shake. While that’s no doubt unwelcome publicity, college officials are obviously reluctant to appear to either embrace or distance themselves from Rangel.

“We’re waiting to see the process play out,” said Mary Lou Edmondson, a spokeswoman for the college. “Of course, we continue to cooperate with the inquiry so that the process can run its course. We are not going to jump to judgment before the process runs its course.”

The college has, however, made some course corrections amid the controversy. In December of 2008, as the House Ethics Committee voted to expand its investigation of Rangel, the college opted to postpone its opening reception for the Rangel Center.

As fund-raising efforts for the center began in early 2005, City College also prepared a 20-page glossy brochure describing the inclusion of a "well-furnished office for Congressman Rangel," which House investigators used as an example of the center directly benefiting Rangel. That part of the project has since been scrapped, Edmondson said.

"The idea of the office was a very early idea. The congressman didn’t ask for it. It had long ago been abandoned," said Edmondson, who didn't elaborate on the reasons.

Citing other direct benefits to Rangel, the panel noted that storage of his papers at the center "allows him to perpetuate his legacy."

“We’re not pulling back on the papers. This is 40 years' worth of papers from a congressman who has a strong 40-year record," Edmondson said.

Donations Stall

The Charles B. Rangel Center for Public Service already exists in name, and it supports students enrolled in the college’s graduate program for public administration, but no brick and mortar has been laid to house employees or Rangel’s papers. With an estimated $25 million to $35 million price tag, the Rangel Center has raised $11.5 million – none of which has come in over the last year amid Rangel’s public woes, university officials acknowledge.

Rangel may be an admired figure in many circles, but faculty at City College anticipated that the congressman – who has been a lightning rod at times in the press – had potential to bring both negative and positive attention.

“The New York Post has been on Rangel’s case for a long time, and in that sense people have known that the Rangel Center was not going to be the same thing as the Colin Powell Center [for Policy Studies] at City College, or at least wasn’t going to have the same kind of dignity,” said Daniel DiSalvo, an assistant professor of political science at the college.

“It would certainly be fair to say that it’s become clear that Rangel doesn’t have the same stature as Powell. What that means for the center in terms of its fund-raising, in terms of its image, are obviously things other people are going to have to address – not me.”

Brett Silverstein, the center’s director and former dean of the Division of Social Science at the college, did not respond to requests for comment.

Michigan Faces Similar Donor Issue

Apart from the national scope of the Rangel story, City College’s predicament has other distinguishing features. Chief among them is the fact that the manner in which the funds were procured for the project is what’s under scrutiny, as opposed to more common instances where a donor with a named building or program on campus has an unrelated fall from grace. In other words, the solution may not be as simple as pulling a person’s name from a building – the funding itself is directly tied to the controversy.

“They are much more complex [issues] because the money has the perception of taint around it,” said Rae Goldsmith, vice president of advancement resources at the Council for Advancement and Support of Education.

While the cases have differences, the University of Michigan is similarly grappling with the possibility that a significant donation may be tainted by scandal. Sam Wyly, a Dallas-based entrepreneur who donated $10 million to the university’s business school in 1997, was charged late last month with insider trading and securities fraud by the U.S. Securities and Exchange Commission. More potentially troubling for Michigan is the S.E.C.’s allegation that the money given to the university was a direct product of Wyly’s alleged crimes.

Unlike City College, which hasn’t broken ground on the Rangel Center, Michigan has long since completed the construction of Sam Wyly Hall.

“If it is a gift that was made yesterday they might consider taking a deep breath and putting a hold on a project,” Goldsmith said. “If it was a gift made 10 years ago and the project is done, that’s an entirely different conversation.”

Robert J. Dolan, who was named Michigan’s business school dean in 2001, did not respond to an e-mail inquiry and was not made available through the university’s press office. Kelly Cunningham, Michigan’s director of public affairs, repeated the only public statement the university has provided on the Wyly charges.

"Mr. Wyly is a longtime friend and supporter of the university. We're sorry to hear he is facing these difficult circumstances,” the statement reads.

If there is another troublesome analogy between the circumstances City College and Michigan are confronting, it’s the lack of continuity between the lofty goals they had for these projects and the stories circling the key players involved in them. City College sought to inspire students to embark on careers in public service, and now the face of the center is embroiled in the kind of controversy that many credit with engendering apathy among young people. By the same token, the S.E.C. has charged that the physical foundation of Michigan’s business school was built with ill-gotten gains.

“If you have, for example, a business building named after someone who has been convicted of some sort of business fraud, that’s a huge issue and may be more important for the institution to address than if you had a different building named after that person,” Goldsmith said. “Again, that goes right to the heart of the values of the institution.”

 

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