Boston U. Adopts Conflicts Policy for Trustees

New standard is more permissive than recommendation made last year by special governance panel.
July 6, 2005

More than a year ago, as it dug out from yet another round of recriminations in the wake of a failed presidential search, Boston University announced that its Board of Trustees had approved a special committee's wide-ranging recommendations for changes to its governance policies.

Among the committee's proposals: that the trustees adopt a set of highly restrictive conflict of interest policies for themselves that "could serve as a national model." The committee's plan, endorsed by the trustees, said the university would not enter into business or financial arrangements with any entity connected to a trustee unless doing so was "of exceptional necessity to the university."

Late last month, Boston's interim president, Aram V. Chobanian, issued a "Statement of Commitment to Ethical Conduct" that included a new conflict of interest policy that the trustees had adopted at a meeting in December. Notable, to faculty critics, was the fact that the policy eased the standard that restricted business or financial arrangements between the university and trustees, allowing those deemed to be "of clear benefit to the university."

"Why was there no announcement that the recommended change to the conflict of interest policy concerning trustees was not adopted, i.e., that the threshold for allowing business with trustee-related entities has been lowered?" asked the Web site BUWatch, which monitors and questions administrative goings-on at the university. "Why was this changed? How has the university's involvement with trustee-related businesses changed as a result of the new policy? Which business dealings were terminated, and which have been maintained (having been deemed of clear benefit to the university)?"

Boston University administrators acknowledged Tuesday that the standard had been changed, but bristled at the suggestion that the university had committed to, and then abandoned, a tough conflict of interest policy in favor of a weak one. 

First, said Stephen Burgay, the university's vice president for marketing and communications, the trustees never fully or formally embraced the original standard. In approving the special governance committee's recommendations in April 2004, he noted, the board had stated clearly that its audit committee "is charged with responsibility for developing definitions, standards and procedures for the new [conflict of interest] policy."

And as the audit panel and the board as a whole reviewed the policy during the second half of 2004, Burgay said, they concluded that the language restricting business arrangements to those "of exceptional necessity" was unworkable. "The trustees felt that they needed a policy that was very strong in terms of delineating a conflict of interest but at the same time allowed the university to enter into relationships that were beneficial and important to the university," Burgay said.

He added: "They concluded it would be wrong to endorse and apply a standard which over time would not be workable and would work to the detriment of the university."

Burgay strongly disputed the idea that the university had adopted a watered-down conflicts policy. He noted that the policy requires all trustees, officers and other top staff members to disclose potential conflicts involving them or their family members, and requires the board's audit committee to approve in advance, and annually review, all proposed or existing business arrangements involving trustees or officers. "We have extraordordinarily high standards in place," he said. "I don't know what other universities do, but I think that standard would measure up very well."

National experts on trustees tend to agree. Richard T. Ingram, executive director of the Association of Governing Boards of Colleges and Universities, said that in his eyes, the slight change in the wording of Boston University's policy was not what mattered. "The important thing is that we are witnessing a university whose board is intent on functioning effectively, as evidenced by their recent governance study that brought about improvement in many policies and practices," said Ingram, who noted that the university has seen more than its share of governance troubles over the last two decades. 

B.U. appears to have put in place a policy that calls for "timely disclosure" of potential conflicts and "timely consideration of whether a particular circumstance is helpful or hurtful to the institution," Ingram said. What will really matter over time, he said, will be the "good judgment of the small group of men and women charged with deciding whether a particular circumstance is good or bad."

On that point, faculty leaders at the university concur. "The big question is not whether the policy we've just put in place is stronger or weaker than the one proposed before, or whether the trustees went about changing it the right way," said Roscoe C. Giles, a professor of electrical and computer engineering and faculty representative to the board. "The big question is whether the trustees and the university are going to have good governance and effective examination of conflicts of interest. 

"And for that," he added, "while they've made a commitment to doing it, we're going to have to wait and see."


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