New Conflict of Interest Allegations

Some top business school admissions officials get free trips to Japan -- and in some cases more -- to help a company there get applicants into MBA programs.
January 30, 2008

Three senior admissions officials of prominent American universities sit on an advisory board of a Japanese company that helps applicants in Japan get into top M.B.A. programs in the United States -- including programs at their universities.

The officials confirmed their involvement and that they receive a free annual trip to meetings in Japan for their services, which are boasted about on the Japanese company's Web site. One of the officials said that there is also pay involved, but declined to say how much. One official said he couldn't answer questions about his pay. And one official denied being paid except for the free trip to Japan.

While the three officials deny that their involvement poses any conflict of interest issues, the disclosure comes at a time that colleges are facing increased scrutiny about their officials ties to companies that have relationships with their institutions. Some admissions experts questioned the the appropriateness of these relationships. And one of the officials involved -- formerly a top M.B.A. official currently working outside of the business school world -- said he "probably" wouldn't have participated as a business school official.

The three officials are Judith Hodara, associate director of M.B.A. admissions at the Wharton School of the University of Pennsylvania; Donald C. Martin, associate dean for enrollment and student services at Teachers College, Columbia University, and formerly an admissions official at the business school of the University of Chicago; and Sherry Wallace, director of M.B.A. admissions at the University of North Carolina at Chapel Hill. The company for which they serve on the advisory board is called AGOS Japan.

An official involved in business school recruiting in Japan sent an e-mail to some officials of the universities involved, and some journalistic organizations, including Inside Higher Ed, raising questions about why top universities were lending their names and officials to an admissions consulting service in Tokyo that hopes to send applicants to their institutions.

Hodara and Martin said that their universities approved their ties to AGOS before they started. Wallace, of Chapel Hill, did not respond directly to questions. But a spokesman for the university indicated that the university became aware of the relationship only in recent days, when it received an e-mail complaint, and that officials then checked out the arrangement and determined that it was appropriate.

In the last year, many colleges have been forced to toughen conflict of interest rules for financial aid leaders after publicity over financial payments, trips and other benefits provided to aid directors by lending companies. To some watchdogs of conflict of interest, the latest news suggests the potential for problems in the admissions field as well.

"The parallels to the student loan scandal are self-evident. How can you serve on the advisory board of a company involved so directly in your field?" asked Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. He said that people getting asked to serve in such capacities need to ask themselves "some basic questions." If they are providing truly valuable insights, he said, shouldn't they be providing those in ways that benefit all applicants, not just those who can afford the services of the company providing them with a trip to Japan? If they aren't providing great insights, "then the reason you are there is not because you are Joe Smith but rather because Joe Smith's employment at ABC university is the real gloss here."

The companies benefit from associations with top universities, Nassirian said, but the relationships hurt the credibility of higher education. "If we want to maintain the integrity of the admissions profession, you pay a price for that by not engaging in activities that push the envelope."

One of the three university officials agreed that it raised conflict of interest issues, except not in his case. Martin, of Teachers College, said that he was recruited for the position because of his past work with Chicago's business school, and that he was assured by AGOS officials that they worked only with business school applicants and would not seek his advice on admissions to Teachers College. Martin said he couldn't answer questions about pay.

Columbia was among the universities hit hard by the student loan scandal, and Martin said he was aware of the increased attention to conflict of interest issues. "I spoke with our administration about this before serving on it," he said. "I don't understand how someone could view this as a conflict of interest since I don't work with M.B.A. programs."

Asked if he would have agreed to participate had he been working in M.B.A. admissions -- as is the case with his advisory board colleagues from Wharton and Chapel Hill -- Martin said "probably not." Why not? "In that case, if I was still working for a graduate school of business, I might have felt it would have appeared that it was tied in with one particular organization in Japan when there are several that do this kind of work."

Hodara, of Wharton, said she was being paid for her work for AGOS, but she declined to say how much. She also confirmed that she would be receiving a trip to Japan once a year for meetings. Hodara said she knew some of the founders of AGOS from their previous work in the admissions industry.

On the question of conflict of interest, Hodara said that there was no problem because she will be advising AGOS, and not counseling individual AGOS clients. However, she said AGOS would provide her with a list of its clients applying to Wharton so she could recuse herself from considering their applications. The arrangement was vetted by Penn lawyers and her supervisor, Hodara said.

"I am an incredibly ethical individual and I made sure none of this would be a conflict," she said.

A spokesman for Chapel Hill sent a statement in response to questions. The statement said that the university investigated the situation after receiving an e-mail about it on Sunday, and found that Wallace's work for AGOS is "complementary to her professional duties and does not create an inappropriate bias." The Chapel Hill spokesman said that Wallace receives no compensation, just reimbursement for an annual trip for meetings in Japan.

Asked if there might be an inherent conflict in the admissions director of a highly competitive M.B.A. program providing advice to a consultant in Japan, when most applicants don't have access to that consultant, the Chapel Hill spokesman replied: "Based on the review, officials in the Research Compliance Office believe the same information and support is available through our admissions office for any other student or organization that might seek it."

A spokeswoman for the Graduate Management Admission Council said that her organization did not have any code of ethics that applied to the conduct of admissions officers in these cases, and that the organization's view was that institutional policies would regulate conflicts of interest.

The National Association for College Admission Counseling does have an ethics code. David Hawkins, director of public policy and research, said that the code doesn't have language that directly speaks to the AGOS relationships, and that he didn't know about them. Broadly, the code says that admissions officers should not accept payment from other entities for the placement or recruitment of students.

He said it was "very difficult to think of circumstances" where NACAC would advise admissions officers to serve on a board for which they would receive benefits if that board helps a company that tries to place students.

"We have discussed and continue to discuss with our board and membership the seriousness of conflict of interest situations that arose last year," he said. "Particularly in this environment of heightened awareness and concern, we need to remain on our guard and do our best to be fair and to avoid conflicts or perceived conflicts."


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