Wednesday, December 4, 2013

Conflicts of Interest on Penn State's Board of Trustees

Sent on September 7 2013 by Bill Levinson, B.S. '78

To:  State Senator John Yudichak
State Representative Scott Conklin
cc: Penn State Board of Trustees
Penn Staters for Responsible Stewardship

As reported by the Centre Daily Times, the leaders of Penn State's Board of Trustees have accused the Trustee plaintiffs (Lubrano, McCombie, Clemens, and Taliaferro) in the lawsuit against the NCAA of having a conflict of interest.[1] These leaders also presented student Trustee Peter Khoury with an ultimatum: withdraw from the lawsuit, or lose his position on the Presidential search committee. [2]

I am not an attorney, but my layman's understanding is that a conflict of interest exists when the personal benefit of a trustee, conservator, or holder of a power of attorney is at odds with the well-being of the organization to which he or she owes fiduciary responsibility. The only such conflict that I can identify involves the Board's controlling majority, and it's the same kind that Maish Rennick had in Requiem for a Heavyweight. Rennick bet against his own boxer, and then lost money he could not afford because the boxer wouldn't take a dive. The Board's controlling majority similarly bet its credibility against the well-being of Penn State on at least three identifiable occasions:

(1)   The Board displayed obvious panic by holding an emergency meeting on 11/9/2011, and then rushed to judgment against Coach Paterno without any diligent effort to determine whether he had any culpability in Jerry Sandusky's actions.
·         This, in turn, falsely admitted guilt on Penn State's part. When you fire somebody, you are saying that he and, by implication, his organization, did something wrong. The Trustees admitted openly at the time that they had only partial information, including a Grand Jury presentation that made the false statement that Mike McQueary had actually seen Jerry Sandusky rape a boy in the shower.[3] The Trustees, therefore, put themselves in the position where Coach Paterno HAD to be guilty because proof to the contrary would reflect directly on the Trustees who fired him. This, along with their de facto admission of guilt on behalf of Penn State, put them in the same position Maish Rennick was in when he bet against his own boxer.
(2)   The Board's controlling majority then affirmed the Freeh Report's findings of guilt without (apparently) bothering to study the report.
·         The time between the release of the report, and its public affirmation by the Board, did not seem adequate for any such review. If the Board had reviewed it, it would have recognized the report's numerous deficiencies.
·         Board Chair Karen Peetz said, "I think our reaction is that the clarity that's come out of the report would show that 61 years of excellent service that Joe gave to the university is now marred. And we have to step back and say, what does that mean?"[4]
·         Trustee Kenneth Frazier said in the same interview that people should hold off on assessing Paterno's record, but he had already done so. He is on record as saying on July 12 2012, "several hours" after the release of the Freeh Report, "Administrative leaders -- including at the time President Graham Spanier, Coach Joe Paterno, Athletic Director Tim Curley, and Senior Vice President Gary Schultz — failed to protect children when they had the opportunity and failed to provide adequate information to the board, he said."[5]
·         Mr. Frazier later (March 2013) derided an alumnus' challenge to the Board's reliance on the Freeh Report and its conclusions. "We can take employment actions, we can take corrective actions without any need to resort to the so-called due process, reasonable doubt standard, and I don’t care if they are acquitted. And you know the difference. If you cared about that, you are one of the few people in this country that looks like you who actually believes the O.J. Simpson not guilty verdict was correct."[6] To this he added explicitly, "It is crystal clear that we, as a board, cannot and should not reinvestigate the Freeh investigation."
·         The lawsuit's plaintiffs allege "The [Freeh] report’s conclusions regarding plaintiffs in this action have been thoroughly discredited, and the NCAA knew they were not worth the paper they were written on. … As the NCAA knew or should have known, the report’s key conclusions regarding plaintiffs are wrong, unsubstantiated, and unfair. It is, even for the most charitably undiscerning, a shoddy and deeply flawed piece of work."[7] If this is true, and I believe it is, the Trustees also knew or should have known. The Board's controlling majority therefore seems to have a vested interest, and one that is contrary to the well-being of Penn State, in not having this allegation proven.
(3)   The Board made no identifiable effort to assess the legitimacy of the NCAA's sanctions, or determine whether the NCAA actually threatened to shut down Penn State's football program for four years.[8]
·         The plaintiffs also allege, "What they do seek is redress and compensation for the harms caused by the NCAA’s irresponsible and unlawful conduct. The NCAA-imposed consent decree should be declared unauthorized, unlawful, and void ab initio. The NCAA’s egregious rule violations should be stopped. And the NCAA should not be allowed to continue to exceed its lawful authority." If the NCAA-imposed consent decree is indeed unauthorized and unlawful, it was the Board's duty to act on this. Although the lawsuit's success could conceivably return Penn State's $60 million, along with additional compensation for the harm caused by the ban on postseason play, loss of football scholarships, and damage to Penn State's reputation, it would also show that the Board did not do its duty.

This leaves the Board's controlling majority with, as I see it, a very serious conflict of interest between its own credibility, and the best interests of Penn State. Trustees Lubrano, McCombie, Clemens, and Taliaferro are doing the job the entire Board should have done as of last July: exercised due diligence by reviewing the Freeh Report, and then acted in response to the NCAA sanctions. As stated by plaintiff Spencer Niles, "My question to those BoT members who are against our lawsuit is: What are you afraid of?"[9] The material shown above, I believe, provides many of the answers.

I believe that the pressure that the Board's controlling majority is now putting on the four Trustee plaintiffs, its successful ultimatum to the student Trustee, and its performance on and subsequent to 11/9/2011, is sufficient cause for the Legislature to consider decisive intervention to protect the interests of Pennsylvania's largest and most prestigious educational institutions.

[1] Penn State board leaders say trustee participation in Paterno lawsuit against NCAA constitutes a ‘conflict of interest’ August 30 2013
[2] "Penn State’s student member of the board of trustees is withdrawing as a plaintiff in the Paterno family’s lawsuit against the NCAA, saying he was threatened with being removed from the group that’s searching for the next university president if he didn’t drop out."
[3] McQueary later testified that he did not actually see the act in question, as was alleged in the presentment.
[4] Note also that Louis Freeh said, "The evidence shows that Mr. Paterno was made aware of the 1998 investigation of Sandusky, followed it closely; but failed to take any action, even though Sandusky had been a key member of his coaching staff for about 30 years, and had a office just steps away from Mr. Paterno." If this is true, and there are questions as to whether it is, then Paterno would also have known that the investigation exonerated Sandusky. This alone is a good indicator of the overall quality of Freeh's workmanship, and there are plenty of others in the report itself.
[7] MEMORANDUM IN OPPOSITION TO DEFENDANTS’ PRELIMINARY OBJECTIONS, filed by plaintiff's attorneys, September 6 2013.
[8] "Oregon State president Ed Ray, president of the NCAA's executive committee, has told at least two publications that the committee never threatened Penn State with a four-year death penalty."

No comments:

Post a Comment