NOVEMBER 1997 · VOLUME 18 · NUMBER 11

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U N I V E R S I T Y ,   I N C .

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Kevin Kniffin's on-line University-Industry Study is a database listing the top 50 national Universities" presidents' involvement on corporate boards, 50 corporations with university ties, and actions currently underway.

JUDITH RODIN IS A DIRECTOR of Aetna Life and Casualty and of Electronic Data Systems. In July, she was nominated to become a director of AMR, the holding company for American Airlines. For her service on corporate boards, she received over $123,500 in 1996. Rodin is a busy person, however. While she attended over 36 board meetings in 1996, her day job was service as the president of the University of Pennsylvania. She earns well over $350,000 for this job, in addition to free housing, free housekeeping, an expense account, free Penn tuition (for her child), a personal staff and a car with a driver. Rodin is not unusual. The presidents of more than one half of the 50 institutions listed on U.S. News and World Report's dubious rankings of leading universities serve on corporate boards, according to a Multinational Monitor investigation. Carnegie Mellon University places atop the rearranged U.S. News and World Report list of universities, ranked according to the sum of fees earned by university presidents for membership on corporate boards. Carnegie Mellon's immediate past president, Robert Mehrabian, took over $105,000 in board payments from four publicly traded corporations in 1996.

THE DEATH OF DISINTERESTEDNESS

"DISINTERESTED SCIENTIST" may be on its way to becoming an anachronism. University-affiliated scientists publishing in academic biology journals exhibit a shocking rate of financial interests in the subject matter of their articles, a 1996 Tufts University-University of California at Los Angeles study found. The study, published in Science and Engineering Ethics, suggests that more than one-third of authors of articles in leading biology journals have a financial interest in their published research. The study examined articles published in 1992 in 14 leading life science and biomedical journals. To narrow the scope of the project, the study considered only journal authors based in Massachusetts. The study then investigated whether each journal author: 1) is a member of the scientific advisory board of a company that develops products related to the scientist's expertise; 2) is listed as an inventor on a patent or patent application for a product or process closely related to the scientist's publication under review; or 3) serves as an officer, director or major shareholder in a for-profit corporation involved in commercial activities related to the scientist's field of expertise. The study found that 20 percent of the articles had a lead author serving on the scientific advisory board of a biotechnology company. Twenty-two percent of the articles had a lead author who held or has applied for a patent related to the subject of the article. Seven percent of the articles had a lead author serving as officer, director or major shareholder of a biotechnology corporation. The study appears clearly biased to undercount the proportion of journal authors with financial interests in their published work. It does not consider honoraria, consultantships, personal investments or research sponsorships. Its consideration of scientific advisory boards was limited to Massachusetts companies only; so Massachusetts authors who serve on the scientific advisory boards of a California biotech company, for example, were not listed as having a financial interest. Not a single one of the 267 articles identified as having a lead author with a financial interest closely related to the publication disclosed the financial interest. Only four of the 14 leading journals considered in the Tufts-UCLA study require disclosure of financial or other potential conflicts of interest; most of those policies were adopted after 1992, and journal authors may have disclosed interests to journal editors that were not published. The pervasiveness of academic scientists' financial interests, says Sheldon Krimsky, a Tufts University professor and the lead author of the Tufts-UCLA study, justifies an across-the-board journal policy of published disclosure. "Without such disclosure," he has written, "science writers and journalists who report on scientific advance are without an important piece of contextual information." Krimsky's call for disclosure generated a surprisingly aggressive attack by Nature, a leading British life science journal which does not require disclosure. "It would be reasonable to assume, nowadays, that virtually every good paper with a conceivable biotechnological relevance emerging from the west and east coasts of the United States, as well as many European laboratories, has at least one author with a financial interest -- but what of it?" asserted a February 1997 editorial in Nature. The Tufts-UCLA study "makes no claim that the undeclared interests led to any fraud, deception or bias in presentation, and until there is evidence that there are serious risks of such malpractice, this journal will persist in its stubborn belief that research as we publish it is indeed research, not business." -- Robert Weissman

None of the presidents on U.S. News and World Report's list of top liberal arts colleges serve on the boards of publicly traded corporations.

The growing presence of university officials on corporate boards is one important manifestation of the increasing corporatization of U.S. universities. The growing links between universities and big business raise important questions about academic integrity and university autonomy.

University officials face two sorts of conflicts from outside positions such as corporate directorships: direct and indirect conflicts of interest, and conflicts of commitment. Members of corporate boards acquire fiduciary duties to advance the interests of the shareholders they represent, and these interests may not be commensurate with what is best for a university. More generally, university officials serving as members of corporate boards may find their worldview (and their financial interests) significantly affected by their corporate ties and obligations, perhaps in ways that conflict with the best interests of the academic institutions they lead. "You can't serve two masters at once," says Lawrence Soley, author of Leasing the Ivory Tower and a critic of close university-industry ties. Officials may also face overwhelming time demands from their commitments to their full-time university job and to their meeting-heavy directorships.

PRESIDENTIAL BOARD GAMES

University presidents come upon their corporate board opportunities in a number of ways. Georgetown's President Father Leo O'Donovan, for example, took a spot on Disney's board after becoming acquainted with Disney CEO Michael Eisner, the father of a Georgetown student. A Lehigh alum and benefactor invited Lehigh's recent president, Peter Likins, to the board of Parker Hannifin, a Cleveland fluid power system company. University of Oklahoma's President David Boren acquired some of his directorships through relationships made as a U.S. senator, says a university spokesperson. With regard to the increasing number of former politicians at the helm of universities, Soley says it should be no surprise that they are also serving on corporate boards of directors. These politician-presidents have been "taught to shake the money tree for campaigning. Now, they're shaking the same tree but for a different purpose," he says.

University presidents argue that serving on corporate boards broadens their perspective and connections in ways beneficial to their universities. Regarding her directorships, Rodin says that Penn's trustees expect that "what I do, I do for Penn." Rodin believes in joining the two roles so much that she has linked her University of Pennsylvania world wide web page to Aetna's site.

Peter Likins, one of only two of nearly two dozen presidents contacted by Multinational Monitor who was willing to discuss the issue, comments that board service gives him "a competitive edge over presidents who prepared [for the role of university president] only through academic service. I believe the trustees understand that advantage very well."

Trustees may indeed approve of university presidents serving on corporate boards, for, as Soley points out, "CEOs are the largest single group of trustees of universities."

Some university officials are willing to acknowledge that personal aggrandizement has at least something to do with why they serve on corporate boards. Richard Cyert, president of Carnegie Mellon University from 1972 to 1990, admits, "I benefitted a great deal" from service on the boards of companies like First Boston (an investment bank), American Standard (the toilet company), and H.J. Heinz (the pet food and ketchup company). Cyert also admits something else that appears obvious: that university presidents obtain positions on corporate boards by trading on their university position and affiliation. Presidents "have to recognize they probably wouldn't have the job if it wasn't for their role at the university," Cyert says. In an attempt to redress this exploitation of his university role, Cyert made it a practice to donate large portions of his stock gains back to the university.

Georgetown President O'Donovan follows a similar practice, deferring his salary as a Disney director into a student scholarship fund. But this practice is not the norm.

Inquiries were made of several companies regarding the reasons they recruit university officials to their boards of directors, but none were answered.

FREE TO BE

University policies regarding outside compensation and outside commitments vary significantly. New York State, with the passage of its 1987 Ethics in Government Act, appears to have the most stringent screening process. For example, since campus presidents control one-third of the decision-making power over the selection of home banks, State University of New York (SUNY) campus presidents are not allowed to serve on the boards of banks with which the campus has an account. "[We] must conclude that the dual loyalties to the State and to the bank present, at a minimum, the appearance of a conflict of interest which is prohibited under Public Officers Law S74," the New York State Ethics Commission ruled in 1991, in response to a request by a SUNY campus president to serve on a bank board. New York also requires prior approval for university officials to accept outside posts that will pay them more than $4,000 annually. The New York board has also disallowed stock options for SUNY officials asked to serve on the boards of certain companies which do even relatively small amounts of business with the university.

In contrast with New York's explicit bank conflict policy, the University of California (UC) at Berkeley's former Chancellor, Chang-Lin Tien, is a director of Wells Fargo Bank, the institution that handles the estimated $1.5 billion payroll account for the university system. Greg Colley, of the University of California's treasurer's office, declined to comment on the university system's selection of Wells Fargo except to say that the relationship is periodically reviewed and evaluated. Tien has been a director of Wells Fargo since 1990, the same year he took the lead of UC-Berkeley.

University of California officials, like those at many other public universities, must publicly disclose non-university dealings to the UC President's office, and are bound by a conflict of interest code. They apparently take their lead from the University of California President Richard Atkinson, who serves on three boards: Nevada Goldfields, Qualcomm and San Diego Gas & Electric/Enova.

At private universities, it is typically the case that no prior approval is required for contracting personal obligations to for-profit corporations.

PRESIDENTIAL DOUBLE DUTY CONTROVERSIES

Those presidents and other university officials who serve on the boards of corporations accused of serious wrongdoing have generated the most controversy.

• The chancellor of the University of Texas, William Cunningham, recommended that a new molecular biology building be named after a generous alum and his wife -- the Moffett family that founded and operates the mining company Freeport McMoRan, recounts Robert Boyer, a professor at the University of Texas at Austin. Cunningham suggested this honor be bestowed on the Moffetts at the same time he was serving as a director of Freeport McMoRan, a company accused of poisoning rivers and destroying the way of life of thousands of indigenous people in Indonesia [see "The Mining Menace of Freeport McMoRan," Multinational Monitor, April 1996]. Although he refused Multinational Monitor requests for comment, Cunningham told the Dallas Morning News that his building name recommendation was not marred by a conflict of interest since the Board of Regents ultimately needed to approve the name.

• A joint student-Oil, Chemical and Atomic Workers campaign is calling for Donald Jacobs, dean of the school of management at Northwestern University, and University of Michigan Professor Marina Whitman to resign from their university positions if they care to keep their positions on the board of Unocal, the oil giant providing crucial financial support to the Burmese dictatorship.

• In August, the Sierra Club denounced new University of Missouri President Manuel Pacheco, former president of the University of Arizona, for serving on the board of directors of ASARCO, a mining company which has paid $1.7 million in environmental fines for polluting Missouri's Black River. ASARCO responded with "disappointment" that the Sierra Club decided to "personalize" the issue, while Pacheco told the Chronicle of Higher Education that he serves on the board as a private citizen.

• In California, students at Occidental College demanded this fall that school President John Slaughter issue a statement protesting the involvement of Arco -- on whose board he sits -- in Burma. Six students undertook a hunger strike in November to push their demands. In response, Slaughter issued a statement noting Arco's position regarding its investments in Burma and his disagreement with the position. "ARCO is certainly aware of the political divisions, corruption, human rights violations and drug trafficking in Burma and believes sincerely that by being there and by practicing its own high standards of operation it can be helpful in encouraging more rapid evolution of the changes in government behavior that are slowly but, hopefully, inexorably occurring," Slaughter wrote. "Although I am mindful and respectful of the company's rationale, I have conveyed to ARCO leadership my own personal feeling that I would prefer that the company not conduct operations in Burma and that it should withdraw from the country..."

  Slaughter also serves on the boards of directors of IBM and Northrop Grumman.

Perhaps no individual more clearly illustrates the dangers of university presidents maintaining corporate ties than Thomas Kean, former governor of New Jersey. Kean has been president of Drew University since 1990. He has been a director of Aramark, a large food services company that is effectively the only competitor with Marriott in the market for subcontracting university dining services, since 1994. Aramark began participating in a multi-million dollar contract with Drew University on May 27, 1997. Kean refused to comment on this matter. Kean is also a director of Bell Atlantic, United Health Care, Beneficial Corporation, Fiduciary Trust Company International, and Amerada Hess, the petroleum refining company. Kean made a bare minimum of $235,000 from his directorships in 1996, and attended at least 28 meetings.

Though Kean declined to respond to questions, it seems obvious there is not a stringent review process at Drew. In fact, Kean's own secretaries expressed disbelief at the extent of his board memberships -- evidence of the important role that simple disclosure can play.

MULTINATIONAL MONITOR'S TOP 20 U.S.UNIVERSITIES Ranked by University President Earnings from Corporate Directorships, 1997
University	President's Name	Annual Payment for Board Membership* (No. of Directorships)
Carnegie Mellon	Robert Mehrabian**	105,000 (4)
Massachusetts Inst. of Technology	Charles Vest	95,000 (2)
University of Pennsylvania	Judith Rodin	85,000 (3)
Lehigh	Peter Likens**	75,500 (4)
Vanderbilt	Joe Wyatt	69,000 (2)
Washington University	Mark Wrighton	62,500 (4)
Duke	Nan Keohane	60,000 (1)
Case Western Reserve	Agnar Pytte	50,000 (2)
University of California (UC) - Santa Barbara	Henry Yang	50,000 (1)
University of Southern California	Steven Sample	49,500 (2)
Emory	William Chace	40,000 (1)
Wake Forest	Thomas Hern	40,000 (1)
UC-Irvine	Laurel Wilkening	34,000 (1)
UC-Berkeley	Chang-LinTien**	32,000 (1)
Princeton	Harold Shapiro	32,000 (1)
Georgetown	Leo O'Donovan	30,000 (1)
University of North Carolina-Chapel Hill	Michael Hooker	27,500 (2)}
Brown	Vartan Gregorian	22,500 (1)
UCLA	Charles Young	20,000 (1)
Tufts	John DiBaggio	14,000 (1)

*These figures refer only to annual payments for directorships and do not include stock options or special payments (e.g., for attending board meetings), which may frequently total two or more times the listed amounts.

**Left university office, beginning of 1997 school year

PROCTER & GAMBLE'S ACADEMIC "WHITE HATS"

PROCTER & GAMBLE'S LUSHLY FUNDED campaign to obtain Food and Drug Administration (FDA) approval for the fat substitute called olestra provides a good example of how corporations hire academics to provide a veneer of "objective" scientific support for their dubious claims and products. Procter & Gamble (P&G) has invested more than $300 million to develop olestra. Financial analysts predict that the fat substitute could generate $1.5 billion in annual sales, making it the biggest money maker in corporate history. Thanks to olestra, the English language has been enhanced by the terms "anal leakage" and "fecal urgency." Those euphemisms are used by P&G to describe the severe diarrhea, cramps and other side effects suffered by some people who have consumed food containing olestra. Olestra also depletes carotenoids, an important nutrient found in fruits and vegetables that is believed to reduce the risk of cancer, heart disease and other chronic ailments. Just weeks before the Food and Drug Administration gave preliminary approval for olestra, the Department of Health and Human Services (which oversees FDA) issued its Dietary Guidelines for Americans which suggested people eat more fruit and vegetables "because of [carotenoids'] potentially beneficial role in reducing the risk for cancer and certain other chronic diseases." Olestra also affects the absorption of the fat soluble vitamins A, D, E and K. There are many truly independent experts who challenge olestra's safety. Dr. John Bertram of the Cancer Research Center of Hawaii says olestra would "constitute a public health time bomb." Dr. Herbert Needleman of the University of Pittsburgh School of Medicine says it would be "clear folly to introduce this product into the diet of children." To ensure that such matters remain largely hidden from public view, P&G conducted a vigorous lobbying and public relations offensive. The twin goals of the P&G campaign are to win final approval for olestra from the FDA -- a decision is expected in 1998 -- and to convince the public of the fat substitute's healthful properties. The Cincinnati-based company has turned to members of Ohio's congressional delegation -- many of whom have received generous campaign gifts from P&G -- to push the FDA to approve olestra. P&G has also retained Carol Tucker Foreman, former assistant secretary of agricultural in the Carter era and founder of the Safe Food Coalition, to head off potential opposition from public interest activists [see "The 1995 Lobbying Hall of Shame," Multinational Monitor, January/February 1996]. (In this effort, Foreman has not been totally successful; notably, the Center for Science in the Public Interest remains a vociferous opponent of olestra.) Another key element of P&G's strategy has been to hire dozens of "white hats" from the academic community. These experts testify before governmental bodies or otherwise lobby for the fat substitute's approval, typically without noting their relationship to Procter & Gamble. During the FDA hearings on olestra, the company's hired guns took over an entire floor of the Holiday Inn in Alexandria, Virginia. Among those on the company payroll are former Secretary of Health and Human Services Louis Sullivan, the current president of the Morehouse medical school; Ronald Kleinman of Massachusetts General Hospital at Harvard, a food industry consultant who argues that wheat bread is no better than white bread; and Dr. William Klish of Texas Children's Hospital, who has said that gastro-intestinal problems caused by olestra "are essentially the same as those you'd expect when you switch to a high-fiber diet." Sullivan has been featured in advertisements and promotional material for olestra, addressed press conferences and written letters to the editor of major newspapers. In one dispatch to The New York Times, Sullivan -- identified only as "the president of the Morehouse School of Medicine -- said that "all Americans can feel confident in the safety of snacks made with olestra." Other P&G consultants have appeared at public forums and scientific events. Two of the company's rented professors, Penny Kris-Etherton of Penn State and John Foreyt of the Baylor College of Medicine, were panelists at a conference on fat and sugar substitutes held in Arlington, Virginia in October 1996. So, too, were P&G's own John Peters, as well as representatives from food industry giants such as Kraft Foods and Nabisco, both which might use olestra down the road. The conference itself was co-sponsored by the International Life Science Institute (ILSI), which receives much of its funding from the private sector, including P&G. The company also sits on the Institute's boards of directors and helped pay for the conference, though George Hardy, ILSI's executive director, would not reveal the amount of the contribution. Conference proceedings were later published as a bound volume in the Annals of the New York Academy of Science. The Annals are distributed to more than 700 libraries and, according to the Academy, "are among the oldest and most frequently cited sources of scientific research." Procter & Gamble argues that the fees it pays scientific consultants are modest and unlikely to influence scientific outcomes. "These are known academics and health researchers who have built reputations for sound science over their careers," says company spokesperson Jacqui d'Eon. "They are not going to be bought." John Stauber, editor of PR Watch, a Madison, Wisconsin-based newsletter which covers the public relations industry, disagrees. He says P&G hires people "who appear to have some distance from the company, but they are carefully selected and can be counted on to promote the official line. There's nothing objective or independent about them." Marion Nestle of New York University's nutrition department sides with the critics. She turned down an offer of $1,000 from P&G, for which she was to fly to New Orleans, give a short speech and eat products made with olestra to demonstrate her confidence in its safety. "It's too crude or imprecise to say people are bought off," Nestle told a reporter from the Boston Phoenix. "But I just know if somebody is giving my department money, then I would think twice before saying something mean about that particular industry." Nestle is a rarity. Dozens of academics accepted P&G's money and went to New Orleans. -- Ken Silverstein