Are Universities Above the Law?

Peter Berkowitz:

Corporate governance is a much-discussed topic, and the operation of corporations has proven a fertile field for investigative journalism. But even though many colleges and universities are multibillion-dollar-a-year operations, the subject of university governance has been largely neglected. This is unfortunate because university governance raises fascinating questions of great public interest involving the complex intersection of law, morals, and education. Nasar v. Columbia is a case in point.

On May 6, Columbia University submitted a motion to dismiss a lawsuit filed against it in mid-March in the Supreme Court of New York by Sylvia Nasar, the John S. and James L. Knight professor of business journalism at the Columbia University Graduate School of Journalism. Nasar's complaint alleges, among other things, that "from 2001-2011, Columbia illegally misappropriated and captured for its own purposes income generated by a $1.5 million charitable endowment" established by the Knight Foundation. Columbia contends that Nasar's suit is without merit and that even if all her allegations were true, the university could not be found to be in violation of the law. But if all of Nasar's allegations are true and the courts of New York are unable to grant relief, it would mean that New York state law permits university administrations to disregard their written agreements with impunity and behave deceitfully when called to account.

A distinguished New York Times journalist and author of the Pulitzer Prize-nominated biography A Beautiful Mind (made into a major Hollywood film), Nasar was appointed in 2001 to the Knight chair as a tenured Columbia professor. She has built an esteemed program in business journalism at Columbia and in 2011 published the bestselling Grand Pursuit: The Story of Economic Genius.

Nasar learned of irregularities in Columbia's management of Knight chair funds in 2010. She protested to Columbia and alerted the Knight Foundation, which promptly initiated an audit performed in the autumn of 2010 by Big Four accounting firm KPMG. According to the KPMG audit, "it appears that the Graduate School of Journalism did not abide by the original terms and spirit of the grant agreement." The audit concluded that at least $923,000 of expenditures were "unallowable" and claims against Columbia could total as much as $4.5 million.

Posted by Jim Zellmer at May 14, 2013 1:14 AM
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