Friday, August 20, 2010

Where There's Smoke? ... A University President Who Simultaneously Lead a Failed Financial Company and a Tobacco Company Which Apologized for International Bribery

A long time ago, in 2006, we first blogged about a "new species of conflict of interest" which we thought might prove to be even more important than those afflicting health care that were then starting to be discussed.  This involved health care organizational leaders who were simultaneously members of the boards of directors of for-profit health care corporations.  We posited these conflicts would be particularly important because being on the board of directors entails not just a financial incentive.  It ostensibly requires board members to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]   Thus, for example, the conflict posed by the president of a university, to whom a medical school and academic medical center report, who also is the director of a pharmaceutical company, would be extreme.

Since then, we noted yet another variant on this theme, university presidents who were supposedly the top leaders of failed financial firms, and then who did various dances to try to avoid accountability for these firms' fates.  That theme recently made it to the big time, a front page article on the Sunday Business section of the New York Times.

The most extreme version was the case of that of Eugene Trani, the former President of Virginia Commonwealth University ( full disclosure: I spent 7 years on the faculty of its medical school, and am still an adjunct faculty member).  Trani turned out to be on the board of a tobacco company, and soon after this was revealed, retired from the presidency (see most recent blog post here).

Now a Washington Post blogger has yet another twist on this case:
Eugene P. Trani left the presidency of Virginia Commonwealth University in 2009 after improving the school and expanding its presence in downtown Richmond. But Trani was also a director of LandAmerica Financial Group, a Richmond-area title insurer that went belly-up in 2008, taking with it millions in investors' money.

Today, Trani is on the board of Richmond-based Universal Corporation, a global tobacco marketer. Universal's subsidiaries have just agreed to pay $8.98 million in a tobacco bribery scandal that stretches from Brazil to Thailand to Africa. The firm has issued a public apology. Trani received $159,032 in total compensation for his board service.

So Trani was not only on the board of directors of a tobacco company, he was on the board of directors of a tobacco company that was forced to settle charges of international bribery and issue apologies for same, and just to ice the cake, was on the board of a failed financial company whose failure affected residents of the locality which his university served.

As the saying goes, "the fish rots from the head down."  How can academic leaders expect integrity from their faculty when they willingly take on such grotesque conflicts?  Leaders who thus try to serve two, or many masters are likely to run health care organizations that do not serve their primary constituents, patients who expect good care, learners who expect honest, competent teaching, and the public who expects important, unbiased research, well.  If we really want to reform health care, we need leaders who put the mission, not their own pocketbooks, prestige, and cronies, first.


Anonymous said...

This really becomes a question of corporate culture, and every organization has one. How far does this “win at any cost” attitude go? Being fall, all the way to the football field.

Bill Bush in an article from the Columbus Dispatch, Ohio State backs off tailgating ultimatum, highlights how some longtime holders of OSU parking passes are being shaken down for additional contributions.

The short version is that people have donated money to the university, but not enough, to maintain these prime parking spots. Often these folks have held these spots for decades, and donated six figures over that time, but now the university wants more.

So, people who have had a relationship with the university for decades, and are often pass their prime earning period, are expected to now give more to compensate the university for the economic value of these spots.

Think it ends there? Not in Ohio. For a very long time Ohio has been know for its speed traps. Every political entity has the ability to have its own police force and court system.The result is every little burg has its own speed trap.

This has taken on a new dimension as revenue has fallen in cities and counties. Under the guise of “revenue enhancement” our local city has instituted a policy of “enhanced enforcement.” Not to be out done our local county sheriff has followed the same path posting cruisers on all state and county roads outside the city.

Yes I got a ticket, and yes it was dismissed. What was interesting was the deputy was very anxious for me to simply call and write a check. The assistant county prosecutor kept asking: What?

From our local police to our state’s flagship university the question has become: How can I maximize my interest. Fairness, or even legality, has been pushed to the side in this all out effort to maximize every situation. This is the message being sent to those in medicine: Get all you can.

I recently became aware of the Mathew Principle: To whom much is given, much more will be given.

This seems to be the driver in many of the institutions we entrust with our safety and with education. Sadly, this is the message being carried forward by those we entrust with our health.

Steve Lucas

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