HB V

is older than it's ever been and now it's even older

6/11/2003

For Shame


My alma mater, Lewis & Clark College, is embroiled in a shameful scandal not unlike some of the corporate malfeasance in the news of late. Its president, Michael Mooney, admittedly made a secret loan of over $10 million using school endowment funds to an Idaho company that promised to be able to convert useless waste oil into valuable diesel fuel. Among the salient points of this scandal:
  • The Board of Trustees did not know of the loan, in violation of school rules

  • The loan was for more money than the school’s rules allowed

  • The company did not meet credit standards for the school

  • Mooney personally invested in the company in probable violation of SEC insider trading rules

  • Michael Mooney is not being removed for this. In fact, he is not even being disciplined.

Of course, none of this would probably have come to light except that the company in question did not pay back any of this loan and upon being sued by the school, filed bankruptcy. The school will never see the money again.

I cannot say how dismayed I am by this. The value of an undergraduate education is largely the prestige value of the name of the school. From this point on, in job interviews I will be forced to defend my alma mater as not being simply a place where the president is a crook and Monica Lewinsky failed to graduate. I wasn’t a huge fan of Mooney anyway; he was always known for his smarmy fundraising and his penchant for relentless construction (he even refused to halt pile-driving for the new library during finals my sophomore year, my previous reason to not pony up any cash for the alumni fundraising) yet this truly takes the cake. Fellow LC alums: write a letter (I’d recommend to the Board of Trustees, 0615 Palatine Hill Road, Portland, OR 97219), make some noise, help me fight the tarnishing of the Pioneer name! Mooney must be brought down.


How bad is this? Well, the school has known about this since last November but covered it up until now, so that school would be out and the dirty campus agitators would not be able to protest. They announce it at the beginning of the summer so that the outrage will blow over and when the students return, they will forget about it (Portland's elites certainly don't seem to care). I won't forget this, and neither will the alumni who are asked to contribute their cash to future Ponzi schemes. This is unconscionable.

The Board sent this lame apology for his conduct:

(dated)
June 4, 2003

LEWIS & CLARK COLLEGE BOARD OF TRUSTEES
AFFIRMS SUPPORT OF PRESIDENT MOONEY

(Portland, Ore.) - Lewis & Clark College's Board of Trustees today
reaffirmed its support of College President Michael Mooney's
leadership of the 136-year-old institution. "Michael Mooney's
leadership has helped Lewis & Clark College grow both academically and
financially during the past 14 years," said Fred Fields, chair of
Lewis & Clark's Board of Trustees.

Mooney has acknowledged that he made a serious mistake in judgment in
2001 when he authorized a one-year loan of $10.5 million to an oil
recycling company. The funding, from the College's short-term
investment fund, did not come from the College's endowment or funds
budgeted for operations. The transaction did not and does not impair
the College's essential operations. Vigorous steps are being taken to
recover the assets from the company, which is now in Chapter 7
bankruptcy.

"We learned a difficult lesson through this transaction," said Fields.
"But, we have reviewed our policies and practices and, as a result,
our management has been tightened. We also took a close look at
Michael Mooney. After investigating the incident thoroughly, we
concluded that he made an error in judgment and that this was an
isolated incident. We have reaffirmed our support of his leadership."

As a result of the incident, the College and the Board of Trustees
took steps to ensure the highest standards of business practice,
oversight, and accountability in the future. Among the steps taken:

* The Board thoroughly investigated the transaction and the role of
the president
* Members of the Board, along with President Mooney, have met with
members of the campus community to inform them about the
transaction
* The Board reconstituted its audit committee as a standing committee,
separate from its finance committee
* The Board charged its audit committee with undertaking a regular
review of the College's financial policies and procedures
* The Board charged its finance committee to oversee short-term
investments
* The Board, in collaboration with the College administration,
instituted a review of the structures, staff, and operations in the
Business Office
* The College has brought a new Vice President for Business and
Finance on board.

On May 16, the Board approved a balanced budget for fiscal year 03-04
of $92.8 million. The academic quality of the class of 2007 is the
highest ever. "The College's financial health and its core academic
values remain unchanged. We applaud the quality of student learning
and faculty excellence that are hallmarks of this institution," said
Fields.

And here's what I sent as a response:

As an alumnus of Lewis & Clark College, I am deeply disturbed by this news and particularly that the Board of Trustees has not seen fit to take any disciplinary action against Messrs. Mooney or Brockett. I consider this a profound black eye against my academic record and I am particularly concerned with it as it diminishes the quality and prestige of my degree. Under no circumstances will I so much as think about sending a dime of my money to the school. I have no assurances that it won't go to some harebrained scheme without any checks and balances. Mr. Mooney is, in my estimation, a common criminal and I am sickened that the college won't get rid of him. For shame.



Nathan Hobbs '97

p.s. My wife and two of my best friends are also alumni of Lewis and Clark; we're all upwardly mobile people and this decision will undoubtedly cost you fundraising for years to come. Please reconsider your decision to stand by this crook.

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