Fact Checker Special Report: Domination, Fame and Riches Drive Fuqua Dean into Kunshan

Third of a series of Special Reports on Kunshan, the sinkhole.

We regret Dean Blair Sheppard of the Fuqua School of Business has not responded in any way to our repeated requests for an interview. Beyond discourteous, we find this disrespectful of Loyal Readers and disdainful of the appropriate role that informed stakeholders should play at Duke.

✔After the February trustee meeting, the Dean of the Fuqua sent the faculty an internal briefing. This paints a dramatically different picture of Duke's excursion into China than the one that we -- and other stakeholders we have talked to -- had.

Repeatedly, Dean Blair Sheppard talks about the profits to be made, as if Duke University were just another industrial corporation seizing cheap labor and setting up a manufacturing plant. Repeatedly, he dodges discussion of values that are at the heart of our university, giving short-shrift to academic freedom, to privacy, to financing need-blind admissions when there is no endowment, and to socio-economic diversity among students and faculty in a poor nation where the regime picks its favorites.

There is not even assurance of unfettered access to the internet or to text messages. (Don't laugh. Dubai told Sheppard it would block Blackberry's mobile services.)

✔Sheppard acknowledges that Fuqua's administration has moved far out in front of the faculty in his desire to plunge into China, explaining "I have not been in a position to share some of the information in this note until now because negotiations with our partners were not finalized and we were engaged in sensitive negotiations." As to precisely why information that the Chinese had been given could not be shared with faculty in Durham was never explained.

Indeed, we found a faculty -- in Fuqua and throughout the university -- deep in the dark. Deputy Fact Checkers seeking information often encountered professors who pumped them for details.

The dean emphasized that "it is now time (for the faculty) to take up the question of our own (Fuqua's) presence in China." This is a step that many thought would be taken long before now.

Sheppard did stress that now normal governance procedures will follow, with our China partners Kunshan and Wuhan University understanding any agreement is tentative, until approved by the faculty, the Academic Council which is the faculty senate, and Board of Trustees.

✔✔A key question is emerging about the next step: whether the faculty should rely on estimates for income and expenditures -- as well as academic details -- developed by administrators. Or if the stakes are high enough for the faculty to make its own independent but parallel inquiry before voting to approve or turn down. The Trustees are facing the same issue.

We will explore this particular angle in detail in our next Special Report.

✔Sheppard revealed there is a big carrot for Durham faculty to shuffle to teach in bleak Kunshan: they can fulfill one half of their annual teaching obligation in just six weeks.

The dean is specific in estimating -- if indeed an estimate is specific -- that only half of the professors will be tenure or tenure track, with his numbers showing it costs Duke only 50 percent as much for salary and 40 percent as much for travel expenses for adjutants. Ahhhh, the bottom line.

He is vague on how many of the professors would move from or rotate from Durham, and how many would be appointed by the separately incorporated joint venture called Duke Kunshan University, known as DKU. One eyebrow raiser: he suggests the DKU faculty might enjoy tenure in Durham as well.

✔✔✔Page after page, Sheppard focuses on Kunshan -- and does not even hint at or mention until the very last 13 words the competing Shanghai campus that FC described in depth in our last Special Report. Terming this an "opportunity" to locate Fuqua's premiere programs in the bustling Bund financial center of Shanghai -- albeit at the expense of the backwater city of Kunshan -- Sheppard merely notes this clandestine proposal "still exists and is dependent upon our getting approval from the Ministry." This is the link to our earlier Special Report.


With respect to Fuqua's premier Cross-Continent MBA, which costs a stunning $140,000 over 14 months and involves only 70 classroom days in five international cities plus Durham, Sheppard makes a big leap.

He notes China is the second biggest economy in the world. He says leaders of our own destiny must have knowledge of it. But then he translates a one week stop in China (along with a one week general orientation about the overall prgoram) into time sufficient for degree candidates to absorb the political economy and culture, and significant enough for in-depth networking that will endure through an entire career. A big leap. A yawning leap.

✔In tracing the history of Duke's involvement with Kunshan, Sheppard seems to contradict what he told the Chronicle on April 16, 2009 in the initial revelation of Kunshan plans.

Originally Sheppard said that Kunshan would pay for construction and operations, unqualified assurances giving Duke a free ride. But in his report to the faculty, Sheppard states "When the city of Kunshan realized that Duke's initial presence was likely to be more than the business school, they agreed to underwrite half of all the operating losses... where their initial promise was only to provide the land and buildings."

This calls into question the time-line, what happened when in negotiations. It seems to mean that at one point, Duke was going to pick up all the expected deficits in the opening years; we were never told that.

And we are wondering about the phrase "more than the business school" that so warmed up the Chinese to share the operating deficits, for the most advanced plans for Kunshan beyond Fuqua only include a possible certificate course in public health for 20 undergraduates a year. FC wonders if the Chinese understand this.

In our last Special Report, based upon a confidential briefing document for the Trustees, we estimated that Duke's share of deficits in the first decade would easily be $100 million, more probably $150 million and possibly more.

✔✔Sheppard gives more detail than we've ever had about the six buildings on the new campus. (As recently as October, the PR department and Duke Magazine were saying there were five buildings.)

First, a "teaching building" with four classrooms, two for 80 people and two for 90. Four seminar rooms, an auditorium, "a small library," dining, and support areas.

The construction of this building -- or perhaps the plans for it -- have been the source of whispers, that the Chinese architect designed the walls so they were not strong enough to hold up the roof. An updated sketch shows that a dome, once dominant above the teaching building, is gone.

Michael Schoenfeld, vice president for public relations and obfuscation, clammed up when asked to confirm or deny a problem with the roof. But it could explain the mysterious, unexpected $5.5 million Trustee appropriation for construction supervision to insure the buildings are up to "Duke standard."

The second building Dean Sheppard discussed is an Executive Conference Center housing 220 students with support facilities. Presumably this is for programs run by Fuqua's subsidiary, Corporate Education, which crafts non-degree training sessions for corporations.

Third, a dormitory for 200 students who are seeking degrees. And fourth, sixteen faculty apartments with up to three bedrooms.

These raise an interesting issue: when Duke's Board of Trustees voted $10 million for furnishings -- a capital expenditure we were initially told Kunshan was picking up -- it apparently only covered the first stage of the dorm. That's 200 out of 700 beds. And the first stage of the faculty apartments. That's 16 out of 70. There was never any indication that only a part of the total was involved.

This points to the need for Duke University to pony up even more money than we previously calculated, when it wishes to finish furnishing, 500 more dorm beds and 54 more faculty apartments.

Back to the count of buildings. Fifth, there will be a general purpose laboratory and teaching building with wet labs, dry labs, offices and teaching space. We know of no program going into Kunshan that would require wet and dry labs, and we wonder if this building will be finished initially or if Duke will be clipped for more furnishings.

Sixth, there will be a utility building.

Despite repeated attempts -- including trying to find someone in Kunshan who speaks English whom we could ask -- we have been unable to ascertain the status of construction on any building. We will be making new efforts, as we have just had a Loyal Reader volunteer as a translator.

Previously Schoenfeld confirmed only grading of the site and installation of utilities, presumably part of the new 1,500 acre industrial park which includes 201 acres devoted to Duke.

FC asked Schoenfeld for pictures, given that Duke always loads pictures upon editors during construction projects on its home campus, but there has been no response.

An architect's sketch presented by Sheppard shows the buildings forming a single quadrangle with a huge square pool, rather than grass, occupying much of the left-center.

(FC asked the Brodhead administration to create a website with information about our China designs. No response.)

✔✔On page after page of his note to the faculty, Sheppard talks of profits to be made. Asking "why have a global presence?" he responds himself with four answers, the first of which is our global presence will augur to the success of MBA programs. Programs that "represent over 28 percent of our total revenue... a key aspect of continued profitable growth for the school and... key to our brand." No noble, ringing words, just the bottom line.

While most Dukies have long recognized that having students from around the world contributes to the educational experience, for Sheppard this means "distributing (financial) risk outside of a predominant geography." Translation: if the economy in the U.S. tanks and domestic corporations are loath to put out big bucks for employee education, we might get international corporations to pick up the slack.

He all but chortles at a separate agreement -- undoubtedly made possible because of developing goodwill during the Kunshan negotiations -- with the Chinese government to pay to enroll 20 students in Duke's Global Executive MBA program in Durham. He says the added students will entail very little new cost, thus a "new margin to the school" of $1 million a year. Sheppard sees the Chinese as providing "much needed revenue to the Thomas Center and profitable work" for faculty. Profits yes, but no mention of the perspective the Chinese might add to the program.

The Thomas Center on the mother campus, in its own building next to the main Fuqua building, is used largely for non-degree corporate training sessions and meetings. Because of the recession, corporations have throttled back on sending executives to such gatherings, which can be very expensive, and thus the Thomas Center, which includes a hotel, has been hurting. Hurting enough so that the Thomas Center has taken out ads hawking bed and breakfast rooms to the public for $99.

The Dean also reveals Fuqua is shuffling some expenses to Duke Kunshan University. Capping a list, he writes that "next year, some development costs will also be moved to China." He might have added, if our partners let us get away with it, and if our partners do not get the same idea to plant some of their costs in Kunshan.

Adding insult to injury, he said a "non-trivial portion of the fundraising will come to Fuqua in Durham." In other words, we make the Chinese pay part of the fund-raising and then take the loot donated in Kunshan back to the U.S.

✔While administrators express great excitement about a global Duke, the world is starting to be littered with American universities that flopped. Michigan State in Dubai. Johns Hopkins in Singapore. Merely to start the list. And replete too with schools that shied from international affiliations, like the distinguished Warwick University in Britain, which turned down the precise Singapore deal that Duke accepted.

Duke has taken its hits: when President Brodhead addressed the faculty on internationalization in 2007, he cited with pride Fuqua's programs with the London School of Economics, the Goethe-University Frankfurt Faculty of Economics and Business, Indian Institute of Management in Ahmedabad, as well as nascent deals with the Faculty of Economics and Management at Tsinghua, China and the new Skolkovo Business School in Moscow.

All of those have dropped off the radar. Though the dream behind them lives, described by Brodhead as "making Duke the hub in a wheel that connects the world’s main emerging economies."

Did someone say grandiose?

Every other American university -- save NYU which has opened a full 2,000 student undergraduate college in the Abu Dhabi, sharing an island with extensions of the Louvre and Guggenheim -- has gone carefully step by step. Thus, in a list appearing in Duke Magazine, Cal Tech, Berkley, the University of Chicago, Carnegie Mellon, Cornell and Stanford have single purpose extensions in Singapore. Carnegie Mellon, Georgetown, Northwestern, Texas A and M, Virginia Commonwealth and the Weill Cornell Medical Center have single purpose extensions in Qatar.

But Duke is creating an entirely new university -- DKU -- Duke Kunshan University to serve Chinese students. Unlike earlier international agreements -- and there are more than 700 -- there is no focus on "faculty exchanges, joint conferences and research collaborations." That is, no focus on enriching the experience in Durham.

In fact Duke/Durham will have virtually no intercourse with DKU.

At the moment Fuqua is developing these locations in one gulp. London, Dubai, New Delhi, St. Petersburg, Kunshan, Shanghai, Nanjing. The new university vice president for global affairs, Greg Jones, visited Brazil recently, we believe the city of Sao Paulo. Then there is Seoul, where an executive education program is underway. And Johannesburg, for Global Academic Travel Experience (GATE) elective courses, and Global Consulting Practicums which have flown under the radar.

So far, the array of locations does not include Sheppard's undisclosed plans for the Master of Management Studies (MMS) degree. Unlike most business school degrees, which contemplate students will work for several years before seeking an MBA, this is designed for students immediately after they get their undergraduate degrees. It has feasted off the lack of jobs in the economy, with many students finding this a more attractive opportunity than unemployment or working in a supermarket.

With only one graduating class -- and not the originally planned three year trial run -- Sheppard has slammed permanent approval for the Durham program through the Academic Council and Trustees. Immediately he proposed a "template" for international expansion of this master's program, obviating the need for the faculty and Trustees to approve city by city, which would be the normal formula. Approval of the template is pending.

✔A mole in the administration, who has been the source of other FC stories but not about Kunshan, suggests the President and Peter the Provost found they could not reign Sheppard in with the existing structure, that he was riding all over the Vice Provost in charge of international programs. And in fact Allen Building did not even know what Sheppard was up to.

On that score, Brodhead seemed prescient in his 2007 speech: "I would never advocate central control and direction of Duke’s international efforts: the interest, commitment and inventiveness of actual individuals is the absolute precondition for these programs’ success. But we do need more centralized information about our ventures. We have programs exploring possible partnerships in countries (even in cities) where Duke already has an institutional presence that our new Duke ambassadors often know nothing about. Before we go forward, it would help to be able to know what’s already going on."

Thus, with his usual penchant for solving problems by creating a new layer of bureaucracy, Brodhead installed a vice president, Greg Jones MDiv '85, Ph.D. 88, who served as dean of the Divinity School for 13 years:

"I am a planner by temperament; I don’t like risky business. I don’t even take fun trips without guaranteed reservations and clear itineraries.... there is a great deal at stake in developing education globally in ways that nurture life rather than replicate or intensify brokenness.”

And he added, “my new position is anything but guaranteed or clear…. There are risks on all sides.”

“My worry is that we’ll do too much too quickly,” he says, “and not be able to maintain quality and deliver what we anticipate wanting to do.

“But the mirror image is that we could easily think too small and miss opportunities where we could actually provide significant leadership. Calibrating what is the appropriate strategy that is ambitious enough to really stretch us but not so ambitious as to break us or impede quality—that’s what will always keep me up at night.”

Sheppard noted that the Trustees "voted unanimously" to take the next step, wrapping up details with the city of Kunshan and our silent partner, Wuhan University, and submitting a formal proposal to the Ministry of Education. Unanimous. Providing once again a solid reason for Fact Checker to call them the Board of Lemmings.

As Brodhead himself told the faculty in 2007, "In American universities, the list of showy memoranda of understanding with international partners is far longer than the list of substantive relationships that have followed."

"Momentous," wrote Sheppard.

Fact Checker is indebted to Loyal Readers who have sent many internal documents to us in confidence. They have informed and illuminated our coverage of Duke's China ambitions, while the Brodhead Administration seemingly would leave stakeholders in the dark.

FC also salutes the five Deputy Fact Checkers whose quiet, dogged pursuit has further enabled our coverage.

Thank you for reading and supporting Fact Checker. GO DUKE!