Sheppard's quick exit signals turmoil within the Brodhead Administration over Kunshan Initiative

✔✔✔ A Fact Checker essay.

In the Brooklyn Mafia, when one of the goons acts up -- perhaps botching a truck hijacking or keeping too large a slice of a pizzeria shakedown for himself -- Don Richard Brodheadio and Consigliere Peter Languini would summon Vinnie the Chin. In short order, Vinnie would arrange a car ride, where, depending on the severity of the perceived offense, the goon may be dispatched through the agony of torture, or the lingering terror of a garrote around the neck, or a mercifully quick bullet to the back of the head.

In Allen Building, the Don and Consigliere summoned not Vinnie, but a PR man, who concocted a press release, which was intended to be a merciful announcement of the demise of Blair Sheppard from his position as Dean of the Fuqua Business School. This spin failed and the death will be agonizing.

To believe the press release, you must accept the following:

✔-- that Sheppard now believes that while he gave birth to many dreams, as is "often the case... the person who drove significant change, especially through an extremely difficult economic time, is not the person to consolidate the change."

✔-- that Shephard did not realize this at all during his fourth year in office, when he gave no hint of stepping aside. Indeed he participated in an exhaustive review of his first term as dean by a committee chaired by Professor Paula McClain, a review aimed at a second term.

✔-- that Sheppard did not realize this even when the McClain committee scorched aspects of his career and Peter the Provost sat him down for special counseling. Or even when the University took the rather unusual step of stating in some versions of its press release announcing his reappointment, that these sessions had been held -- and would continue.

✔-- that on April 19, Sheppard let Peter the Provost announce a second term, never mentioning the nuance that emerged in the PR release on Monday: that Shep was merely considering the offer.

✔-- and now, with seven days notice, which is not the way these things are handled in the academic world, Sheppard will depart for a vague job with the new Duke Kunshan University. And he will teach in the regular MBA program, which has not been scheduled at all for the dawning semester. FC believes the job is merely face saving -- and a device to shift Shep's salary off Fuqua's back. He is the Dean with the highest salary in the University --$511,686 -- and typically his salary will continue at this level for a year, and then begin to phase back over several years to that of a regular professor, believed to be about $300,000 in Fuqua. (Dean Nancy Andrews of the Medical School earns slightly more, but that includes a bonus in some years that Shep is not eligible for). By declaring Shep is a Kunshan fund-raiser, we believe the salary shifts to the budget for the Duke development office, which enjoys a five year, $1 million per year gift to rev up Kunshan fundraising. (Rev it up, meaning Duke Durham donors will be approached.)

Even the most senior faculty in Fuqua were caught by surprise.

Fellow Dukies, make no mistake. Sheppard's tumble reflects a deepening crisis over Duke's attempts to build an entirely new campus in the backwater of Kunshan, China. This initiative is in shambles, and Sheppard took the hit.

Crisis? Shambles? Fact Checker, you use strong and urgent words. Yes. Yes, indeed.

FC and Deputies have polled all sources, checking and rechecking.

✔1) There is new tension between Trustees and Administrators, caused in large measure by the rising chorus among faculty vigorously opposed to the Kunshan Initiative. Beyond, there is substantial concern that even among faculty who have not spoken out, support is tepid at best. And equally important, there is no faculty champion willing to stand and lead a fight for the initiative.

✔2) There is increasing recognition we have a can of financial worms on our hands. As the reports from the Fuqua faculty committees on degrees proposed for Kunshan established, the finances are out of whack. And unlikely to get better by tinkering with the proposals.

✔3) Some believe we were sold a bill of goods on Kunshan. Backwater. No university. Not even an airport. Even Sheppard is now saying Kunshan will "not work" for some degrees, that students are demanding courses in the Bund, the Wall Street of Shanghai. And when word got around that Sheppard wanted to build there too, our original partner for Kunshan, Shanghai Jaio Tung University, got pissed because Duke would be in direct competition with its MBA program. The announcement of the termination of our elaborately signed partnership with Jaio Tung seemed phony too, the stated reason being Jaio Tung did not want to operate in a different province of China. As if the geography had just changed.

✔4) A Trustee who talked to FC Monday night says there is now realization that the Fuqua faculty considered only the financial dimensions of the proposed degrees in Kunshan -- and that when the Academic Council considers academic freedom, the initiative is likely to get creamed. Even this Trustee could not tell FC the terms of the agreement that the Brodhead Administration has already negotiated with China for academic freedom -- and yes, this trustee also thinks details are being withheld from stakeholders because they will land with a thud.

✔5) An unlikely partnership -- Methodist minister and atheist graduate -- is formulating a major challenge to Kunshan and other international initiatives because Duke is leaving its Christian heritage at home. Kunshan: no Chapel, no prayer room, no space for meditation. There is considerable concern over the prospect that if some students or faculty or their families want to attend Christian services (or other religions for that matter), the Chinese will thrash them. Moreover, the degrees awarded in Kunshan will be from Duke in Durham -- and one wonders how the words "Eruditio and Religio" will fly with the Chinese regime. FC believes those words are absent in degrees we award in Singapore too.

✔6) There is no one who can understand how rolling the dice on a risky undertaking thousands of miles away will benefit the mother campus. The rationale that Brodhead was finally reduced to offering -- that faculty going to Kunshan to teach would return to infuse the mother campus with an international flavor -- has fallen apart with the June 1 meeting of the Fuqua faculty and the determination that virtually no one wants to go there to teach.

✔ 7) Increasingly we see the Kunshan Initiative not only gobbling money, but grabbing the attention of administrators, leaving them grappling for time to focus on Durham. Brodhead's three week international spree this summer -- followed by vacation -- speaks for itself.

One source tells FC that the Trustees taking leadership roles in this reappraisal of Kunshan include the new chair, Rick Wagoner, and the chair of the secretive China committee, David Rubenstein. Neither has ever been willing to sit down with FC for an interview.

Shephard was the leading advocate for Kunshan. He discovered the city, formulated with its officials the deal for a 200 acre site and buildings, and negotiated each paragraph of a contract. Unfortunately, with each step, the deal became less and less favorable to Duke. Where once Sheppard said we'd get free rent for 20 years, it is now down to six. Where once he said Kunshan would pay all operating deficits for a decade, it's now down to 45 percent for the next five years.

Sheppard rolled over Gilbert Merkx, who was vice provost for international affairs before being demoted to his current position of Director of International and Area Studies in the Provost's office.

Relatively little is known about Shep's relationship with Merkx successors, Gregory Jones, briefly vice president and vice provost for international initiatives (who resigned for health reasons) and now Dr. Michael Merson, diluting his positon as head of Duke's Global Health Institute to sit in temporarily as vice provost.

An important FC source says Sheppard always had a tense relationship with Peter the Provost -- even before the scolding and counseling resulting from the McClain committee review.

And a senior faculty source tells FC that some faculty were always uncomfortable with Shep's academic credentials. He has degrees in psychology, considered a "soft" background by business school professors attuned to the discipline of strategic planning or finance.

Sheppard not only led the faculty -- he got too far in front of them. Time after time, FC was told that he enjoyed very little support among faculty and he seemed oblivious to this. When we first learned of the dislike of Sheppard, it was hard to believe the intensity of the comments, until the June 1 faculty meeting that rebuked his leadership.

He has been criticized for starting Duke Corporate Education (DCE) -- criticized for the way it tailors any program any corporation wants, criticized because universities are not supposed to be set up to chase profits. And criticized because the DCE structure does not require faculty approval for its offerings.

You can't argue with the fact that DCE took off in the rankings, now #1 in the world, nor with its initial financial success. But since the world-wide financial meltdown, DCE has hurt, losing millions last year.

✔✔ So what's next.

Our most important source in Fuqua -- cool to Sheppard -- has mentioned his successor favorably many times. Monday night this source wrote:

"Boulding is trustworthy; I think that he would not be part of something that was not good for Duke.

"Boulding is very good and has been at the center of most of the positive things that have happened at Fuqua for several years. This seems like a great thing for Fuqua."

Hours after the announcement, Sheppard and Boulding made a joint appearance at a forum in Fuqua. Not newsworthy, we are told. Our source again: "People are surprised but do not seem unhappy. I think Fuqua will be ok with the sudden change but only because people trust Boulding and he has a long history at Fuqua."

✔✔✔ The issue is joined: how vigorously will Boulding put together new proposals for academic offerings in Kunshan? Will he try to keep the current timetable -- increasingly unrealistic -- of starting courses in August, 2012? If he lobbys for an extension, will he collide with Brodhead, whose grandiose scheme to start Kunshan and other campuses around the world is already, embarrassingly, on its second timetable?

And how open will Boulding be to ideas other than his own? Will faculty be consulted, their ideas not only heard but incorporated, a very necessary time consuming collaboration that is likely to add to slippage in the deadline?

How will Boulding fare when the proposals -- as required by university by-laws -- go before the Fuqua faculty and then the elected faculty senate, the Academic Council?

And how will he react to the sustained voices who want a two year moratorium so Duke can rethink (or more accurately think thru at last) -- publicly, with stakeholder involvement -- where this international road leads.

And how will he mesh with the Don and Consigliere who suddenly are his bosses? And will he outlast them? Monday's announcement said Boulding has a two year appointment, with a national search for a permanent dean to start in the second year.

Thank you for reading FC.