2/28/2011

FC takes another look at the Reade Seligmann tax lien hoax

✔ FC here. Good day.

It's any one's guess what's afoot here. The first question is how a reporter for a Detroit newspaper, Robert Snell who is on the metro staff, managed to get the first word about a tax lien that was filed in New York City. Months earlier. Hmmmm.

One source tells FC that there were more than 25,000 tax liens filed in this period, making it highly unlikely that Snell just happened to ferret it out.

Hmmmm.

And the story sucked in the way it portrayed Reade. The headline: "Controversial ex-Duke lacrosse player...."

Personally I think the description "Awesome ex-Duke lacrosse player..." is rather appropriate.

Snell also wrote that Reade was involved in a "rape case," which is a rather inaccurate way of describing a hoax in which there was no sexual contact whatsoever. The story had legs too: the Daily News in NY featured a huge file picture of a shifty looking Seligmann.

http://www.nydailynews.com/news/national/2011/02/25/2011-02-25_former_duke_lacrosse_player_reade_seligmann_owes_irs_millions_report.html

Snell has done federal tax lien stories before -- but all of them seem to have a hometown angle. For example earlier this year he told how the Miami Heat bailed out Tim Hardaway, who played on five different clubs, noting in the lead that Hardaway's son is very much in the local news as a star on the basketball team at the University of Michigan.

As noted above, the lien was filed in New York City -- apparently because Reade -- who lives in New Jersey -- paid his taxes using the office address of an accountant, David Weiss. We stress apparently, because all we can confirm about Weiss is that the Seligmann family used him as an adviser.

We have been unable to trace the accountant -- Loyal Readers know we tried -- and it is entirely possible the IRS sent correspondence to that address, which, when unanswered, caused the IRS to go off the deep end in estimating taxes, penalties and interest.

Reade's principal lawyer -- Richard Emery -- disclosure: friend of FC -- says all taxes were paid. And thus the unfortunate part of all this is that Reade is once again victim of the government like he was with the disgraced, disbarred prosecutor Mike Nifong and Durham police.

✔ The tantalizing part of course is the estimates of how much Reade would have "earned" -- received -- to merit a tax bill of $6.5 million. First of all we do not know how much in penalties and interest that includes, so it's only an estimate, variously given at between $18.5 and $20 million dollars. Net of any fees for his lawyers, which would be presumably deductible.

Up until now, no one has known, but the whispers have been that each of the three falsely indicted players got between $6 and $8 million in a confidential settlement from Duke. And that's consistent with what Emery said when asked about the $20 million: we got one too many zeroes in the equation.

Beyond the amount of these settlements, with the Brodhead Administration's penchant for secrecy we have gotten only snippets of information on how much Duke's continuing defense is costing. While Duke scampered to settle with the three accused players and with Coach Pressler -- stopping their ability to subpoena Brodhead, board chair Steel and others to set the historical record straight -- two other lawsuits by other players are continuing.

The other day Duke settled with the scandal tarred AIG insurance company, on a policy that apparently covered both defense costs and payments to plaintiffs. Or maybe only lawyers, who knows.

We do know that Duke once rejected $5 million from AIG -- which is the total face amount of the policy. It's anyone's guess how Duke figured it would be entitled to more -- possibly by viewing the lacrosse hoax not as one event, but as separate incidents involving each player. Such disputes with insurance companies are common. For example was the attack on the two towers of the World Trade Center with two different jets one incident or two. Answer: one.

For all we know, the final settlement with AIG was less than $5 million -- or many times that amount.

There is a window into Duke's legal costs on IRS Form 990 -- but it is only a cracked window, not a wide open view. We're talking costs for lawyers here, not settlements.

Post-lax, the annual costs have tripled -- meaning Duke has been spending about $8 million a year on lacrosse lawyers alone.

There is one other figure, and that is a $2 million payment in one year to hot-shot Washington lawyer Jamie Gorelick for her part-time services. Unfortunately disclosure of such payments -- formerly required for the five highest recipients of professional fees each year -- is no longer required. There is continuing provision for disclosing the five highest entities with whom Duke does business -- but inevitably these fall to construction companies.

✔ And finally, Fellow Dukies, we come to the city of Durham, defendant in a lawsuit brought by the three indicted players for the misdeeds of police and prosecutor, and by other players too. We do have some definitive word on what this is costing the city, thanks to WTVD which checked up on this.

Taxpayers paid the first $500,000. Then an insurance company started to pay the bills -- $3.8 million as of January. The city's policy provides for a max payment of $5 million.

If you think the litigation is dragging on, WTVD asked former federal prosecutor Dan Boyce: "Many attorneys jokingly refer to the "P" in plaintiff as "push" and the "D" in defendant as "delay," he explained. "There's all these ways that a defendant can get a case stalled. They hope a defendant runs out of money, gets tired of it, or gives up."

Never.

2/26/2011

Trustees wallop students and parents with big tuition hike. No word on end of wage freeze. Curious, tepid announcement about Kunshan

(As many FC posts, this is a commentary added to a report of the Trustee meeting in the Chronicle. In all probability, you do not have to read the newspaper's report to understand. This time.)

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✔ FC here. On duty all weekend.

While the Chronicle story properly tell us in the lead paragraph how the Trustees have walloped students and their families with a tuition hike far in excess of inflation....

the real story of the two-day Trustee meeting is the tepid response to plans for creation of a new university in China, that is, the Brodhead Administration's tumble into the financial sink hole of Kunshan.

First word -- not from the #1 FC mole but from a good source -- indicates increasing, penetrating questions by Trustees, some as shocked as Loyal FC Readers who learned last week how the estimated losses have ballooned -- with Duke's share at least $100 million over ten years, more probably $150 million and possibly higher. We had a briefing on the meeting, but are prevented from using direct quotes at this time at the request of the source. There's a reason for this, and you won't find that out either!

The Trustees left it this way: Brodhead and his team can go ahead and continue to negotiate the deal between Duke, Kunshan and the cellar-dwelling Wuhan University for creation of a new school. They can seek government permission to operate -- which can only be done during March or September each year. But there also must be an exit strategy.

We do not know if Brodhead won the $1.5 to $2 million a year subsidy he requested right now for Kunshan -- in reality $2.4 million since it included a 20 percent fudge factor. If this were not approved, it is a clear rebuke.

We had to laugh at Friday's Chronicle: Peter the Provost "clarified" Brodhead's request for $1.5 to $2 million a year directly from the Durham budget. "Clarified" that this was NOT the extent of the projected losses.

Peter, how come your boss cannot be clear.... or is it he did not want to be? How come he cannot stand before the Academic Council and level with them in a clear, concise manner, about the depth of financial problems in Kunshan. Itemize everything.

During the coming week, FC will have an analysis of statements made at the Academic Council meetings which show a turning tide.

✔ With the financial uncertainty of Kunshan, the Trustees also put off until May any decision on ending the two year old wage freeze. Make sure you understand: Kunshan is putting significant, unexpected strain on the Durham budget. The money we lose in China is just not on a tree, waiting to be plucked.

There is no word either on Trustee action on a capital campaign long overdue. While our officials blame the financial meltdown, 36 universities have campaigns for $1 billion or more right now, meeting great success.

Be ready for a really big battle in the months ahead, with faculty members stirring increasingly about the financial plans for Kunshan -- which were omitted or disguised in earlier Brodhead statements.

✔ ✔ The Chronicle correctly quotes the press release: there will be a tuition hike of 4.3 percent -- an astounding, way-higher-than-inflation bump. The overall cost of an undergraduate year including fees, room and board will increase 3.9 percent.

Thus the hike is $2,040, the total bill moving from $51,865 to $53,905.

Stop, stop. stop. The same PR department that gave us those numbers on Saturday... posted some figures months ago that conflict. Rather than being $51,865 now, the current cost was listed as $52,405. (We are also checking with students who get financial aid -- to see the total estimated cost that appears on the outline of their aid. )

http://www.dukenews.duke.edu/resources/quickfacts.html#financial

Did these PR people think that FC would not be alert??

✔ More on the cost of Duke. First FC analysis: the soaring cost of Duke puts us at a serious competitive disadvantage.

Princeton, for example, will cost $49,069 next year, after its Trustees held the cost increase to one percent. This makes the new cost of Duke ten percent more than Princeton's, as FC had predicted last week. Using the newest official figures. Anything you see in US News and World Report about great values is now out-dated.

Or looked at another way: let's say you are a sophomore who loves Duke and you want your kids to come here. You are 20 years old, plan on having your first child at age 28, and the child will enter Duke at age 18. If costs continue to soar at the current rate, using the latest official figure for next year which contradict figures for this year as documented above, FC calculates your bill for your child's freshman year will be $145,758. And for the senior year, $169,861.

✔ ✔ While there were unexpected questions about Kunshan, the PR department was so sure of the outcome of the obeisant Trustee vote on tuition, for example, that its press release came out in the middle of the night Friday-Saturday..... before a vote that the PR people said occurred Saturday. Thus the Board of Lemmings lived up to expectations as it met in secret.

OK time for basketball. GO DUKE!

2/25/2011

Surprise!! On eve of Trustee meeting, administrators reveal Brodhead's proposal for $1.5 to $2 million subsidy for Kunshan, may really mean $2.4 mill.

✔ ✔ Fact Checker here. Fearful of the day's developments at the Board of Trustee meeting.

✔ ✔ ✔ KUNSHAN

My fellow Dukies, we are entering a sink hole.

Just days after we learned that President Brodhead will ask the Trustees for $1.5 to $2 million to cover SOME of the operating losses in Kunshan, we learn the figure is actually much higher. There's a 20 percent fudge factor -- meaning Brodhead wants authorization to spend up to $2.4 million a year -- with the option of going back to the Trustees for even more.

Make no mistake: this is money going straight from the Durham campus to Kunshan. Money that would otherwise be available to be spent here in a very tight budget year. History department, economics department, AAAS, are you listening?

The $1.5 million, $2 million, $2.4 million -- whatever number you take -- is only the start of our losses. We have papered over millions more by contending we can get contributions -- maybe. Be careful to note this is not money given to the Kunshan university, but money donated to Duke in Durham that will be shifted to Kunshan. Millions.

And we plan to take millions and millions more out of the Fuqua business school's Corporate Education division to hide the losses -- and pretended it is not Duke University money at all.

Fellow Dukies -- we will lose $100 million minimum, $150 million probably and possibly more in Kunshan in the next decade. Those are statistics from Board of Trustee briefing papers -- NOT FC estimates.

What a crime, to think they sold us on the Kunshan idea by saying the Chinese city would pick up all the losses.

In the December minutes of the Academic Council, covering an appearance by global VP Jones, and the proposed January minutes where the ebullient Dean Sheppard of Fuqua tried to get permission for yet another international venture, there are very very substantial questions about this project. Unfortunately those questions -- sharp, critical questions from concerned faculty members throughout the university -- are arising at a very late hour, and I fear the Trustees will prove to be the Board of Lemmings and leap to a vote for Kunshan.

✔ ✔ TUITION

The Chronicle article mentions tuition at other schools. Next year, by the time the Trustees get done raising Duke's tuition, (and hiding the current Quad fee) it will cost an undergraduate ten percent more at Duke than at Princeton.

Mr Brodhead should know that while he emphasizes his commitment to financial aid -- it is he and his cohorts thru never ending spirals of tuition hikes far in excess of inflation that make the expanding aid packages necessary.

At the moment, Duke sustains its level of financial aid only by robbing future generations; we are spending 28 percent more than we should -- based upon normal distribution figures -- from endowment aimed at financial aid.

✔ ✔ WAGE FREEZE

The issue before the board is how to apply whatever money is available to break the two year freeze. Do lower paid employees and the highest paid faculty get the same percentage increase?

How much money is spent on lavish fringe benefits, versus given to people in their pay checks?

✔ ✔ ARTS AND SCIENCES

When last we heard there was a real crunch in the budget of Arts and Sciences. We simply have too many professors, and to compound the problem, at least 35 of them were not carried in the A and S budget at all, but in the Provost's slush fund.

With the slush fund shrinking -- and Peter the Provost wanting to move in new directions and not have his funds dedicated year after year --- A and S may get a double whammy.

Let's see what the Trustees come up with. While many other schools (including the aforementioned Princeton) have concluded their budgets now, this is typically a May announcement at Duke.

✔ ✔ FUND-RAISING DRIVE

As Duke stirs toward a HUGE development campaign, there's a 500 pound gorilla in the room. Brodhead is coming up on 64 years of age. We cannot change presidents in mid-stream; that's a given. Is he going to be with us for the length of the campaign: does he want to or does he want to return to teaching? Will he be physically able to carry the burden of a campaign -- starting probably in a year and continuing for five or six more years.

✔ Final note -- Tallman, the trustee briefing papers note that Duke will take 55 percent, Kunshan 45 pct of the losses -- not a 50/50 split. This is only for six years -- leaving the Chinese city the options of refusing to cover any losses and/or starting to charge rent for the buildings. All bets on what the losses will be are then off the table.

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2/24/2011

Detroit newspaper claims Reade Seligmann owes $6.5 million in taxes -- possibly from Duke settlement. Lawyer says it's an error.

FC posts this news article from the Feb 24 Detroit News. For some reason the headline said "Controversial Duke lacrosse player...." It should have said "Awesome Duke lacrosse player..."

By Robert Snell / The Detroit News

Nearly four years after receiving an undisclosed settlement from Duke University, Reade Seligmann, one of three lacrosse players exonerated in a racially charged rape case, owes the IRS almost $6.5 million in taxes, according to public records. (( There was no rape. So how was it a rape case?? ))

The 24-year-old New Jersey native's lawyer disputes the tax bill, however.

According to a tax lien filed Feb. 17 in New York City, Seligmann owes $6,492,377 in income taxes from 2007. That's the same year Seligmann reached the settlement with Duke.

The amount of the settlement has never been disclosed and is an enduring mystery in one of the most divisive scandals in college sports history. (( This makes you think all this was a sports scandal. Nothing could be further from the truth ))

Tax lawyer Jeffrey Freeman of Birmingham, Mich., said someone would have to make about $20 million in one year to generate a $6.5 million tax bill.

The Detroit News asked Seligmann lawyer Richard Emery if the former Duke player received $6.49 million from the university or if the amount represented the taxable portion of the settlement. He also was asked if the Duke settlement was the basis of the tax lien. Emery said "no" and that the amount was inaccurate.

"We are trying to get to the bottom of this mistake," Emery wrote in an e-mail to The Detroit News. "We are retaining tax counsel to figure this out. The lien will be withdrawn shortly. It is in error."

The IRS does not comment about an individual's taxes.

In general, people don't have to pay taxes on settlements stemming from personal injuries, said Freeman, who specializes in civil and criminal tax cases. People generally have to pay taxes on settlements stemming from emotional distress, depression and other symptoms.

The $6.49 million tax lien gives the government a legal claim to all of Seligmann's property, everything from vehicles, to homes and income.

The lien lists Seligmann and New York City accountant David Weiss, with whom the Seligmann family consulted several years ago, Emery said.

"This is quite obviously a mistake..," Emery said. "We will get it corrected. The whole thing is very weird and makes no sense." Emery would not elaborate on the mistake.

"It's just a flat-out mistake," Emery wrote.

Weiss, whose name and Manhattan office address is listed on the tax lien, did not return a phone call or e-mail seeking comment.

Emery represents Seligmann in a federal lawsuit against the city of Durham, N.C. The case is pending.

Seligmann was suspended after being indicted in spring 2006 on charges of rape, kidnapping and sexual offense. The charges came after a woman told police she was attacked while working as a stripper at a March 2006 team party.

State prosecutors, who inherited the case from Durham County prosecutor Mike Nifong, dropped all charges. (( Not only dropped charges, but declared the lax players "innocent."

Nifong resigned amid allegations he withheld evidence, lied to the court and made misleading and inflammatory comments. (( Wow. Nifong resigned because he was disbarred. He served one day in jail.))

After being exonerated, Seligmann and his two teammates reached a settlement with Duke in June 2007. The university settled to "eliminate the possibility of future litigation," according to a statement issued that month.

After leaving Duke, Seligmann enrolled at Brown University, where he played lacrosse, and graduated last year. He reportedly is studying law at Emory University in Atlanta.

From The Detroit News: http://detnews.com/article/20110224/NATION/102240477/Controversial-ex-Duke-lacrosse-player-owes-IRS-$6.5M#ixzz1EuVEhYrl

Total disclosure: Richard Emery has also represented FC in litigation. This was many years ago and totally unrelated to anything Duke, or FC's journalistic or legal career.

Two nasty litigators -- Duke and fraud ridden insurance giant AIG -- settle their lacrosse lawsuit. University stakeholders kept in dark. Of course.

✔ FC here. This is written in response to a Chronicle story. Let's start by noting that when the newspaper reports the charges were "dismissed," it's meant that the NC State Attorney General, after a thorough investigation, concluded the three Dukies charged with crime were "innocent." The victims of a "rogue prosecutor."

As for the lawsuit between Duke and AIG. There are curious elements to this -- one being why Duke said no to a $5 million settlement when we understood that the limit of its insurance policy was $5 million.

This was a battle between two sides who are nasty in their approach to litigation: Duke and the scandal tarred insurance giant AIG. The Chronicle tells us their settlement brings us a step closer to final resolution of the lacrosse hoax. But let no one think there aren't some giant steps still to be taken.

There are two lawsuits that include Duke as a defendant, and another aimed at Durham for the actions of its district attorney and police. I'll go thru the latest on these in a moment.

✔There is also unfinished business on the Duke campus. Today the Chronicle uses a file photo of former Trustee chair Bob Steel and President Brodhead. Neither has been forthcoming in explaining his actions during the crisis, and until both are held accountable, there can be no closure.

Just with respect to the suspension of the team -- which is the subject of the news conference where the picture was taken -- we had Brodhead stating team members were threatened and their lives in jeopardy if their season continued, and Steel explaining to The New Yorker magazine that ending the season was a PR move, that we couldn't allow video of new practice sessions on television newscasts define what Duke was doing.

The contradictions go on and on.

Yes, Mr Brodhead later offered what his PR man identified as an apology, offering just a generalization that he and his administration should have been more supportive of the players. But this avoided the root of the matter: why he did what he did, why he acted as if the three players were guilty.

For example, in the initial days, with three lacrosse players facing false charges for a crime that was never committed, Brodhead refused to meet with the parents of the players. Why? What the hell was he thinking?

Students, imagine if you were facing charges that could land you in prison for 30 years, your parents raced to Durham, and the president of Duke refused to see them.

Parents, imagine your kid being arrested and locked up in a city that was racially charged with violence threatened, but Brodhead shut the door in your face.

What the hell was he thinking?

It's questions like that one that haunt this campus. They will forever cast a shadow over Brodhead's tenure if he takes no steps to throw some light.

I would like Michael Schoenfeld, PR Vice President, to explain to me one good reason why stakeholders in this university cannot find out what settlements cost. Right now there is a haze, for we wonder if officials are paying too much to settle lawsuits so they protect their own hides by not testifying, or if on the other hand, we are left hanging as to whether Duke University has been fair in its dealings with the players and others caught up in the hoax.

The settlement announced last night was about the cost of lawyers as well as money paid to the three lax players who faced charges. FC has often heard -- but been unable to confirm at all whether this is accurate or a wild estimate -- that each player got $8 million; FC also does not know if this includes legal fees or not.

To give Loyal Readers just a taste of the horrendous money involved -- aside from the $5 million settlement from AIG that Duke spurned -- let's remember that just one high flying defense lawyer that Duke brought in for one of the civil suits, Jamie Gorelick of Washington, billed for $2 million for her services in one year. And that was before the litigation really went into high gear.

We learned that from income tax form 990 -- which unfortunately was changed in a manner so that it yields more insight in some areas, less in others.

Form 990 also revealed that Duke's legal costs have tripled since the year before the hoax, but we have no way of isolating what was lax and what was other things -- like this foolish rush into Kunshan China.

As FC has pointed out, Duke is a ruthless litigator, trying to wear out plaintiffs, trying to get them to exhaust their resources. Most recently, FC has expressed great concern that the same nasty tactics would be use to cast additional burden on the cancer patients of Dr Anil Potti, who have substantial malpractice claims and great anguish already.

OK the latest. The first two lawsuits basically are by team players other than those indicted, and center on the outrageous actions of Brodhead and Steel as well as the disgraceful actions of the Group of 88 faculty who tried to form a lynch mob. Recall please the day they stood beside a sign that said "castrate." Recall please the banging of drums.

✔ One lawsuit with Duke as a defendant is known as Carrington. You can find papers here:
http://dockets.justia.com/docket/court-ncmdce/case_no-1:2008cv00119/case_id-47871/

Lawyers have now sent papers back and forth to each other 163 times. It's been dormant since last fall as we await further pre-trial moves.

✔ A second lawsuit with Duke as a defendant is known as McFadyen. Papers are here:
http://news.justia.com/cases/featured/north-carolina/ncmdce/1:2007cv00953/47494/

Court records show lawyers have traded papers -- briefs, motions -- 183 times. And the case goes on.

✔ A third lawsuit does not involve Duke, but the city for the role of its District Attorney and police. This was started by the three players who were indicted. Papers are here.
http://news.justia.com/cases/featured/north-carolina/ncmdce/1:2007cv00739/46882/

We're up to lawyer maneuver #132 in that one.

✔ Thank you for reading Fact Checker. Good day!

2/22/2011

The Kunshan Sink Hole: Did Vice President Jones label Yuhan as "weak" and then change his tune?

✔ Good day fellow Dukies. FC here.

We'd like to update yesterday's Special Report on Kunshan, which, using top secret briefing papers for Friday's Trustee meeting, estimated Duke University's losses in the first ten years at $100 million minimum, $150 million more likely, and possibly higher.

Hardly what we expected when Trustee chair Dan Blue assured us any losses would be "not substantial."

The Chronicle should have picked up on our figures, even though we were unable to grant the newspaper's request for a copy of the briefing papers. The massive losses -- which will eat up money otherwise available for the Durham campus -- provide the greatest argument against continuing this venture.

Mr. Brodhead owes every stakeholder in this university a thorough measurement of the depth of this sink hole.

Publicly he claims we will "only" need $1.5 to $2 million a year from our general revenues, up from an estimate of $1 million by his global vice president in December. But we now know that Brodhead uses Enron accounting to disguise the losses by counting donations that do not exist; by shuffling money from a profit-making subsidiary of Fuqua to make it seem as though University funds are not in play; and by sending a phantom bill to our partners, hoping they will pay $2 million or so every year for services of administrators who are on the Durham payroll anyway.

At least the briefing papers admit that budget lines like contributions are wild estimates, not based upon any experience. Or as a Deputy Fact Checker put it, we might as well go to Shooters after a long weekend night, take someone feeling no pain, and ask him to throw a dart at numbers we have tacked on the wall.

✔✔✔ Since the Special Report, we have received numbing information about Vice President Jones' appearance before the Academic Council in December. With Shanghai Jiao Tong University bowing out, we desperately needed a new sponsor pronto in order to meet a March deadline set by the Chinese government.

Jones said an urgent call to Trustee Ziqing Gao, Law School '68, who is in charge of all of China's overseas investments, reporting directly to the Premier and State Council. Gao lined up three possible partners.

Jones says one was "top tier," which rules out Wuhan in our judgment. As noted today in the news story and editorial, this school simply does not ring the rankings. Moreover, we rule out Wuhan because Jones indicated this school wanted to join in academic programs, while Wuhan is going to be "sillent."

We rule out another because it is located in the same province as Kunshan.

And the third, ominously, Jones described as a "weak" school "willing to be completely silent." This sure wounds like Wuhan. Silent. Weak.

Jones owes every stakeholder of this university an answer: did we or did we not enter into a partnership with a "weak" university that officials now try to puff up, in order to salvage a signature Brodhead initiative.

Quite frankly, I fear the answer.

✔✔✔ Since FC posted the Special Report on the Chronicle website yesterday, the Durham Herald Sun has quoted Brodhead saying there's been a "clarification" of our deal with the city of Kunshan. That's a clever use of a word by an English professor.

Here is what it means. On capital costs, Kunshan is not paying 100 percent anymore. We agreed to pony up $5.5 million to insure the buildings are up to Duke standards. We agreed to contribute approximately $10 million for furniture. We calculate that at 17 percent of the total.

On continuing operating costs, Brodhead originally told us Kunshan would pay all the operating costs -- and thus assume the losses -- for the first five years. The clarification is that Duke will pay 55 percent of the losses for the first six years. And after that, Kunshan is free to negotiate for Duke to pay 100 percent of the losses -- and rent on the buildings to boot.

✔✔✔ Thank you, Loyal Readers, for your outpouring of e-mail supporting our investigation of the Kunshan steamroller. Duke.Fact.Checker@gmail.com

2/20/2011

Fact Checker Special Report: Duke facing losses of $100 to $150 million in first ten years of Kunshan venture

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When the Trustees convene behind locked doors on Friday, the Brodhead administration will seek approval for radical changes in Duke's venture into Kunshan.

Changes that make this expansion vastly more costly.

Far more risky, with giant losses on the horizon.

And far more grandiose.

✔ We start with the burgeoning cost, or more pointedly the burgeoning losses, a worry occasioned not only by the financial meltdown and tight budgets competing for every dollar in Durham but also by the sheer magnitude of where we are heading.

In recent weeks administrators have dropped snippets of information about rising losses in Kunshan -- but have given a very incomplete (and in our view misleading) picture. In fact we believe the Brodhead Administration -- by failing to be candid with all stakeholders -- has brought upon itself a huge credibility gap.

✔✔ Item one: the annual operating deficit of Kunshan

On April 16, 2009. The Chronicle reported for the first time our aspiration to move into China, an ebullient Dean Blair Sheppard of Fuqua describing how the city of "Kunshan will cover all construction and operating costs for the facilities."

Weeks later, we learned of an important limitation: operating costs for only five years. But administrators stressed how comprehensive Kunshan's commitment would be in this period, even specifying that electricity was included.

President Brodhead echoed this 100 percent commitment in his initial comments, but in a rare e-mail to all alumni on April 21, 2010, he seemed to hedge, for he mentioned only construction costs.

By the time the December 3, 2010 meeting of the Academic Council rolled around, the recently appointed VP for international expansion, former Divinity School Dean Greg Jones, was singing a new tune. He said that he would ask the Trustees in late February 2011 to vote $1 million a year to subsidize operating costs. Yes, money that would be taken from the budget in Durham.

And by the time President Brodhead delivered his annual address to the faculty on February 17, the Chronicle quoted him as slipping in a new figure: $1.5 to $2 million a year.

Fellow Dukies, we believe we understand how Brodhead arrived at this total -- and we must challenge his methodology for it conceals -- but does not resolve -- the true dimensions of our liability.

After much study, we have concluded that the financial model Brodhead used shows Duke responsible for covering losses approaching $8 million a year, every year. This sum could be dramatically higher if the expected sources of revenue do not pan out -- and we truly have no idea how many people will pay tuition or how much we can charge. And it could be dramatically higher too, if the city of Kunshan starts to charge rent for buildings it is putting up, a distinct possibility after the 6th year.

Brodhead does not focus on the loss. Rather he tells how -- stop stop stop writing. Rather he guesses how it might be covered.

Brodhead assumes $2 to $3 million of the loss will be covered by new donations every year, and thus not payable out of our general funds. Every year. This is an unproven estimate based upon no experience, based upon no fund-raising for a new university that has no alumni, no stakeholders.

Please understand that donations given directly to the Kunshan campus -- to be run as a separately incorporated university -- won't count as Duke's share. That's separate. We're talking money given to Duke to be transferred to Kunshan at the expense of Durham, $2 to $3 million a year.

Brodhead also assumes Duke will tap Fuqua -- we believe the Fuqua Corporate Education program to be precise, organized as a profit making corporation -- for $1.5 to $2 million a year. But wait a second. Corporate Education is totally owned by Duke University. Anything that comes out of their coffers might just as well have come from Duke University itself.

And then Brodhead assumes that its partners in Kunshan will let Duke send in bills for leadership and administrative costs incurred by Duke University brass, even though these are phantom expenditures for people already on the payroll of Duke University. This little ditty is in the $1.5 million range.

Voila. Our President talks not of an $8 million loss, but of the prayer that only -- only -- $1.5 to $2 million a year will have to come from Duke's general funds.

Fellow Dukies, did you ever hear of Enron and the way it did its accounting? That's what this is.

We repeat: without speculative and false infusions, after the Kunshan campus gets up to speed, Duke would be losing on the order of $8 million a year. Yes $8 million a year to be borne by Duke University alone.

The government of Kunshan would lose additional money.

The city managed to get Duke to renegotiate the original deal that provided it would pay 100 percent of operating costs, and thus all losses. The deal was whittled down, the tables turned to the point where Duke must pay 100 percent of some of the losses (associated with certain Fuqua programs).

Then Duke must pay half of the rest -- giving Duke University responsibility for approximately 55 percent of the overall annual loss. In today's Durham Herald Sun, Brodhead describes this as a "clarification." FC calls it a screwing.

Duke did get another year of free rent tacked onto the deal in the exchange. Six years and not five. But it's anyone's guess what happens after the sixth year; the only guarantee is a rather vague expression of intent to continue the venture, meaning we could be liable for all the losses in the range of $14 million a year.

If Kunshan starts charging rent for its buildings, the losses go out of sight.

✔✔✔✔✔

These statistics are in small type deep inside the Trustee briefing papers. They add up this way: coupled with surprise costs for overseeing construction and furniture, Duke University could easily lose $100 million in the first decade in Kunshan, and $150 million seems a more realistic figure. These totals will go higher if we have to pay rent under a renegotiated lease for the buildings after six years. Or if the city stops covering a share of operating losses.

✔✔✔✔✔

Decisions at Duke Kunshan University -- as this new entity is called -- will be made by a seven member board of trustees. Duke will appoint only three. The bylaws call for five affirmative votes on any decision -- meaning that the board can act with only one Duke vote. Ah yes, there is an exit strategy, not specified, in case of implosion.

✔✔ The financial projections which we have discussed bounce around because nothing is certain. There is no experience -- by any university -- for such a venture. As noted before, we do not know how many students will matriculate. We do not know how much we can charge them. And beyond the economics, we have no idea of the quality of people who may be interested in applying.

✔✔ A second economic model shows a total loss in the range of $15 million in the first five years and escalating after that. The fine print also says there's a 3 in 4 chance the loss will be more than that. Putting all the possibilities and ground rules together, this model shows Duke's share could reach $11 million per year.

✔✔ And yet another projection shows that Duke could lose more than $10 million per year. Per year.

We repeat: FC believes -- given these models and their horrendous possibilities -- that Duke University is digging a $100 to $150 million hole for itself in the first ten years of operations in Kunshan, and that Mr. Brodhead owed us a better explanation than to say Kunshan might need a subsidy of $1.5 to $2 million a year.

And we believe that our Trustees -- like us -- should be scared of the entire project.

✔✔ Item two: the construction costs in Kunshan

Our starting point once again is Dean Sheppard on April 16, 2009: "Kunshan will cover all construction and operating costs for the facilities." Time and time again, administrators affirmed this. Until the December 3rd Trustee meeting.

Duke's new vice president for global expansion -- former Divinity Dean Greg Jones -- asked for $5.5 million to cover planning, construction and oversight, to insure the 201 acre, six building complex meets "Duke standards." Duke announced this in a press release. While Jones was new to the administration, surely someone knew about this all along, while we were repeatedly hearing all construction costs were taken care of.

What was not announced -- and surely Jones knew about this one -- is a second request that is even larger.

In preparation for Friday's meeting, Trustees have received briefing papers that reveal for the first time that while Kunshan is putting up the buildings (including dorm beds for around 700 and 70 faculty apartments) they are an empty shell. Duke is going to have to dig deep for furnishings -- the numbers we have seen are in the $20 million range -- half of it from Duke. The Brodhead administration will describe this as a “loan” and is asking the Trustees for approval now, although it will not reveal how the loan will be repaid -- if ever -- until the May meeting of the Trustees.

A loan? An annual payment on a loan is an operating expense, and Fact Checker and Deputies have debated whether the amortization is included in the loss projections that we outlined above. A deputy says maybe it is. Fact Checker says no it is not, because the Trustees, asked to approve the borrowing now, are told they will learn at their May meeting the details.

✔✔ ITEM THREE: What's in this for our new partner, Wuhan University?

The briefing materials for the Trustees give just a few words about our new partner, short shrift in fact, leaving wide open the tantilizing question of why this school would want to get involved with Duke. What's in it for them?

Duke has described Wuhan as our silent partner. What does that mean?

It means no financial contribution. It means we have no faculty or student exchanges in place, no joint programs.

Saturday evening we picked up on a discussion indicating we will pay Wuhan what amounts to a franchise fee. Maybe in cash. Maybe in disguised ways.

We emphasize that other information in this Special Report did not come from this conversation and that while the Dukies in this conversation are in a position to know, we have no confirmation of their conclusion that Duke is going to fork over $1.5 million a year to Wuhan.

If this is true, it would be beyond any losses projected in the economic models above. Those models do detail where money will be spent -- and nothing for Wuhan is included.

✔✔ Item four: The shifting sands of what Kunshan is constructing.

In an initial press release putting a price tag on Kunshan, Duke's press office described Duke's $650 million campus in Kunshan.

Later we got clarification that this is not money that the city is putting into the new campus at all, but a translation of what it would cost to put up similar buildings in Durham.

By the time Sheppard gave the Wall Street Journal an interview that appeared on 2-11-2011, the translation had slipped to $360 million. And Duke had also flip flopped between five and six buildings.

And Friday, the briefing papers for the Trustees will include yet another estimate, this one $100 million or more lower than the last. And we're back to six buildings although the map being provided Trustees shows eleven.

FC has repeatedly asked VP for public relations and obfuscation Michael Schoenfeld to explain these calculations. We have provided him with comparable construction costs -- for example details on the new North Carolina Central dormitory which will open soon -- and comparable property values -- the recent sale of Hoch Plaza for example -- but have not had any answer.

We believe Duke's estimates are wildly inflated.

Here is why these numbers are crucial. Kunshan has committed these buildings rent-free for six years (actually the material we have is in conflict on the length of the lease, five or six years, though clear on the period in which Duke and Kunshan will split operating losses, six years).

The value of the buildings may well guide the future rent we have to pay. There is only a guarantee that Kunshan will hold talks to extend the lease in principle, no discussion of price.

We dare say there is not a business in America that would begin a major operation with such a shaky foundation.

✔✔✔ One of the negative effects of our rapid expansion globally -- not only in Kunshan but in London, Dubai, New Delhi, St. Petersburg and soon Brazil all at once -- is the way our management's attention is diluted and diverted.

Take Larry Moneta, vice president for student life. This is not to single him out, for we think he is one of the better administrators, but look, please, at his portfolio in Durham. He's leading campus culture in a new direction, trying to change course and introduce something more stimulating than a night stumbling on alcohol. He's leading fundamental changes in campus housing as we completely rework the concept of what it means to live in a dorm. And he's in charge of dining at a time when we're trying to return mealtime to an integral part of the educational experience and not just a line at the feeding trough.

The last thing Moneta needs is responsibility for dorms and dining, and faculty apartments, thousands of miles away. Yet he's getting it.

The Trustees will receive a long list of assignments. Executive Vice President Trask has more than a full time job in Durham, with the financial crunch continuing. Yet he will also have oversight in China. Our librarian, our head of computer resources, the list goes on and on.

Duke went down this route with the medical school in Singapore. Dean Sandy Williams tried to juggle two hats, spending half his time in Asia and half at Duke Medical School, and it did not work. And while we do not see Moneta or Trask or any of the others spending half time on new assignments, the diversion, the dilution is considerable.

Most seriously, Duke's vice president for development Bob Shepard (do not confuse him with Fuqua's Blair Sheppard) will also have Kunshan responsibilities. If someone gives a gift to the Kunshan campus, the city and Duke will share the benefits by having the gift applied to DKU income.

While we get those details, there is no discussion of the 500 pound gorilla: if donors are solicited for Kunshan, will this be at the expense of donations to Duke in Durham? Remember please, we will use Duke's donor list, as there are no stakeholders, no alumni, no constituents to tap in Kunshan

✔✔✔✔✔ Up until this moment, with the exception of the medical school in Singapore, the globalization of Duke has meant engaging on the Durham campus, welcoming faculty and students and researchers from all over as never before, bringing in ideas and honing our perspectives and sensitivities.

Kunshan is different: it is envisioned as a separate school called Duke Kunshan University. DKU. Get used to it. A totally new university, not a satellite, not an outpost, not the headquarters for Duke's programs in the city, but a totally new university. Its own charter, bylaws, Trustees. As we said at the start of this Special Report, grandiose.

With the possible exception of the excursion of New York University into Abu Dhabi and soon Shanghai too, no university in the world has ever tried this. Tried to found another university in a far off land.

While the trustee documents state that Duke is exceptionally well positioned to pull it off, there are no details of precisely how we view ourselves in such an advantaged spot. In fact financially we are always crying the blues, explaining how as a younger university -- compared to others in our class -- we have a far smaller endowment.

Certainly a university that lost 30 percent of its assets during the world financial crisis -- 30 percent of all that was accumulated over generations by Trinity College and Duke University flew away in one quick year -- is not well positioned financially. We are a school where just 17 months ago the chair of the Trustees proclaimed we were in "dire financial strait."

In part, our confidence is inspired by outside consultants, including Boston Consulting Group. Quite frankly, FC does not think highly of such organizations.

We can find no BCG expertise in the education field, no substantial involvement with universities. Its senior leaders come from the travel industry, from brand label food products, the leader of its Shanghai office known for his work with airlines and oil companies. BCG is part of a business school oriented culture that exudes confidence in its own ability to reshape anything anywhere with insight and expertise. For the right fat fee that is. While in favor in some circles, in our experience -- and it is extensive -- organizations such as BCG are veneer tacked on to very little supporting wood.

✔ The intent is to have Duke faculty travel to Kunshan, hire some adjunct faculty locally maybe. The feeling is this is the only way to guarantee the quality of instruction.

The students will be mostly from China, but other nations too some day. And Trustees will learn on Friday we have no forecast whatsoever on the quality of students who will apply.

These students -- most at the graduate level, most in business school -- will never see East or West Campus.

As for undergraduates, the Chinese government requires some, and we are going to try to slide by with only a token number of undergrads in one classroom for a certificate program, a far cry from our earlier understanding from the King Dean of Undergraduates Nowicki. The government has yet to sign off on all this.

We do know this: Duke plans to soak the students. As FC noted last Friday, the briefing papers for Trustees state flatly that the Chinese think to pay more is to get better quality. But won't this limit who can attend, only the rich and those selected by the communist government? You bet, but Duke makes vague mention of a sliding scale of fees and passing reference to scholarship money. We are talking discounts from normal tuition to uphold our commitment to need-blind admissions, a core value.

There are also concerns of course about academic freedom. In the extensive briefing reports, there are precisely three sentences about this crucial value that seem to us vapid. Empty lip service. And there is one curious observation: a fear that people associated with the new university will become involved in public controversies. You know, controversies like free elections and freedom of thought, access to the internet and the exploitation of labor in Kunshan.

Trustees will be told that administrators largely dismiss concerns about the stability of the Chinese government and what would happen if students and faculty on campus start getting bright ideas like their counterparts in Egypt and other lands. While Duke's crystal ball shows no significant likelihood of this (Mubarek used the same crystal ball all through January), there is mention but no detail of an exit strategy.

Question: will the availability of a Duke degree in China mean fewer students will travel to Durham for their education? Will the mother campus thus be robbed of international flavor?

Question: in outlining initial Fuqua activities at DKU, only a masters degree in management studies, an executive MBA and corporate education programs are mentioned. Curious, but the Cross Continent MBA which is the genesis of all this is not mentioned. We have no idea why. We speculate that Fuqua may want to run this out of the financial hub of Shanghai itself, not the backwater of Kunshan. Yes backwater, no matter how our promotional materials try to puff the city.

✔ Faculty going to Kunshan can expect a semester of isolation. Bleak isolation. There is no university there, and thus little opportunity for intellectual intercourse with colleagues other than those you could meet in Durham. There will be no Chinese neighbors either, as the Duke campus is carved out of a new industrial park, a fact that we learn for the first time from the Trustee briefing papers. DKU likely will have a high fence around it, like the Kunshan factories where workers who came in from rural China searching for more meaning in their lives are stacked in dormitories behind huge gates to protect them from city crime.

We have no idea how faculty children will be educated, but Duke has stated specifically it will foot the bill for elementary and secondary education; it already gives a giant grant to any faculty or staff member with college-aged kids.

Culture? Forget it. Zippo.

In the city of Kunshan, there is only one local hotel with stars, and having just been sold, its future is uncertain. The other hotels are charging in the $7 range. And quite frankly, the food does not sound appetizing either, the local specialty being hairy crab. Yes hairy crab, born in sea water, migrating to fresh water and well known for clogging local drainage systems before being ripped lose and brought to your table.

✔✔ The opening paragraphs of the briefing materials for Trustees tie our expansion into Kunshan to the execution of the current strategic plan called "Making a Difference."

First of all, this plan is not current at all, but a statement developed with the kind of collabrative input from every segment of the university that we have not seen during Brodhead's tenure. All this was prepared before the financial meltdown with its indefinite postponement of the lynchpin of the plan, the new Central Campus. (During his initial days at Duke in 2004, Brodhead told the freshman class that they'd be using Central Campus as seniors)

We find that the quote about global expansion presented to the Trustees from the strategic plan has been ripped out of context. There is no philosphical nor stragetic underpining for the creation of a new university 7,681 miles away.

Read, please, the five goals in the plan, written before the words international and global became the Shibboleth of administrators.

A) Attracting and retaining outstanding faculty.

B) Deepening engagement in education by undergraduate and graduate students. (This was before we lumped these thoughts under the campus culture banner.)

C) Transform East and West Campuses with new and improved facilities.

D) Strengthen the arts

E) Recommit to diversity and access.

Not a word global.

✔✔ Duke does have a history of growth, even audacious ambition to borrow from the great Terry Sanford. But Mr. Brodhead and his administrators misread. When Trinity College was converted into Duke University, James B. Duke specified a medical school. But President William Preston Few and others held off for six years, until adequate money could be secured both from Mr. Duke's will and the Rockefeller Foundation.

When President Terry Sanford took Duke from being a strong Southern school to a hot national power, he did it by focusing on the Durham campus, increasing the depth of the experience at home, increasing the endowment per student which is a key measure of institutional strength. He did not start outposts all over the nation -- New York, LA, Houston -- in order to achieve his goal. This should be a lesson as we desire to join the ranks of truly international universities -- that the need to have campuses in half a dozen nations may be a canard.

When the Forestry School saw the need to be far more comprehensive, it waited until President Nan Keohane raised funds and thus it emerged as the Nicholas School for the Environment. (Pete and Ginny Nicholas delivered on the transforming gift; they reneged on a later pledge of $72 million for a new building.)

And when the Sanford Institute sought to expand into a full School, Brodhead and the Trustees told the Dean to raise the money first. And that's what he did.

When Duke Health was solicited to join forces with Singapore, the government ponied up $350 million in real cash upfront, and a wealthy industrialist Tan Sri Khoo Puat bequethed another $52 million.

Never, never have we set sail for new frontiers with only hot air propelling us.

And never, never have we set sail with such risk.

Trustees of Duke, you have decided that in order to give frankest consideration to issues, you must meet behind closed doors. While we do not agree, we hope that the dimensions of Kunshan, which you will learn about for the first time on Friday, provoke particularly pointed questions and ultimately a decision to step back and let all of us -- from the oldest Trustee to the longest serving faculty member to the newest freshman -- digest the frightening implications and impact.

Thank you for reading Fact Checker! Both the long and the short posts!! About 4,100 words today.

2/18/2011

Kunshan - the cost grows and grows

✔ Fact Checker here. Good day fellow Dukies!

(The Chronicle reports today on Mr Brodhead's annual address to the faculty, which attracted 100 out of 3,138 faculty members.)

Desperate to salvage the signature initiative of the Brodhead years and establish a new “partnership” with a Chinese university in order to qualify to open a campus, Duke reached far, far down into the list to come up with Wuhan. Situated in the vast inner region of the nation, this school is not even included in the Times of London survey of the world’s 400 greatest universities (Duke is #24). Moreover, much of the “university” is not a hotbed of intellectual ferment as we are led to believe, but in good part a vocational school.

The new partnership is a far cry from what we had with Shanghai Jiao Tong University, a partnership that collapsed very mysteriously with the Brodhead explanation that Jiao Tong did not want involvement outside its own province (state), a geographic barrier that sounded like a convenient excuse since everyone knew from day one that Kunshan was in another backwater.

There is no explanation, of course, from Mr. Brodhead why Wuhan, located much farther from Kunshan, would find such an out-of-state agreement agreeable when another university had rejected it.

The most important difference is that Wuhan seems to have done a good job insulating itself: it will not share in the great financial risks of this venture, putting no money on the table now or later. Nor share in the reputation risks: it is not even obliged to provide any faculty.

And Duke -- creating a new corporate shell for this new university -- will have only three of seven members on the board. Yes a new university: the idea that this is merely an arm of Durham is over.

✔ Risky? Yes risky. That word is one the Brodhead administration has not advertised, but deep in briefing papers to be given the Trustees for their meeting next Friday and Saturday the risk is apparent time and time again: two economic models show the possibility of far far greater liability for Duke if the revenues and costs -- which are just wild estimates -- do not pan out. Yes, a financial liability -- year after year -- ten times what we are told about now.

With unusual candor, the Brodhead administration concedes in the briefing papers we do not know how many students might attend (although most will be Chinese), we do not know the quality of student we might attract, and we do not know how much we will be able to charge them.

If it were not so patronizing to the Chinese, the suggestion in the briefing papers (we have seen more than one rewrite) that Chinese think that to pay more is to get more -- and therefore we can soak them -- would be hilarious.

It’s anticipated almost all of the students at DKU at least in its initial years will be on the graduate level -- with the ever expanding Fuqua in the lead. DKU -- yes get used to it. Duke Kunshan University, the official name.

Only three percent of students in one projection will be undergraduates to start -- enough for one small classroom. They will be in a certificate program, not leading to a degree. This meets in a pro forma way at least, another requirement of the Chinese government.

There is no effort to explain if the new university will rob Durham of its international flavor -- by making it possible for Chinese students to get a Duke degree without ever seeing East or West Campus.

Fact Checker will have a full report on these briefing papers on Monday.

✔ ✔ Mr Brodhead conveniently overlooked in his address to the faculty some other, emerging costs of Kunshan:

✔ The Trustees will learn for the first time that while Kunshan is putting up the buildings (including dorm beds for around 700 and 70 faculty apartments) they are an empty shell. Duke is going to have to dig deep for furnishings -- the numbers we have seen are in the $20 million range -- half of it from Duke. The Brodhead administration will describe this as a “loan” to DKU and is asking the Trustees for approval now, although it will not reveal how the loan will be repaid -- if ever -- until the May meeting of the Trustees.

--- This project was sold to us with the affirmation that the city of Kunshan will pay all operating expenses for five years. If a used car salesman pulled off a deal like this, we’d call it bait and switch: Kunshan has gotten Duke to “renegotiate” the deal -- never announced by Mr. Brodhead -- and we are now looking at Duke paying slightly more than half of the expenses for six years. After that, it’s anyone’s guess what can be negotiated. Kunshan might for the first time demand rent for the buildings.

Remember, please, Loyal Readers, how we were told that Kunshan was going to pay all the operating expenses for five years -- even the electricity.

✔ Our president gave lip service to our core values, brushing through academic freedom and neglecting open admissions -- the opportunity of an education for all. With no endowment and no ready source for scholarship money, there is great danger that this DKU venture will be serving only rich Chinese and only those selected by the Communist regime.

At their meeting next week, the Trustees will be told DKU will mount its own development program. They of course will not be told how this might impact efforts to raise money for the Duke campus.

For sure, with every top administrator at Duke listed in a chart for new responsibilities in China, this venture is going to divert and dilute attention here at home. It is similar to the situation that developed when Duke Medicine charged into Singapore -- at least we know there was half a billion dollars on the table for that move -- and our Medical School dean, who once had a full time job in Durham, started spending fully half of his time in Asia.

✔ ✔ ✔ Every dollar we sink into Kunshan -- with more and more dollars needed every time we write about this folly -- is money that won’t be available in Durham.

✔ The Trustees will raise tuition next week -- likely making Duke’s cost for an undergraduate ten percent more than Princeton's; to be sure, Kunshan is putting pressure on the increase.

✔ So far as we know from the Chronicle report (we will read the transcript when it becomes available) no one at the faculty meeting mentioned the wage freeze -- now in its second year. Money for Kunshan is not on a tree, it has to come from somewhere, and the Chinese venture reduces what is available in Durham.

✔ And no one apparently mentioned -- even though it was a faculty meeting -- the instability in the Arts and Sciences, with simply too many professors. More than 600 according to the news release announcing a new dean (actual count 647) versus only 502 at Yale according to the student newspaper earlier this month. With cutbacks and even layoffs looming, every dollar spent in Kunshan means a dollar must be saved in Durham.

In the overview, there is great danger, fellow Dukies, that the Brodhead administration is making decisions based upon its own place in Duke's history -- rather than on what is best for the campus. Cynical yes, but if they want to project another truth, let them do this in the open, so we do not learn in mid February, 2011 that Kunshan is not putting up the entire campus and that it is not meeting all the operating costs for five years.

We fear particularly with respect to Fuqua -- where Dean Sheppard has a never ending stream of expansive suggestions, and a track record of failure after failure -- that the rapid expansion in half a dozen places around the world all at once -- is very ill advised; this is an idea we did not develop ourselves, but one shared with us by senior faculty in Fuqua.

Please read additional details in our Special Report planned for Monday. Have a good weekend.

2/09/2011

Another Chronicle editorial on Brodhead's leadership

✔ Thanks Chronicle. (editorial dated 2-7-2011)

FC disagrees with one statement: "That this discussion took place at all is to the credit of Brodhead and the other administrators who took part, as they were under no obligation to participate."

That's absurd. Their job is to engage all stakeholders in creating a better Duke. Brodhead and his cohorts may have the keys at this moment, like janitors and other custodians, but they do not have all the answers.

Indeed, Brodhead himself has given lip service to this reality from time to time. In addressing the Academic Council in February 2010, he called for participation of a "broad" segment of the community in decisions, the specific context being the financial meltdown. In opening Convocation and on other occasions, he has charged freshmen to not only study at Duke but to build its future.

Good ideas. He just never executes.

✔ What's amazing is how this morning's editorial on campus culture mirrors an editorial exactly one year ago after Brodhead addressed the faculty through the Academic Council on the fiscal crisis.

The headline a year ago read "Brodhead's Incomplete Address"

"... what was missing from his speech—and what will inevitably be on the minds of the Duke employees Brodhead will address tomorrow—was a straightforward analysis of the “short view” and a clear presentation of the University’s strategy to weather its impending budgetary shortfall."

"At tomorrow afternoon’s “Primetime” forum for Duke employees... Brodhead should come prepared with answers."

"Brodhead ... must confront the issue head on... should be honest with employees and tell them up front, refusing to tiptoe around the subject of job cuts and divert difficult decisions to the months ahead."

And again, "administrators should be able to offer employees conclusive answers."

Hey what was that expression I learned in French class, "plus ├ža change, plus c'est la ..."

2/03/2011

Chronicle editorial examines leadership from President Brodhead

✔ FC here. Good day Fellow Dukies!

The first words of today's Chronicle editorial incisively recognize the problem: both Nan Keohane and Dick Brodhead grant "rare access" to students.

With Nan, it's understandable. After all she's retired from Duke, wisely moving off campus to spare her successor constant comparison with her amazing tenure, now residing in a big house with glorious trees on a quiet street in Princeton. Nan, welcome back for a rare visit!

But with Dick Brodhead, he's here. And should be alive among us. And he's not.

This morning, the Chronicle singles out his absence on campus culture issues.

✔ Fifty one weeks ago, a more emphatic Chronicle editorial made the same point -- but on the fiscal crisis that is crimping Duke. And so it has been on issue after issue. He's invisible, reclusive.

Your editorial a year ago was written as the President was going to emerge out of hiding and stand on the campus before the Academic Council. "Brodhead should come prepared with answers." Boy, today's editorial sounds the same theme: "students seek the wisdom of presidential leadership to offer clarity in the form of straightforward opinion."

A year ago, the editorial held out hope for leadership, but a follow up was headlined "Brodhead's incomplete address."

"... what was missing from his speech ... was a straightforward analysis of the “short view” and a clear presentation of the University’s strategy.."

" .. administrators should be able to offer ... conclusive answers ... instead of noncommittal 'maybes.'"

"Brodhead should speak openly and candidly to the Duke community as a whole. We need to know the specifics of how the administration is moving forward..."

✔✔ So Dick, here's the plan:

✔ First, give up your parking space on the main quad and replant grass there. Park near the Clock Tower and walk down to Allen Building every day. Stand out front between classes like you once did.

This is nothing imaginatively original: Dean Nowicki has enunciated the same idea for the new Keohane dorm, create points where students just pass each other and interact.

✔ Second, use the internet. Sir, the website you designated to keep stakeholders informed of the fiscal crisis is in shambles, a meltdown worse than the value of the endowment. Look at it, update it, make it an avenue of communication instead of a joke.

Ditto the plans for Kunshan. There is no reason you do not involve us and share everything on the internet. A map of the new campus that is your signature project. A description of the buildings. Copies of the agreements you signed. There is no reason why FC has had to write and rewrite your fellow administrators, and still not have such basics.

Oh yes, your personal website, Mr. President. Your contemporaries use this as a means to communicate, but yours is woefully out of date, your last speech for example on May 14, 2010. Your e-mail update to alumni from April 21, 2010 is there, but not your update on January 21 of this year.

And a couple of other things: update your pic, because you look different than you did with the stach the first week of your arrival. And provide a way that people can discover you even have a website -- they're called links -- so they do not have to rely on FC!!! http://www.duke.edu/president/

Oh yes, Include a welcome message on the home page, which alone among your peer presidents, you do not offer.

The same is true of the trustee website. The recount of "action" of the Trustees is an insult to anyone who wants to follow the affairs of Duke University. Rather than aiding your work, it hurts it.

✔ 3) Tell your administrative cohorts to stop being so sanctimonious. They do not own this place. They are like the janitors, with the keys right now. They should respect all stakeholders, be courteous in responding, have open office hours like you do, and schedule times when they can guarantee they will be reachable by phone. The ideas of stakeholders -- students, parents, faculty and alumni -- must not only be heard, but included.

✔ 4) Be strong. Let me cite an example from the Potti Mess. When asked about the lies in his credentials -- at that point we had confirmed he faked a Rhodes Scholarship and other issues were in the air -- you said be careful, there can be truth, there can be lies, and there can be "intermediate explanation."

Here is what you should have said. "We are checking the credentials carefully. We expect this to be completed in three days and I will report to you personally. I can assure you now that if anyone lies on their resume, I will kick their ass out of here."

Even when Potti's fraud was confirmed, you let him fester, paid, as a faculty member.

With respect to Potti's patients, you should address them personally, apologize, bring them together in a forum so they can support each other, and then tell us that you have done this.

You must assure us that the medical administration's misdeeds -- including concealing an e-mail from a distinguished scientist outlining very specifically how Potti was a quack -- are being investigated. By whom?

And on another note, on drinking, do you or do you not favor lowering the drinking age? You signed the Amethyst Initiative with a wishy washy call for a national conversation; take the lead and schedule one.

✔✔ What's amazing is that Duke faces the same problems today, that it did half a century ago, with precious little progress. The undergraduate dorms are beautiful -- until you go inside and discover they are not conducive to studing nor socializing. Or as a history professor was fond of saying in the 1950's, "If I lived there, I'd make drink beer and make C's too."

Quad models? Fraternities? Try the Parker Report, part of the first strategic planning Duke ever did in 1958.

Fraternities? Go back 19 years and listen to Reynolds Price at Founder's Day, saying we must rid the campus of them. Oh yes, he also said the place was not sober anymore.

✔✔ And so today, this time with the student government as sponsor, Brodhead again has a public conversation. Let's hope that in our next essay FC can report that it was a new conversation with new emphatic direction, and not a continuation of the old.

Thank you for reading FC
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