University of Missouri alum Ken Lay donated over $1 million in Enron stock to fund a chairmanship in his name in MU's department of Economics. Now he wants it back.
The guilty verdicts may be in against former Enron CEO and chairman Ken Lay, but he is still doing battle with, of all things, his alma mater. Seven years after making a $1.1 million gift to endow a chair in economics at the University of Missouri, Lay is now trying to have the money returned. Last September, in the wake of Hurricane Katrina, he personally sought to have the money — as yet unused — transferred back to Houston to assist 14 charities in relief efforts, including preacher-author Joel Osteen's megachurch. Five months later in February this year, the trustee for Lay's assets went to the campus in Columbia, Mo., seeking the money to pay for legal fees instead. The trustee went home empty handed, but now university alumni — only recently apprised of the negotiations — are buzzing with indignation. The university, meanwhile, is stuck with the name — and despite the verdicts, isn’t moving just yet to make changes.
Lay graduated from Mizzou and received a Master's degree from the Department of Economics. He funded a chair in Economics via the donation of Enron stock to the Department of Economics in 1998. As good financiers will do, Mizzou officials immediately sold the stock to diversify the portfolio, not because they knew the stock was tainted.
"This has all the smell of a Richard Scrushy effort," says Mizzou alum Thomas Battistoni, a New York litigator who until recently sat on an alumni board for the MU College of Arts and Science, overseers of the economics department — and hence the chair. Scrushy, the former head of HealthSouth Corp., poured over $700,000 into Birmingham, Ala., churches and ministries during his felony trial in 2004, a coincidence noted with more than a little skepticism by his prosecutors. (Scrushy was acquitted). Battistoni raises similar questions about Lay’s attempt to divert the money to charities in the fall before his trial started, but he doesn't believe the money is "tainted" since it was donated before the shenanigans at Enron began.
Should the department give back the cash? The department went through some infighting and some lean years before I arrived as a graduate student in 1993, but things began to turn around about the time I arrived (that's all correlation and no causation :-) ). The gift by Lay was huge.
Several professors from around the university signed a petition to give the cash back, but I don't blame the department or the university for not returning the money.
Keith Poole, who from 2000 to 2005 held the title of Kenneth L. Lay Professor of Political Science at the University of Houston, doesn’t see any reason why it should.
...Poole said private endowments from business leaders with questionable business practices, such as oil magnate John D. Rockefeller and steel tycoon Andrew Carnegie, are what helped make the nation’s universities great.
Don't forget Cornelius Vanderbilt. But the Lay chair has never been filled. From the first link:
The search for an academic to fill the chair continues, meanwhile, with over 60 candidates screened in the last eight months. Battistoni suggests one solution to the controversy would be to make ethics part of the lesson. "If the university is going to do a chair in economics named after him, to be true to its own values, the university should set it up as the Ken Lay Chair in Economics and Business Ethics."
Perhaps one reason why the chair has never been filled is because qualified candidates have shied away from it. But my recollection of the department in personnel issues was that search committee members were very picky about who they were going to bring in whether they were hiring an assistant professor on tenure track or an endowed chair. Indeed, this fellow took an endowed professorship in the department in 2004 that was funded around the same time the Lay chair was funded.
I don't see any reason to give the cash back. Mizzou and department officials should find a good person to fill the chair and they should abide by the contract. So should Ken Lay.
HT for the Time article to Power Reader, friend, and fellow Mizzou alumnus Chad.
Addendum: Richard Scrushy feels for Ken Lay.
Update 1: The Columbia Daily Tribune has more here. The headline reads "Empty Chair Stumps MU." Nobody should be stumped:
The Department of Economics has a pay range for the chair of between $150,000 and $190,000 with a research fund of $10,000. "The salary is a combination of what can be distributed from the undisturbed principal of the endowment account and funds provided by the department itself," Moore said.
...There was an initial attempt to fill the chair between March 2000 and March 2003. Three offers were rejected by scholars after their institutions made counter-offers, according to an MU statement. After Lay was indicted in July 2004, the search was suspended.