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Georgia Tech president rebuked for ethical lapses under his watch

Georgia Tech President G.P. “Bud” Peterson accepted blame Monday for what his boss described as “lax management and unethical behavior” by several former top officials at the institute, and vowed, “I’m going to fix this.”

Peterson, in an exclusive interview with The Atlanta Journal-Constitution, discussed the plans to fix and monitor the flaws and lapses that allowed four high-ranking administrators to do things such as get a school vendor to pay for a football suite they used largely for friends and family.

Peterson said he felt “disappointment and anger and embarrassment” about the scandal.

“I need to play a stronger role in ensuring that Georgia Tech is fully compliant with the policies and procedures of the institute, its University System and the state of Georgia,” said Peterson, his first comments to a news outlet since the revelations broke in July.

Reports released last month found four high-ranking Georgia Tech administrators committed other ethical abuses such as, receiving pay from a German company to serve on its board at the same time the company was paid by Georgia Tech for various projects, playing golf with vendors during work hours and expensing after-hours dining and drinking. Peterson fired a vice president and the other three resigned.

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The abuses were discovered not through reviews of expense reports or discussions among administrators, but through tips to Tech’s internal auditor and to the University System ethics line. One Georgia Tech internal report in January cleared an official, but it wasn’t until a tip came to the University System’s ethics hotline that the scope of the situation was fully understood.

University System Chancellor Steve Wrigley, who oversees the public college system that includes Georgia Tech, wrote a stern letter Monday to Peterson, whose $1.1 million annual compensation package is the highest of any public college president in the state.

“[L]ax management and unethical behavior at Georgia Tech have resulted in misuse of resources and a failure to hold staff accountable, and, as president, you are ultimately responsible,” Wrigley wrote.

08/20/2018 -- Atlanta, Georgia -- Georgia Institute of Technology President Bud Peterson talks about the recent ethical changes Georgia Tech is undergoing in his office on the university's campus in Atlanta, Monday, August 20, 2018. (ALYSSA POINTER/ALYSSA.POINTER@AJC.COM) (Alyssa Pointer)

Wrigley added that many on campus believe “when they raise ethical issues, they are not taken seriously or are deliberately ignored by some administrative leaders. This must be corrected immediately.”

Peterson released a seven-page report Monday ordered by Wrigley to explain how he’ll fix the problems. The report said some changes have been made, such as no single person negotiating contracts can also approve them. Others are in progress, he said. Peterson said additional structural and personnel changes may be coming.

Wrigley wants an update by Nov. 12.

Asked why some things, such as creating a database of all outside activity by employees to spot potential problems hadn’t been done before, Peterson said, “It’s a good question. We hadn’t done it.”

The disturbing revelations at Tech are the latest in a series in recent years at the nationally-acclaimed Atlanta research institute.

Peterson, who said he met twice with Wrigley on Friday, said he understood the severity of the problems.

“I have spent a lot of time celebrating the good and not spending as much time focusing on the things we need to do right at Georgia Tech,” Peterson said during a 30-minute interview in his office.

Peterson, who’s been Georgia Tech’s president for more than nine years, did not know the university was paying a German company, RIB, for its services, according to a University System review. But emails, personnel files, internal memos and other documents obtained by the AJC using Georgia’s Open Records Act show that institute employees, including a legal advisor in Peterson’s cabinet, had known since 2015 that a vice president, Steve Swant, had been involved in university purchasing and staffing decisions that affected RIB. He had filed a mandatory disclosure about it.

Swant’s annual compensation from Georgia Tech was about $495,000. He was receiving about $15,000 a year for his board participation.

Peterson said his legal team is reviewing RIB’s business relationship with Georgia Tech.

Tech officials are hoping other changes, such as moving Business Services away from the purview of Campus Services, will prevent violations such as what they said happened with a football suite.

An internal report found Paul Strouts, then-vice president of campus services, had Barnes & Noble pay $35,000 a year, starting in 2013, for a Georgia Tech football suite. Barnes & Noble operates a bookstore on campus. The company thought the suite was being used for “student outreach,” but the report found about 85 percent of the suite’s use went to Strouts’ family, friends, Tech employees and other vendors.

The recent findings have stunned and angered many campus supporters and state leaders. A few state lawmakers asked for hearings. The July reports by the University System and Tech’s internal auditor were sent to the Georgia Attorney General’s office. A spokeswoman for the Attorney General’s office has said it is reviewing “appropriate next steps.”

Peterson previously instituted some changes since the reports, such as its ethics and audit officers will report directly to him. He’s making the rounds with Tech’s foundation leaders and students to discuss his plan.Classes at the 30,000-student campus began Monday.

The story so far

  • Three Georgia Tech officials resigned and a top-ranking administrator was fired after investigations said they exploited relationships with vendors, abused their privileges or rank or had serious conflicts of interest.
  • Georgia Tech President George P. “Bud”Peterson began reorganizing his staff and promising a comprehensive review of conflicts of interest, and he presented a plan of corrective action to Wrigley Aug. 15.
  • Chancellor Steve W. Wrigley delivers a stinging letter to Peterson Aug. 20, saying Peterson was “ultimately responsible” for the failures; that Peterson must “dramatically” improve expectations of senior officials; and he must fix the campus culture where “many” believed they are not taken seriously and are ignored by leaders when raising questions about ethical lapses.

The University System of Georgia referred the cases of the four to the state attorney general.

Here are some of the changes Georgia Tech president G.P. “Bud” Peterson wrote in his report and told the Atlanta Journal-Constitution:

  • conflict-of-interest reports for all vice presidents and anyone reporting directly to him will now also go to the University System for review.
  • no single person negotiating contracts can also approve them.Georgia Tech is working on a plan to create more ethics training for its leadership, with the help of the University of North Georgia’s Center for Ethical Leadership.
  • Georgia Tech is creating a database of all outside activity by employees to spot potential problems.they are reminding employees that only full-time faculty who don’t earn annual leave can take consulting leave. Steven G. Swant, Tech’s former executive vice president of administration and finance, spent 30 days last year “in furtherance” of a Tech vendor, according to a state review.

Staff writer Ty Tagami contributed to this report

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