Georgia Tech president George “Bud” Peterson has a deadline of Wednesday to present a plan to state officials about how he’ll prevent ethical abuses like the ones that ended with him firing an executive vice president and also to the resignation of three highly paid staffers.
While Peterson has already announced some organizational changes and asked another organization for advice, experts interviewed by The Atlanta Journal-Constitution pointed out holes in Georgia Tech’s governance structure that must be filled. And others, from state legislators to faculty are waiting to help out, if asked, or inject themselves into the conversation.
The university’s problems began after an investigation by the University System of Georgia found former Executive Vice President Steve Swant, Lance Lunsway, Thomas Stipes, and Paul Strouts exploited relationships with vendors by getting a school vendor to pay for a football suite for them, expensing after-hours dining and drinking, and playing golf with vendors during work hours. All four men made six-figure annual salaries.
Swant, making $495,000 this year in salary and benefits, also had a conflict of interest by receiving pay from a company for serving on its board at the same time the company was hired by Georgia Tech for projects.
Tech administrators, including Peterson, knew of Swant’s arrangement, although the president said he was unaware the company, RIB, was getting paid by Tech. A state investigator called Swant’s arrangement in his report last month “an impermissible and unmanageable conflict of interest,” which did not end until a whistle-blower complained to the University System’s ethics hotline in May.
Finance, ethics and faculty experts told the AJC the university needs improvements from better state oversight to requirements to file paperwork declaring potential conflicts-of-interest more frequently.
Tech should require employees to submit conflict-of-interest reports once every three months or twice a year, said Kelly Richmond Pope, who worked in the forensic accounting practice at KPMG and is now an associate professor at DePaul University. Now, the reports are submitted annually.
“We have an environment of the wild, wild west,” Pope said of what was revealed by investigators. “People feel like they can do what they want.”
Pope and others said the university needs more frequent in-person, case-driven and hands-on ethics training “where you can see people’s decision-making skills.” Some of Georgia Tech’s ethics training is currently done online.
Tech has rules for everything from filling out expense reports, to engaging in consulting agreements and other documents. Then, there are federal regulations. Former employees say it can all be confusing.
Some believe Tech’s voluminous research work, much of it confidential, has resulted in a few Georgia Tech officials forgetting its mission.
The university, through its size and scope, is a major cog in the Atlanta region’s economy. It employs 7,147 full-time workers. About 30 percent of its $1.6 billion annual budget comes from the federal government for research. The institute oversees an alphabet soup of organizations that conduct high-level research and educate students.
“I think what stands out to me the most is Georgia Tech has been operating more like a private university than a public one,” said David Bergeron, who administered more than 60 grant and loan programs to colleges and community programs at the U.S. Department of Education. He’s now a senior fellow at the Center for American Progress.
Vic Hartman, an Atlanta-based former FBI agent who specialized in fraud-related cases, believes Georgia Tech needs a better system to independently review or audit its financial disclosure and consulting agreements. He said such work is costly and many employers are unsure how to do it. He also mentioned he believes Georgia Tech needs more ethics training.
“The more you talk about (ethics), the more (employees) think about it,” said Hartman, president of the Georgia chapter of the Association of Certified Fraud Examiners.
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. The disturbing revelations at Tech are the latest in a series in recent years at the nationally acclaimed Atlanta research institute. The reports, completed last month, were referred to the Georgia Attorney General's office.
Some state lawmakers have demanded public hearings to understand what happened. Sen. Fran Millar, R-Dunwoody, chairman of the senate’s higher education committee, said he’s waiting for Peterson’s report before ordering any hearings.
Still, Millar has questions others are asking.
“I think the question has to be asked, why this wasn’t picked up other than from a whistle-blower, so this doesn’t happen again,” Millar told The AJC.
Peterson recently announced several organizational changes in response to the scandal, such as making the chief audit and ethics officers report directly to him. He’s also contacted the University of North Georgia’s BB&T Center for Ethical Leadership “to determine training and other activities that will strengthen the ethical culture at Georgia Tech,” university officials told the AJC.
Many professors are disturbed, some faculty members say. The criticism has been somewhat muted because the fall semester hasn’t started on campus, which has nearly 30,000 students. Classes begin Aug. 20.
Vivek Rajasekar, 20, a third-year Georgia Tech student and resident advisor, said as Tech prepares for the fall semester that officials have been more vocal about following regulations and curtailing some exceptions they previously allowed in student housing.
“They’re emphasizing ethics and change, and everything is by-the-book,” he said.
Abdul-Hamid Zureick, who’s taught at Tech for 33 years, said he hopes the situation will increase shared governance between administrators and faculty, such as allowing faculty or staff to participate in planning and decision making. Such changes, he said, would give faculty greater scrutiny over many financial matters, potentially allowing them to weigh in on conflict-of-interest issues, such as Swant’s participation on the RIB board.
Zureick said he’s seen several headline-grabbing instances of improper conduct by staffers in his years at Tech.
“Despite all of the attempts, we continue to see the same thing over and over again, at different levels and forms,” said Zureick, president of Georgia Tech’s chapter of the American Association of University Professors.
Common Cause Georgia executive director Sara Henderson thinks the University System needs to update its expense reporting system. Henderson, an adjunct professor at Clayton State University, said she has to fill out some university records manually. This antiquated system, she fears, could lead to abuses.
“It’s probably not an isolated case,” she said.
Georgia Tech situations in recent years where officials have violated ethics guidelines or been sentenced to prison for theft.
May 2008 - Donna Renee Gamble of Marietta was sentenced to 32 months in prison for stealing $316,000 using university credit cards.
March 2009 – Michelle Harris was sentenced to 10 years in prison for using her university credit card to pay for a part of her wedding, her tuition costs at Georgia State University and her son’s tuition at the University of Maryland.
Nov. 2013 – James Fraley and Alan Golivesky resigned after an internal audit found they may have been involved in possibly bogus invoices and procurement card payments made to questionable companies totaling $1.5 million. Fraley and two other men were indicted in 2016 by federal prosecutors for wire fraud. The cases haven’t been adjudicated.
March 2014 – An internal audit accused professor Jochen Teizer of taking more than $20,000 of funds intended for student stipends.
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