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News Outlets Question Baylor Conflicts of Interest

Two media outlets have raised questions about potential conflicts of interest among Baylor University regents.

The Dallas Morning News first raised the issue in an article published Sunday, Sept. 7. Potential conflicts of interest also were discussed in an editorial published on the Baptist Web site EthicsDaily.com two days later.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />
 
Allegations of improper connections on the Baylor board come amid strife within the university community over President Robert Sloan’s leadership. Five regents have announced they will ask the board later this week to terminate Sloan’s tenure as president immediately.
 
The Morning News article, written by staff writer Linda Wertheimer, noted “some Sloan critics contend that the deck is stacked in the president’s favor because of what they consider conflicts that impair the impartiality of some of the 36 regents.”
 
The article cited four examples, including regent Duane Brooks, pastor of Tallowood Baptist Church in Houston, who is the brother of Baylor Chief Financial Officer David Brooks; regent Wes Bailey, who owns a Waco insurance company that underwrites Baylor insurance policies; regent Jim Turner, president of the Dr Pepper/Seven Up Bottling Co. in Dallas, which has an exclusive contract with the school; and regent Brian Harbour, pastor of First Baptist Church of Richardson, Texas, who teaches adjunctively in Baylor’s Truett Seminary.
 
The EthicsDaily.com editorial mentioned “a number of conflicts of interest on the board,” including those referenced by the Morning News and others. One regent “attends the school’s seminary,” author <?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Robert Parham wrote. “Other regents allegedly have adult children on the school payroll. Still others have significant financial interests in the school.”
 
Both the Morning News and EthicsDaily.com indicated attempts to contact the regents with potential conflicts of interest. However, both reported that only Turner responded. Both quoted him as saying his company gives back to Baylor in donations more than his company makes off its contract with the university.
 
Parham’s editorial criticized a “culture of denial and deception” at Baylor. “The administration’s attitude about conflicts of interest is to deny the problem with the deflective reasoning that the regents disclose their conflicts annually and are good people who do the right thing,” he wrote. “If this is the case, the school’s leadership deceives itself about how relational and financial pressures can cause morally good people to make morally compromised decisions.”
 
Three-fourths of the Baylor board is selected by the board itself, and one-fourth is selected by the Baptist General Convention of Texas.
 
Baylor spokesman Larry Brumley said the university does have a policy regarding conflicts of interest on the board of regents. Initially, he said the university’s general counsel would not allow that policy to be released publicly.
 
However, after a persistent inquiry from the Baptist Standard and online publication of an article describing the refusal to release the document, Brumley provided a copy of the five-page policy to the Standard. It was given with a requirement that the Standard not share it with any other media outlets.
 
This summer, as regents conducted an investigation of one of their members on charges of wrongdoing, the Baptist Standard and other media outlets sought copies of the university’s bylaws to ascertain what procedure would be followed. Again, the university refused to disclose its most basic governing document, calling it a privileged document.
 
The Baptist Standard finally obtained one paragraph from the bylaws.
 
Likewise, when the Standard earlier reported on the Baylor administration’s claim that the university had completed its prior fiscal year with a financial surplus, the supporting data could not be found in the university’s published audit. The data to show that surplus, the Standard was told, appeared only in the university’s internal “operating budget,” which is a confidential report.
 
Brumley said the regents are required to disclose annually any conflicts of interest they may have. Those reports are given only to the board, he said, and are held as confidential information.
This practice is spelled out in the regents’ policy, which says the annual declarations of conflicts of interest are to be given to the board’s audit committee.
 
The policy provides two “general rules.” The first is that Baylor will seek competitive bids in business transactions.
 
The second is that the university “shall refrain from entering into any financial, business or other transaction with a regent or a member of his or her immediate family or with any entity or individual in which any such person has a financial interest or management responsibility, inasmuch as such transaction might involve a potential conflict of interest.”
 
The policy also allows the audit committee to make exceptions to these two rules in cases where the committee believes such a transaction would be in the university’s best interest. The policy does not require public disclosure of cases where exceptions are made.
 
However, the policy warns regents that they “should follow the biblical admonition to avoid even the appearance of impropriety” because “the results of a perceived impropriety may become, over time, more disruptive or damaging than an actual transgression.”
 
The BGCT makes freely available its own policies regarding conflicts of interest and eligibility for service on BGCT-elected boards. One of those states that “trustees must not be related in the third degree by birth, adoption or marriage to each other or to the chief administrators of the institutions on which board they serve.” Chief administrators, the policy says, include the chief executive officer, chief financial officer, chief accounting officer and chief operating officer.
 
The policy statement adds a definition of third-degree relations, noting exclusion of parents, brothers, sisters, grandparents, nieces, nephews, great-grandchildren.
 
That BGCT policy would impact regent Duane Brooks, who is the brother of Baylor Chief Financial Officer David Brooks.
 
According to published accounts in the Baptist Standard, Duane Brooks was elected to the Baylor board by BGCT messengers in November 1999 and began serving on the board June 1, 2000. According to information on Baylor’s Web site, David Brooks began work as the university’s chief financial officer Oct. 1, 2000.
 
Duane Brooks, contacted by the Standard for comment, said he would prefer to comment after the current storm of events at Baylor has died down.
 
David Brooks told the Morning News he thinks critics of Sloan are raising such issues now because they’ve been unable to remove the president. “This group of dissidents is attacking regents individually. Where was the concern three years ago?”
 
BGCT Executive Director Charles Wade told the Morning News some within the convention have asked Duane Brooks to resign from the Baylor board because of the perceived conflict of interest.
“We’re trying to protect the governance of our institutions so that the regents are free to make the best decisions they can without the perception of conflict,” he said.
 
Meanwhile, Parham, who earned a doctor of philosophy degree at Baylor, called on his alma mater to “provide full and public disclosure of all their conflicts of interest.”
 
Mark Wingfield is managing editor of the Baptist Standard.