University of Louisville Foundation goes rogue.
An unexpected special meeting of the 5-member Executive Committee of the University of Louisville Foundation that was to be held at 5 PM today (Labor Day) was canceled at the last minute. I and several members of the traditional print and broadcast media arrived to cover the open session only to find we were the only ones there! It was anticipated that the meeting would initiate the hiring of an external firm to perform the forensic audit demanded by the James Graham Brown Foundation, and execute the separation of Foundation President James Ramsey and Kathleen Smith from the Foundation. It was reported by Andrew Wolfson on the Courier-Journal’s website that the cancellation was consequent to a letter by University of Louisville Board of Trustee Chairman Larry Benz. However, it was later reported by Chris Otts of WDRB, that today Acting University Chairman Neville Pinto had also sent an email to Foundation Chair Robert Hughes and other Board members expressing polite but strongly worded objections to the Foundation’s plans. Unbelievably, neither President Pinto nor Chairman Benz, both of whom are on the Foundation Board, had been consulted about the meeting nor informed about what was to be discussed or enacted. Copies of the emails from Chairman Benz and President Pinto to Chairman Hughes are attached.
The reasons given by both University officers included that technically, according to its bylaws, only the entire Foundation Board and not its Executive Committee alone could act to remove a Board member or officer. It was also apparent that the Foundation Executive Committee was preparing to give additional payments to the separating individuals. Both Neville and Benz pointed out that because Doctor Ramsey had resigned, that there was no further obligation to buy out his contract or otherwise reward him. Furthermore, “To provide him with a settlement payment is not in keeping with the terms of his contract or our obligation to use the assets of the Foundation for the exclusive benefit of the University’s mission.”
With respect to Chairman Hughes’ intention to initiate the contracting procedure for a forensic accounting, both Pinto and Benz were unequivocal that “to ensure transparency and to provide the public with confidence that all issues have been fully and fairly examined,” it was essential that the “accounting firm is wholly independent, nationally recognized and not directed by the Foundation. As Foundation assets are held for the benefit of the university, it is the University that must direct any examination of the Foundation.” [How could it possibly be any other way at this point?}
According to the report in the Courier-Journal, Hughes “said he decided to cancel the meeting because it appeared that Benz was threatening to sue if the Executive Committee acted. My reading of Chairman Benz’s letter shows it to reference the Foundation’s own bylaws, Ramsey’s employment agreement, and the Kentucky statute defining the Foundation as a fiduciary, I don’t read any threats in it. Perhaps Doctor Hughes is feeling a little vulnerable. In my opinion, he should be. In a subsequent interview, Doctor Hughes said that the Foundation Board is not obligated to terminate Ramsey. “We can decide what to do and that is our prerogative to do so.”
This is absolute craziness!
Does anything more need to be said about why the relationship between the Foundation and the University needs to be rewritten? It is inconceivable that the President of the University and the Chairman of its Board of Trustees be kept in the dark about this last-minute meeting. It is equally inconceivable that the Chairman of the University’s Board of Trustees would have to file an open records request for information related to a controversial multimillion dollar loan by the University to the Foundation. In my opinion, Doctor Hughes and at least some of his colleagues on the Foundation Board appear to think that they are in charge of what happens at the University of Louisville. Indeed, after reviewing the budget materials and other items from the August 25th University of Louisville Board meeting, they may be right! I will have more to say about that and the recent UofL Board meeting at a later time. This brief report will have to do for now.
In my opinion, there is much to be concerned about with respect to the manipulation of the University’s Board of Trustees by the Governor over the past year and the University’s relationship with the University of Louisville Foundation. I found the coyness with which Drs Ramsey and Hughes discussed Ransey’s future relationship with the Foundation to be troublesome and I think that concern has been justified. The Foundation’s website is surprisingly uninformative and even outdated so I do not know who is on the Foundation’s Executive Committee. The Foundation’s reported Secretary, Mr. Ulysses Bridgeman, is the same person who negotiated former President Ramsey’s resignation from the University with its Bevin-appointed Board. There should be no appearance of financial linkage of that resignation with his dismissal from the Foundation. The University could only contribute the financial equivalent of the year of academic time owed, but the leadership of the Foundation (which included Ramsey himself) has shown no lack of willingness to kick in its millions. It is the such a perceived lack of probity that led the James Graham Brown Foundation to demand the forensic audit that has been needed for several years now. The audit by the Office of the State Auditor of the “relationship” between the two entities will not “follow the money” as must be done. If illegalities are found, then individuals must be held accountable, and if indicated, monies should be reclaimed. The University of Louisville’s very future is at risk.
Lately it occurs to me what a long, strange trip it’s been. (The Grateful Dead, 1970)
Peter Hasselbacher, MD
Emeritus Professor of Medicine, UofL
5 September 2016