UT Regent Defends Review of Law School Foundation

Updated, 11:30 a.m.:

University of Texas System Regent Bobby Stillwell told the Tribune on Thursday that his colleague Alex Cranberg was splitting hairs in his recent defense of the board’s plan to seek an external review of the UT Law School Foundation.

The planned outside investigation of a now-defunct forgivable loan program run by the foundation has been a flashpoint of controversy since the board approved it in a rare 4-3 split vote on March 20. Cranberg voted for the review, and Stillwell voted against it.

Those who oppose the review say that the system’s general counsel, Barry Burgdorf, already looked into the matter. His report, which concluded that the loan program was inappropriate and should be terminated, was reviewed and given the green light by an outside legal firm and the Texas attorney general’s office.

"This duplicative review, which targets the University of Texas at Austin for the obvious purpose of attempting to discredit its president, will be the fourth review of this matter," a majority of Texas senators wrote March 25 to the board, encouraging it not to spend money on any further investigation.

But Cranberg contends that most critics claiming that there have been multiple investigations “don’t have all the facts or misunderstand the scope of the two review efforts.” The outside firm and attorney general’s office only examined the legal conclusions in Burgdorf’s report, he noted, under the assumption that it was “full and accurate.”

In an email to the Tribune on Wednesday, Cranberg wrote that Burgdorf’s investigation “was so inadequate that I have heard complaints of it being a cover up.”

The regents, in their vote to commission an external report, set Burgdorf’s report aside, citing “fact discrepancies,” but have since declined to provide specifics.

Stillwell defended Burgdorf’s “fine report” and shrugged off Cranberg’s tally of the number of investigations.

“I think whether we’re in round four of one investigation or on the fourth investigation is just semantics,” Stillwell said. “The fact is, it’s been going on for the better part of a year.”

Stillwell countered Cranberg’s assertion that the initial report failed to address “significant issues” of interest to the regents, saying that Burgdorf did as instructed.

“If the report didn’t go further, it’s because it wasn’t intended to go further,” Stillwell said.

Cranberg said that the board is “doing its constitutionally mandated job by insisting on completing its investigation,” but Stillwell indicated that he believes the board should move on.

“There’s no useful purpose to be served by continuing to beat this dead horse,” he said.

Original story:

After two weeks of criticism from lawmakers about the University of Texas System regents’ controversial plan to seek an external review of a forgivable loan program run by the UT Law School Foundation, one regent, Alex Cranberg, is speaking out.

“The board is doing its constitutionally mandated job by insisting on completing its investigation, even if that investigation is not popular or understood in all quarters,” Cranberg told the Tribune in an email.

Lawmakers recently issued a letter to the board calling the outside investigation “unnecessary,” because the system’s outgoing general counsel, Barry Burgdorf, already examined the forgivable loan program, which supplemented the compensation of some faculty members at the law school and has since been terminated.

The foundation is an independently run nonprofit organization that provides financial support to the school. Its relationship with the university came under scrutiny following the 2011 ousting of the dean of the law school, Larry Sager, and the subsequent revelation that he had received a $500,000 forgivable loan from the program. 

At the time, University of Texas at Austin President Bill Powers said he had no prior knowledge of Sager's forgivable loan and that the dean's removal was necessary to calm a deeply divided faculty that had lost its sense of "common enterprise."

Burgdorf's subsequent report found that the loan program was "not appropriate" and called for it to be ended. The report was examined by an outside firm as well as by the Texas attorney general's office, both of which largely concurred with its conclusions. An internal system audit of related accounting matters is also ongoing. 

To many, the matter appeared settled. But on March 20, in a 4-3 rare split vote, the UT regents decided to set the Burgdorf report aside and commission an external review, touching off a wave of controversy.

The four regents in the majority cited “fact discrepancies” in Burgdorf’s report and “fact matters” that call into question the foundation’s independence but have since declined to be more specific. One of the three regents who voted no, Steve Hicks, expressed concerns that such a review could be pricey and contended it is merely a search for a hook on which to hang Powers — and he's not alone.

"This duplicative review, which targets the University of Texas at Austin for the obvious purpose of attempting to discredit its president, will be the fourth review of this matter,” 18 members of the Texas Senate wrote to the board. Their position was later supported in a separate statement from Lt. Gov. David Dewhurst.

But by Cranberg's count, there has only been one investigation of the law school foundation. Only Burgdorf’s report examined the facts surrounding the loan program, he said, while the other reviews merely checked Burgdorf's legal conclusions under the assumption that his investigation was “full and accurate.”

“The single investigation was so inadequate that I have heard complaints of it being a coverup,” Cranberg said.

Burgdorf was unavailable for comment. He submitted his resignation last month, and his work at the UT System will conclude in early May.

Gene Powell, the chairman of the UT regents, has previously said that the board would not comment about the matter until the external report was finalized. 

But on March 28, Powell sent a letter to legislators countering what he called a “fairly widespread misconception” that multiple investigations had been conducted and that significant money had been spent on the effort.

According to UT System estimates, the previous efforts of Burgdorf, the outside firm and the attorney general’s office cost the system about $36,600, which does not include $84,500 worth of administrative staff's time.

Hicks noted that a previous external review of the spending habits of former UT-Southwestern President Kern Wildenthal cost the system about $530,000. Erroneous accounts have since reported that the regents committed to spending about half a million dollars on the law school foundation review, but Cranberg anticipates the cost will be significantly less.

Lawmakers have urged the system to save money by using the attorney general's office for the review. House Appropriations Chair Jim Pitts, R-Waxahachie, filed an amendment to the budget that would prevent the board from being able to spend any state appropriations on such investigations in the future.

“We should be able to satisfy, promptly and at a reasonable cost, the board’s and public’s reasonable questions and concerns,” Cranberg said.

Cranberg contends that Burgdorf only interviewed a small number of key players, expressed concern that no transcripts of those interviews were made, and said specific requests of by regents were not addressed.

“Important parts of the approval process for and awareness of the Foundation remuneration other than to Dean Sager and other than for forgivable loans were not examined,” he said in his email. “We now know that the normal chain of command for such approval was altered with the effect that additional secrecy surrounded Foundation transactions. The secrecy, of course, led to abuses and to a climate of mistrust within the law school.” 

Cranberg questioned the motives and reasoning behind the spread of what he considers inaccurate information about the board’s efforts to have a deeper examination.

“Most of those citing multiple ‘investigations’ don’t have all the facts or misunderstand the scope of the two review efforts,” he said. “Others are possibly attempting to distract from the seriousness of the issue and diligence of the board. There are some who simply did not wish to inquire beyond a narrow scope.”

It appears regents had time to review the scope of Burgdorf’s report. It was first submitted to them in the spring of 2012, though a final version was not publicly released until November.

“In reading this report, it is important to understand its scope and the inquiries it attempts to make and answer," Burgdorf wrote in it, adding that it was not a broad investigation of the foundation or its inner workings.

“This report and recommendations focuses on U.T. Austin and how it interacts with the Foundation and internally manages the relationship with particular emphasis on the forgivable personal loan program and overall faculty compensation at the Law School,” Burgdorf wrote. “There might be larger inquiries that could be made about other aspects of a university’s interaction with a supporting foundation but such inquiries are beyond the scope of this report and recommendations."

Upon further review, Cranberg told the Tribune that, while he had questions about the execution, he did not take significant issue with the scope as written in Burgdorf's report, provided that it also included relevant consideration of the UT System's role in the matter.