Boston University trustees may be benefitting from conflict of interest transactions and BU may be failing to properly disclose them, according to a report released Tuesday.
The report, published by Boston-based think tank Tellus Institute and partially funded by Service Employees International Union Local 615, a labor union for service workers at colleges, alleges that 70 percent of the 20 Massachusetts private schools studied did business with at least one firm affiliated with one of their trustees.
This kind of relationship has the potential to create a conflict of interest, according to the report, and many schools, including BU, have written policies to manage and prevent potential conflicts of interest.
“In a majority of cases reviewed in this study, errors and omissions in reporting raise questions about the quality of information that schools are providing to the public and the effectiveness of the current transparency system,” the report said
The study ranks BU, Harvard University, Tufts University and Williams College as some of “the worst offenders.”
“Boston University, one of the worst offenders, provides a case in point when it comes to the clear identification of trustees who are interested persons because of their affiliation with firms doing business with the university,” the report stated.
The report cited an example from BU’s Internal Revenue Service Form 990, a federal tax return form, for the fiscal year 2010. The form’s Schedule L requires the school to list the names of the interested persons in business transactions.
However, the form lists three company names rather than individuals: Barnes & Noble College Bookstores, Dell, Inc. and Blue Cross Blue Shield of Massachusetts.
The names most likely omitted were John Battaglino, senior vice president of Barnes & Noble, Ronald Garriques, former president of the Global Consumer Group at Dell, and Cleve Killingsworth, Jr., former chair and CEO of Blue Cross Blue Shield of Massachusetts, according to the study.
Battaglino is a former BU trustee and current trustee emeritus. Garriques and Killingsworth serve on the Board of Trustees at BU.
However, BU officials said this is not an indication of improper disclosure and conflict of interest transactions committed by the school.
“The reason that we disclose them the way we do is because of where it asks who the interested party is, to whom do we pay the money, we pay the money not to any individual, we pay the money to the company in question,” said Senior Vice President Todd Klipp, secretary of the Board of Trustees and legal counsel for BU.
The form lists the company names because BU buys books from Barnes & Noble, computer equipment from Dell and health insurance for its employees from Blue Cross Blue Shield, Klipp said.
“It doesn’t represent an attempt to hide anything, it represents a good faith effort to comply with the filing requirements as we understand them,” he said.
Klipp said an absolute prohibition of these transactions would block BU from using a number of large vendors, and would not allow BU to purchase books from Barnes & Nobel, computers from Dell or healthcare for its employees from Blue Cross Blue Shield.
“I think most experts would agree that these kinds of relationships can provide significant benefit to the institution provided that they are carefully monitored and are done at arms length, and that is precisely what we do and what we have done for many years now,” he said.
According to the report, trustees benefiting from conflict of interest transactions should be disclosed to the public. The report suggested the recent financial crisis may have had some effect on profits gained by private trustees.
“Given the kinds of divided loyalties one routinely observes between private gain and public purpose, it should come as little surprise that the financial crisis proved simultaneously to be a stewardship crisis on far too many campuses,” the report stated.
However, Klipp said any private benefit gained by the trustees was either minimal or nonexistent. The trustees involved with Barnes & Noble, Dell and Blue Cross Blue Shield derive absolutely no profit from the transactions.
“I don’t think there is any factual basis for anyone to say that trustees are reaping windfalls as a result of these relationships,” he said. “It’s just not the case.”
CORRECTION: The original story said John Battaglino was both a trustee emeritus and the executive director of student activities and operations. John Battaglino Sr., to whom this story refers, is only a trustee emeritus. His son is the executive director of student activities and operations.
This is an account occasionally used by the Daily Free Press editors to post archived posts from previous iterations of the site or otherwise for special circumstance publications. See authorship info on the byline at the top of the page.
BU has had some pretty unlucky events happen over the last few months. Just when you think it can’t get any worse…
There was a mistake in reporting here though:
“Battaglino is a former BU trustee, current trustee emeriti and executive director of student activities and operations.”
The former trustee and current emeriti is presumably 20-30 years older than the directory of student activities. They are father and son.
I’m interested to see what becomes of all of this. The whole setup reeked of corruption, and I only got more and more suspicious as my time went on there that a mass amount of BU’s undergrad programs were there as cash machines fill the pockets of those lucky enough to be in on it.
Hey just wanted to give you a brief heads up and let you know a few of the images aren’t loading properly. I’m not sure why but I think its a linking issue. I’ve tried it in two different browsers and both show the same outcome.