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Professors say USF ethics endowment is being used unethically

TAMPA — The University of South Florida received nearly $2.2 million a decade ago for an endowed professorship in business ethics.

Today no such position exists.

Now, two professors contend that's a "possible inappropriate use of funds."

Business professor Marvin Karlins and associate business professor Robert Welker made the allegation in a complaint filed Monday with USF's compliance office.

"Ten years have passed, and there ain't nobody sitting in that chair," Karlins says. "They take $2 million, and they sit on it."

That's not true, according to USF administrators. They say the annual earnings from a $2 million endowment won't cover the salary of a top scholar, who might make $200,000 a year.

So the money pays for other academic activities on both ethics and sustainability, the study of environmentally sound and socially responsible business practices.

"It's a program we're really proud of," USF College of Business dean Robert Forsythe said.

At issue is a USF endowment created with $1.25 million from the Exide Corp., plus $937,500 in state matching funds.

In 1999, Exide paid the money to USF to help settle a Florida Attorney General's investigation into allegations that it sold auto batteries that were defective, used or mislabeled.

At the time, an Attorney General's news release said the $1.25 million would go to USF "to establish an eminent scholar chair in business ethics."

"This will give us the ability to attract a major scholar in business ethics," then-USF president Betty Castor said.

A later, separate agreement between Exide and the USF Foundation said the money would go for "an endowed professorship for business ethics."

In their complaint, Karlins and Welker say it was "specifically ordered that the Exide money would be used to create an endowed professorship for business ethics.''

"To do otherwise is a clear breach of contract," they say, one that could have "serious legal implications" because USF received state matching funds.

"We also find a certain irony in all this," they said. "A corporation fined $1.25 million for unethical behavior now finds that USF is using that money unethically."

A university spokeswoman said the complaint will be investigated. USF's Office of University Audit and Compliance investigates claims of fiscal misconduct. It coordinates with university police, the general counsel's office and other USF offices.

"I welcome an internal audit," Forsythe said.

The Attorney General's Office says it does not have the authority to force USF to use the money for a specific purpose.

"Clearly, our office did want USF to create an endowed chair," attorney general spokeswoman Sandi Copes said in an e-mail to the St. Petersburg Times.

But USF was not a party to the attorney general's settlement with Exide, she said. USF officials say they know of no separate agreement that puts conditions on the matching funds.

Today, there is $1.7 million in the Exide endowment because of investment losses that have affected USF's overall endowment of nearly $400 million.

USF uses income generated by the Exide endowment to:

• Pay annual stipends of $10,000 to three faculty members. Sharon Hanna-West is the Exide distinguished lecturer of ethics and sustainability. Christopher Thomas is the Exide professor of sustainable enterprise. John Jermier is the Exide distinguished professor of sustainable enterprise research.

This year, USF also paid $16,800 in Exide funds in hopes of keeping Michael Barnett, an associate business professor who is going to Oxford in the fall to head a center for corporate reputation.

• Support four annual competitions at which business students analyze companies, including their efforts at corporate responsibility. Exide money pays $100 to each winning student.

• Launch an annual symposium on sustainability. The most recent event attracted 3,000 people and led to USF president Judy Genshaft signing a pledge to create a greener campus.

USF administrators scaled down their plans because the interest earned by an investment of $2 million was not enough to attract and pay a top scholar, according to a March 2000 letter to the state from then-business dean Robert Anderson.

With a 5 percent rate of return, the endowment would generate about $100,000 a year. But Forsythe said a top business scholar could command a salary of well over $200,000 a year.

Castor left the president's job in 1999 and said she couldn't pass judgment because she wasn't involved in detailed discussions of how the Exide money would be used.

"It seems like a lot, but it's tough to pay for a full scholar on that amount," she said.

Forsythe also suggested that Welker and Karlins are driven to stir things up for other reasons. Each has filed a grievance against USF over their summer school pay and class loads, and Welker is the chief negotiator for the faculty union.

They deny it, saying their complaint will not help their cases.

Hanna-West, one of the Exide faculty members, said she respects both men professionally but "they're angry about other things."

"Because of that they went looking for some dirt," she said. "That's not ethical in my opinion."

Professors say USF ethics endowment is being used unethically 07/14/09 [Last modified: Thursday, July 16, 2009 9:45am]
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