Who’s Really at Fault in the American U. Scandal?

To the Editor:

Pablo Eisenberg’s opinion piece on American University (“When You Can’t Trust the Trustees,” October 27) is characteristically provocative but his conclusions are way off the mark.

According to Mr. Eisenberg, America’s universities have become “corporate structures” and their boards have become cabals of profligate businessmen content to do nothing but raise money and then squander that money on scandalous compensation packages for rapacious university presidents.

One wonders how such a corrupt system could produce 17 of the top 20 research universities in the world, as one recent survey concluded, or more than half of the Nobel laureates in physics, chemistry, medicine, and economics over the last decade.

A less ideological, more reasoned analysis leads to a very different, more limited, but extremely important set of conclusions. The sad spectacle at American University occurred not because of widespread systemic failures in American higher education, but because one institution’s trustees failed to observe core principles of sound governance.

A short list of good governance practices, effectively implemented, would have prevented this debacle. The list includes an active independent audit committee ensuring strong internal controls, outside auditors accountable to the board rather than the CEO, full board approval of CEO compensation based on complete and accurate disclosure, and complete public reporting of CEO compensation on the Form 990. This cautionary tale is well worth reading, but the moral is very different from what Mr. Eisenberg suggests.

Robert A. Boisture
Caplin & Drysdale
Washington