By Jon Cassidy | Watchdog.org
For years before a forgivable loan scandal forced him to resign as dean of the University of Texas Law School in 2011, Lawrence Sager was running up annual six-figure bills on a credit card paid for by the UT Law School Foundation.
From 2007 to 2010, Sager racked up $401,498.29 on that card, all of it paid by the foundation, apart from tens of thousands in other expenses for conferences, computers, club dues, food, travel, storage units and other items.
By comparison, when Bill Powers was dean of the law school, his credit card expenses were far lower — $6,209.15 in 2004 and $9,260.62 in 2005 — although strangely enough, the foundation continued to pay various bills for Powers into 2007, more than a year after he became president of the university.
In 2011, some members of the foundation’s board objected to Sager’s “excessive” expenditures and reined them in, according to a long-delayed report by the attorney general’s office released late Friday.
The report flatly contradicts an earlier internal investigation that attempted to absolve everyone at UT of any involvement in covering up an off-the-books compensation program at UT Law that violated system rules. The new report describes “a climate of non-disclosure” around the program.
Sager was so keen on keeping the details of his faculty perks program secret that he used public and private funds to settle a dubious lawsuit by a professor that threatened to expose the program, according to the new report.
The report offers news both good and bad for Powers: It raises new questions about whether his own compensation from the foundation was properly authorized, but it also provides new witnesses (names redacted in the version released Friday) who say he didn’t know about Sager’s half-million dollar forgivable loan.
In all, the foundation has spent more than $1 million in compensating and reimbursing Sager. That’s just a fraction, however, of the $68 million the foundation has spread around UT during the past decade, most of it compensating the school’s faculty and administrators.
The question the attorney general’s report does not answer, or even ask, is whether the members of the Law School Foundation have received anything in return for their largesse. Reporting by Watchdog.org has established that many children of generous foundation members have been admitted into UT Law, although there is little evidence that would cast doubt on their qualifications.
That question of undue political influence on the admissions process is the subject of another investigation that’s nearing completion. One place to seek answers would be a stash of 70,000 emails that Sager kept after stepping down as dean.
After John B. Scott, the former deputy attorney general who wrote the new report, learned of those emails, UT apparently recovered 35,000 of them from Sager. Scott did not examine those records in his review.
Most of the turmoil at the University of Texas in recent years can be traced back to a report the UT System published on Oct. 15, 2012, regarding an investigation into the Law School Foundation conducted by Barry Burgdorf, a system attorney who was pressured to resign when a majority of the Board of Regents came to doubt it.
Regent Wallace Hall and several other board members thought that Burgdorf simply hadn’t dug very hard. Powers’ many friends and political allies decided that meant Hall’s real aim was to dig up dirt on Powers.
The first footnote of the first sentence of the Burgdorf report expresses the whole: “There exists no evidence that anyone at the Foundation or the Law School attempted to or did conceal the forgivable personal loan program which is the primary focus of this report. The forgivable personal loan program was simply not known or understood outside the immediate Law School community.”
The new report, in contrast, faults Sager for keeping the program secret, despite a regents’ rule forbidding employees from accepting money from university foundations without approval by the chancellor.
The report says that “under Dean Sager’s leadership the Law School provided incorrect or incomplete responses to requests for salary information by both University management and the public pursuant to the Texas Public Information Act. To settle a lawsuit, both Foundation and public funds were expended in order to paper over a climate of non-disclosure.”
Scott also faulted Sager for concealing the $500,000 forgivable loan he procured for himself, reporting that “the Law School maintained two forgivable loan lists — one that contained Dean Sager’s $500,000 forgivable loan and one that excluded that particular loan.”
When a professor filed a sex-discrimination lawsuit over the secret loans, “Sager indicated that the matter should be settled, at least in part, because he believed if the full picture of the Law School’s compensation package were to become public it would be very damaging to the Law School and the University. Importantly, Dean Sager himself had received a $500,000 forgivable loan that would have been publicly disclosed, although Sager specifically denies this was a concern.”
According to a partially redacted footnote, Burgdorf knew about the settlement agreement.
Sager has long maintained that Powers knew of his loan, which Powers has denied. Although key names are redacted in this version of the report, it appears that one or possibly two members of the Law School Foundation board support Powers’ version.
The report also shines light on compensation that Powers received from the foundation.
In early 2001, when Powers was dean of the law school, he signed a $325,000 deferred compensation agreement with the foundation. Several administrators above him at the time were informed of the agreement and approved of it, although there’s no record that a necessary sign-off by the chancellor was obtained.
The purpose of these agreements, whether they’re called forgivable loans or deferred compensation, is to act like “golden handcuffs” for valuable employees, guaranteeing them a bonus if they ignore suitors at other universities.
On Dec. 14, 2005, nine days after Powers was named the new president of UT, the foundation president at the time, Kenneth Roberts, agreed to give him a check for an additional $115,000.
That payment was approved by the chancellor at the time, although it’s not mentioned in the minutes of either the foundation or the board of regent’s meetings beforehand.
“The approval of the payment was premised upon it being a payment for deferred compensation,” Scott writes. “That basis was clearly what Powers and others believed at the time. (Redacted) recollection and the lack of supporting documentation do not support this belief today.”
That $115,000 payment wasn’t widely known until the Austin American Statesman reported it last April, although the newspaper did not report the payment was not part of Powers’ compensation agreement, and that it came after he was named president.
Powers received $256,292 from the foundation in 2006 and another $379,626.87 in 2014, representing the balance of his agreement, plus interest.
Contact Jon Cassidy at [email protected] or @jpcassidy000.
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