Trusting Haldeman
By Emily Esfahani-Smith | Monday, April 21, 2008
On pages 6-7, the Review examines the character of Charles “Ed” Haldeman, who chairs the College’s Board of Trustees. The allegations made against him are certainly serious in their own right—but beyond that, they pose a problem for the Dartmouth community as a whole. Namely, should we trust this man to lead and, more importantly, reform our college during this precarious point in its history?
Haldeman has the reputation of not only being a reformer, but of being an ethically minded reformer. In October 2003, Haldeman was promoted to CEO of Putnam Investments, a mutual fund company based in Boston, to clean up a corporate scandal, which made national headlines in 2003. Putnam Investments was the first mutual fund company, among many, to be convicted of fraud by the SEC within a year after the scandal broke; the scandal was one of the worst in American financial history.
Haldeman stepped up to steer Putnam in the right direction, away from its then ethically challenged behavior with avaricious investors and shareholder negligence. So the story goes. According to recent allegations by whistleblower Peter Scannell, however, Haldeman may not have been the right man for the job. In fact, the record suggests quite the opposite: when the fraud was occurring, Haldeman, as head of investments before he was promoted to CEO, allegedly did little to nothing to stop it. Beyond that, the record suggests that he may even have impeded the investigation of the scandal by either passively or actively overseeing the obfuscation that followed.
Ultimately, The Dartmouth Review does not yet know whether Haldeman’s involvement in the scandal was direct and active or indirect and passive. What the Review does know, however, is that according to Putnam’s Code of Ethics, Haldeman did little to protect the people that he had a duty to protect: the shareholders. All of them. Currently, Putnam Investments is facing a class action lawsuit in a US District Court in Maryland for violating its fiduciary duty to shareholders in the scandal.
These days, there are analogies to be drawn between the Putnam imbroglio of 2003 and the power plays taking place at Dartmouth College today: the College is attracting the attention of national media for “reforms” that are being enacted by the likes of Chairman Haldeman in the name of good and ethical governance. Such reforms include the controversial board packing scandal. The college is not only facing a lawsuit that challenges the legality of these reforms, but its current president is stepping down as a result of such reforms; as a result, a search for a new leader, a new president, has begun. In this next year, as the lawsuit develops, and as the presidential search committee—co-chaired by Chairman Haldeman and trustee Al Mulley, see page 2—deliberates on a new candidate for president, Chairman Haldeman will necessarily emerge as the College’s pro temp leader.
Given that Chairman Haldeman is attempting to once again implement “reforms,” this time at Dartmouth, it may be wise to step back and ask what these so called reforms amount to, how they are being enacted and why. Are these reforms ethically solid and in the best interest of Dartmouth and those who love her, as Chairman Haldeman and his gang would have us believe they are? Was the implementation of these so-called reforms advanced in good faith? Are they transparent, or are they behind closed doors? Is deception, tomfoolery, and “thuggery”—to quote an Association of Alumni executive member, Frank Gado’s description of the reform process—being used to cover up questionable behavior?
When these questions are answered, as they have been in past issues of the Review and continue to be (see the pullout), it seems that under Chairman Haldeman, Dartmouth is faring little better than Putnam: both Putnam and Dartmouth are faced with a lawsuit for activities that are not only unethical, but may very well be illegal as well.
In Putnam’s case, the shareholders’ rights were violated; in Dartmouth’s case, the alumni and students’ rights are being violated. When alumni voted down the first disastrous attempt to thwart the democratic process of alumni governance—the proposed alumni constitution of 2006—even President James Wright told the Alumni Council on December 1, 2006, “It is my view that all of this signals that it is time to give the efforts at alumni governance reorganization a rest. Let us work with the existing structure.”
This did not satisfy Chairman Haldeman and his rear- guard. Rather, a governance committee, which he sat on, secretly met for six months and decided to dramatically alter the structure of the Board, overthrowing the 117 year tradition of parity between elected and appointed trustees.
When the Association of Alumni strongly objected to Haldeman’s proposed reform to the Board’s structure, “the administration defunded the Association of alumni.” The administration did this, “after consultation with Board Chair Charles ‘Ed’ Haldeman and President Wright,” according to the petition trustees’ amicus curiae brief, filed in the lawsuit. With the funds they could have had, but were denied, the Executive Committee of the AoA would have sent a letter to alumni, informing them of Haldeman and the rest of the Governance Committee’s rash decision to take away the alumni’s right to vote.
To defend himself, Haldeman assures alumni that the democratic 1891 Agreement “doesn’t promise parity.” He goes on to say, “The Board’s 1891 resolution was simply a non-binding resolution of the Board. It’s one of many resolutions that have been adopted over the years regarding governance, and one the Board is free to amend, in fact is required to amend, if it determines that it’s in the best interest of the College to do so.”
He then claims that by adding eight appointed members to the board, thereby reducing the number of elected trustees to one third from one half, the Board is actually reaffirming “its commitment to alumni democracy and alumni trustee elections.”
For the record, here are some quotes from the 1891 Agreement: the trusteeships would be “so arranged that our vacancy therein will regularly occur on the Monday following each Commencement” and alumni “may so nominate for the election of his successors in such Trusteeships.” That is, the Agreement would apply to each successive vacancy on the Board of Trustees, and does not merely provide “for the alumni to nominate the next five trustees,” as Haldeman asserts.
Haldeman’s “reforms” at Dartmouth will change the character of the College. Two related questions emerge: does Haldeman have the right to change the College so drastically, and even if he does, should the Dartmouth community trust him to do so? Given the history of the College, the answer to the first question is no; given the parallel that exists between how Haldeman allegedly led Putnam and how Haldeman is leading Dartmouth, the answer to the second question must also be no. n
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