Yale drops economist for 'irregularities'

Yale University has asked for and received the resignation of a prominent, tenured professor -- and former faculty member at Harvard University's Kennedy School of Government -- citing ''financial misconduct and irregularities" at his institute as the reason for his departure.

In a statement released yesterday, Yale officials said that Florencio Lpez-de-Silanes, 38, a professor at the university's School of Management and director of the International Institute for Corporate Governance, would be placed on unpaid leave until June, when his resignation would take effect. A spokesman, Tom Conroy, declined to elaborate on the nature of Lpez-de-Silanes' misconduct, saying only that ''appropriate corrective actions have been taken."

Lpez-de-Silanes did not respond to phone calls or an e-mail yesterday, and Jeffrey Garten, dean of the School of Management, did not return a phone call. Colleagues who learned of the charges against Lpez-de-Silanes at a meeting last month convened by Garten and the university's general counsel, Dorothy Robinson, were told that Lpez-de-Silanes had failed to properly manage the research assistants assigned to him and that he had padded his expense accounts. They were also told that Lpez-de-Silanes had made financial restitution to the university.

''I made a mistake and I deeply regret any unintended harm," Lpez-de-Silanes said in a statement issued by his lawyer, Peter Fleming III. ''I have taken appropriate corrective steps with all affected parties and I can offer no excuse except the intensity of my focus on my work. I am leaving Yale because it is the right thing to do for the Institute and all concerned."

''It is extremely rare for a university to withdraw tenure from a member of the faculty or to ask him to resign," said James Freedman, the former president of Dartmouth College and of the University of Iowa, who now lives in Cambridge. ''There are a whole series of actions the university has to go through if they want to take away tenure involuntarily. Usually, people fight it."

Lpez-de-Silanes is a renowned, globe-trotting economist and financial adviser who has worked for the World Bank and the International Monetary Fund on questions of corporate governance. He has advised the governments of Russia, Mexico, Egypt, and several other countries ''on issues of financial markets' regulation, corporate and bankruptcy law reform, industrial policy, and privatization," according to his Yale website.

He has also won many awards, having twice been honored by the Switzerland-based World Economic Forum as one of the world's 100 outstanding global leaders.

Yale's president, Richard Levin, an economist, and Garten worked together to woo Lpez-de-Silanes away from Harvard's Kennedy School of Government to open Yale's new corporate governance center in 2001. The following year, the Yale Daily News quoted Lpez-de-Silanes as saying he was happy to have left Harvard for the Yale management school: ''It's a happening place."

University sources familiar with Lpez-de-Silanes' case said Yale first began questioning his accounts in September, following up on complaints from low-level staffers at the School of Management. Lpez-de-Silanes retained Fleming as his lawyer, and decided to resign and reimburse the university for his accounting miscues, rather than to avail himself of the administrative remedies that protect tenured faculty from involuntary dismissal.

Two of Lpez-de-Silanes' colleagues agreed to discuss his case, asking not to be identified. One cited the difficult conditions under which the professor's research assistants worked as the initial source of his conflict with Yale. Both professors agreed that Lpez-de-Silanes' financial improprieties were relatively small-scale: ''The sums involved may be less than what the Boston Globe will spend on the paper costs for this story," one professor e-mailed. ''I believe most of the issue was just stupid carelessness on Florencio's part and not anything fraudulent. (I believe that a big part was insufficient administrative support, so he managed to screw up some of his records.)"

Lpez-de-Silanes' future plans could not be ascertained. His lawyer, Fleming, said that no litigation has been filed in relation to his client's resignation.

Alex Beam can be reached at beam@globe.com