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No illegalities in Suffolk Univ. conflict-of-interest case, AG says

‘Related-party transactions are not intrinsically inappropriate. ... Boards must continually review whether these transactions are in the best interests of the organization.’ ‘Related-party transactions are not intrinsically inappropriate. ... Boards must continually review whether these transactions are in the best interests of the organization.’
By Milton J. Valencia
Globe Staff / July 10, 2009
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Suffolk University failed to follow its own procedures and other safeguards in monitoring a potential conflict of interest between a trustee and his lobbying contract with the institution, the state attorney general said yesterday after a review.

Martha Coakley said that the review of the “related-party transaction’’ with trustee Robert B. Crowe found no legal violations, but that the university could have done more to follow appropriate policies.

“As we have noted on many occasions, related-party transactions are not intrinsically inappropriate,’’ Coakley said.

“However, to assure that the best interests of the organization are always placed first, boards must continually review whether these transactions are in the best interests of the charity.’’

Coakley said the review was limited to legal violations and did not consider whether Suffolk’s dealings with Crowe were in the university’s best interest.

Based on Coakley’s review, the university has since agreed to implement new safeguards and conduct regular reviews of its dealings with trustees and other employees.

The attorney general said the review is officially closed.

Suffolk released a statement yesterday saying, “We appreciate the attorney general’s recommendations regarding disclosure and review procedures for related party transactions, and are in the process of implementing those recommendations.’’

The attorney general’s review occurred after a Globe story in November highlighted concerns about Crowe’s involvement in awarding a lucrative compensation package to university president David J. Sargent.

Meanwhile, Sargent had renewed a $10,000-a-month contract with Crowe’s lobbying firm to represent Suffolk’s interests in Washington.

The original contract the university signed with Crowe’s firm, now called WolfBlock Public Strategies LLC, in 1997 included a proper process in which Crowe left a meeting and did not participate in any vote.

The attorney general’s report stated, however, that Suffolk has shown no evidence that it has conducted a review of the contract since to determine whether it is in the university’s best interest.

Also, while the university disclosed in regulatory filings over several years that it had engaged in a $120,000 yearly contract with a trustee, according to the review, it did not identify the trustee, as required.

Later, the university amended the filings to identify Crowe.

Also, each filing stated that the respective contracts had been voted on by the university’s board of directors, though the attorney general’s review found no evidence that a vote was ever taken.

According to an agreement with Coakley’s office, Suffolk intends by Oct. 1 to review its plans and develop ways to give its board of directors a stronger role in determining contracts that best serve the university.

The university will also review its disclosure statements to make sure that all filings are up to date.