Regents’ Panel Insists UC Seek Way Out of Deal With Milken

Saying they wanted to leave no stone unturned, members of a University of California regents panel Thursday prevailed on administrators to look for a way out of a controversial contract that allows fallen junk bond king Michael Milken to keep 95% of profits from the sale of videotapes of his lectures at UCLA last fall.

At one point raising their hands in a mock motion of solidarity, members of the regents’ Finance Committee appeared unanimous in their determination to get out of the embarrassing legal obligation, which some branded as offensive and a raw deal for the university.

But they could not take formal action because the university’s contract with Milken had been put on the agenda by President Jack W. Peltason only as a discussion item.

Despite that technical hang-up, a spokesman said after the meeting that Peltason would abide by the regents’ sentiments and direct the university’s attorneys to “look into the contract and see if the other party will withdraw.”

That will not be easy, UCLA Chancellor Charles E. Young warned Thursday. Trying to dissuade the regents from tampering with the deal, Young said he would have “very great difficulty” approaching Milken about rescinding it and predicted that the convicted felon “will not be happy, and we are going to be faced with a confrontation that may very well result in a legal dispute.”

Yet Regent John G. Davies of San Diego retorted that the “sense of the regents is we want to leave no stone unturned to see if we can get out of this contract. . . . We may have to have Mr. Milken’s consent to do that, and he’ll say no. But I want to know we tried everything.”

Milken, the onetime junk bond dealer who was convicted of six securities violations, co-taught 10 three-hour lectures at UCLA’s Anderson Graduate School of Management last fall. As part of the agreement, the school allowed his fledgling Educational Entertainment Network to tape the lectures and collect 95% of the profits, leaving the university with 5%.

Although UC officials have defended Milken’s participation as an exercise in academic freedom, it has become a public relations albatross for the university. UCLA was ridiculed in the nationally syndicated “Doonesbury” comic strip, and last month two state senators appeared before the regents demanding that they try to get out of the contract.

The senators accused Milken, who could not be reached for comment Thursday night, of trying to use UCLA’s name to rehabilitate his reputation, and they said school officials were duped into a deal that gave them the short end of the profits while waiving virtually all their legal rights in relation to the videotapes.

They said UCLA officials, who signed the agreement last fall on behalf of the regents, were seduced by Milken and his family giving more than $3.3 million to the university, including $40,000 to the business school shortly before the contract was finalized.

Revisiting the controversy Thursday, UC officials said the contract did not appear to violate university rules regarding the use of its name or unofficial logo, but they conceded that there is no “comprehensive policy” to govern such commercial attempts to market lectures.

Regent Frank W. Clark Jr., senior partner in Los Angeles’ Parker, Milken, Clark, O’Hara & Samuelian law firm, criticized the contract because it may have unintentionally created a partnership with Milken by sharing in the profits, instead of receiving a royalty.

As partners, he said, the university also would be forced to share in any legal liabilities incurred by Milken. Meanwhile, UCLA officials waived the university’s right to rescind the agreement or even file an injunction against the former junk bond king, he said.

“There are serious legal problems with this document,” Clark said.

Regent Ward Connerly, a Sacramento land use consultant who was recently confirmed by the state Senate, called the contract terrible and “offensive to a lot of people.”

Connerly suggested that it might be appropriate for the regents to take back some of the contract powers it delegates to campus administrators, saying the university’s oversight panel should not have to find out about potentially embarrassing arrangements with notorious figures “after the fact.”

“I don’t want a contract with Louis Farrakhan or Charles Manson,” he said. Regarding the Milken agreement, he added: “I guess what we’re saying is that in this case poor judgment was exercised.”