A Fellow May Squirm a Bit in a Chair Endowed by Ken Lay

Keith Poole figured that he’d landed a plum job two years ago when he won a lifetime endowed professorship in political science at the University of Houston. The salary was high, and the research budget was generous.

Poole was proud to be known as the Kenneth L. Lay professor of political science. “It was a very prestigious title to have,” Poole said. “It isn’t now.”

“Now I get a lot of ribbing from friends who tell me Enron jokes and send funny e-mails asking whether Ken Lay wants his money back.”

For a variety of professors and university administrators, life hasn’t been the same since Enron Corp. collapsed and triggered nationwide furor over its business practices. It once was something special to be offered a Lay chair or an Enron professorship, but now some proud academics are squirming in their seats.

“It’s like holding the Al Capone chair,” said a laughing Robert S. Erikson, Poole’s predecessor in the Lay post at University of Houston and now a political science professor at Columbia University.

Yet, even as the jokes fly, three universities are soldiering on with plans to fill academic positions endowed in former Enron chairman Lay’s name--and by all accounts, applicants aren’t holding back.

In fact, a Nebraska economist nearing the end of his six-year Enron professorship is considering applying for another six.

And even if the nation’s roughly 40 Arthur Andersen professors of accounting find their titles somewhat of a liability these days, they aren’t exactly turning in their green eyeshades to protest the Andersen firm’s handling of Enron’s books.

The predicament of these academics illustrates two fundamental rules of higher education economics. Rule No. 1: More often than they care to mention, institutions of higher learning pocket big contributions for endowed chairs and campus buildings from people who land in society’s doghouse.

Rule No. 2: Don’t count on the schools to refund their dog-housed donors’ cash.

Morton Owen Schapiro, president of Williams College in Massachusetts and an economist with expertise in university finance, said schools too often appear to take their cue from an old joke in fund-raising circles: “The only thing wrong with tainted money is that there ‘taint’ enough of it.”

Robber barons and other reviled tycoons have a long history of bankrolling some of the nation’s finest universities. Leland Stanford, who built a railroad empire with exploited Chinese laborers, put up big bucks to found Stanford University. Steel kingpin Andrew Carnegie, whose company crushed union backers in the bloody Homestead strike, launched Carnegie Mellon University.

Professors typically argue that intellectual freedom is the real issue. They say that so long as big benefactors don’t meddle with their academic work, the name that comes with the money normally doesn’t matter.

“You don’t always carry the title of your chair as part of your uniform,” said Murray L. Weidenbaum, an economist who was the Ken Lay, Vinson & Elkins visiting scholar at Rice University in Houston for five months early last year.

Weidenbaum says he doesn’t put much stock in titles. Then again, he’s got a few to spare: He was the first chairman of the Council of Economic Advisors in the Reagan administration, an assistant secretary of the Treasury in the Nixon administration and today is the Mallinckrodt Distinguished University professor at Washington University (named after a respected business figure in St. Louis).

“Often, I just refer to myself as someone who teaches economics,” he said.

Whatever it is named, a well-endowed chair can be hard to resist. At the University of Missouri-Columbia, the open Kenneth Lay chair in international economics offers a salary of up to $180,000 for the nine-month academic year, plus money for research assistants and for travel to conferences.

“People would take a little ribbing for that kind of money,” said Kenneth R. Troske, a labor economist who is heading the search committee. He said there’s been no scarcity of applicants.

Officials of the university, which Lay attended as an undergraduate, say they are hopeful they will find a first-rate international economist to help upgrade their economics department. After all, said Michael Podgursky, who heads the department, no crime has been proven in the Enron affair.

“We’re very grateful to Ken Lay for giving us $1.2 million. Period,” Podgursky added. “Within our faculty, there hasn’t been a murmur of, ‘Let’s give the money back.’ ”

Student reaction has been similarly blase, said Patrick Terpstra, editor in chief of the Maneater, the official student newspaper. “The reaction has been pretty much nothing. Students aren’t really following the Enron scandal as much as I think the general public is.”

Terpstra, though, is personally peeved. If the decision were his to make, he “would get Ken Lay’s name out of there. I think a lot of people are associating this with somebody who contributed to the demise of 20,000 people’s stock portfolios and livelihoods. The greatest analogy I’ve heard is that it’s a guy who, when the Titanic sunk, he got on a life raft . . . and let everyone else drown.”

At Rice University, administrators have had to call off plans to fill two Enron chairs in the management school because of the company’s descent into bankruptcy reorganization. But officials said they still have a pledge from the Lay Family Foundation to complete the financing for a Lay chair in economics and a related research center, the Ken Lay Center for the Study of Markets in Transition.

“If it was the Adolf Hitler chair, that would be a different thing,” said Bob Stein, dean of the school of social sciences at Rice University and a member of the search committee.

He added that “whatever the source of money, I think the institution that accepts it is trying to do something beneficial with it. I’ve not had any candidates say ‘I don’t want to be the Ken Lay chair.’ ”

At the University of Houston--where Lay obtained his economics doctorate--officials still hope to add a Lay professor in economics, in addition to the existing Lay political science post filled by Poole.

University faculty who already have Enron-related titles--from the dozens of Arthur Andersen teachers to the couple of Enron and Lay professors--have shown no interest in giving up their jobs.

Mark Wohar, for instance, will continue as the Enron professor of economics at the University of Nebraska at Omaha until next year. After that, he may apply for a new six-year appointment.

“I’m as outraged as anyone about the dealings at Enron. But I have no bad feelings about the previous years that I’ve had the chair,” he said. “The money was given to the university in good faith, and I’m not embarrassed about it.”

Still, to give himself a break from the constant jibes, Wohar deleted the Enron title from his e-mail signature. “I was getting everything from ribbing to questions about my relationship with Enron from as far away as Australia,” he said. “I don’t have time for all of that.”

Insofar as town-gown diplomacy goes, the Lay, Enron or Andersen positions might not even be the most difficult to defend. Consider Harvard’s law and design schools, which have a combined endowment of $2 million from the family of Osama bin Laden, who is one of at least 50 siblings. The Bin Laden money finances short-term fellowships for visiting scholars.

Harvard officials emphasize, however, that the family has long dissociated itself from Osama, and there is no evidence that it has been linked to any terrorist activities.

Thomas I. White, director of the Center for Ethics and Business at Loyola Marymount University in Los Angeles, said universities would be well-advised to take a tougher stand toward donations with potentially tainted ties.

“It’s true we live in a society where people are presumed innocent until proven guilty, but we aren’t talking about a court of law here,” said White, who holds the Hilton chair at Loyola Marymount. “We’re talking about what message does a university send to the public and to its students about its values.”

White said he’s given the issue a lot of thought lately. He’s on the verge of launching a campaign to secure an endowment in the range of $5 million to $10 million for his ethics center.

“Frankly, when the whole Enron thing broke, I thought, ‘Well, I’m sure glad I’m not the Enron Center for Ethics and Business,’ ” he said.

Still, the University of Houston’s Poole said he isn’t doing anything to distance himself from the Lay name.

“I’m not going to change my title or my stationery. I’m not going to take it off my Web site. Why should I?” he said. “I didn’t have anything to do with it [Enron’s collapse]. After all, Ken Lay’s family and friends paid for it. The checks have cleared. I’m not going to kick the guy when he’s down.”

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Silverstein reported from Los Angeles and Hart from Houston.