Regent Conflict Of Interest Claims Addressed

Sept. 12, 2003

by Larry D. Brumley

The Baylor University Board of Regents received a report Friday from its internal auditor that said recent conflict of interest claims made against a number of current regents are "completely baseless and unjustified." Dr. Juan Alejandro, the university's director of internal audit and management, said his office examined charges of conflicts made in recent correspondence and newspaper articles.

"It is not a conflict of interest to care about Baylor, have children or friends at Baylor, make charitable donations, or to be involved in community activities that touch the university," said Dr. Alejandro. "That's what most of these complaints and criticisms have involved."

As an example, Dr. Alejandro cited the example of a conflict allegation against Joe Coleman because he has two children who work for Baylor and his law firm may represent the school in a future lawsuit.

"We looked at the pay records, and Mr. Coleman's children are being paid wages comparable to others in their positions," said Dr. Alejandro. "In addition, there is a possibility that Mr. Coleman's law firm will be representing the university in a lawsuit, but he will not have any involvement in that litigation, should it come to pass, and he did not participate in the decision to hire the firm."

Another conflict assertion has been made regarding Jim Turner, president and CEO of Dr Pepper/Seven Up Bottling Group Inc. because the company has a contract to distribute soft drink products on the Baylor campus.

"That contract was awarded in August 1997 through a competitive bid process, three years before Mr. Turner came on the Baylor Board," said Dr. Alejandro. "Their bid providing revenue to Baylor was several million dollars higher than the other bid. In late 2000, the athletic department recommended an extension of the exclusive vending rights contract, which was executed in December of that year."

Investigators also examined the university's insurance contract and the possibility of a conflict of interest involving Wes Bailey, president and stockholder in Bailey Insurance and Financial Services. Questions have also been raised about Mr. Bailey's role as an adjunct professor in the business school this fall.

"Mr. Bailey's insurance agency has served as the university's broker since the late 1960s, well before he came on the board. Furthermore, the university has historically employed an independent insurance consultant every three to four years to evaluate Baylor's total insurance program - both coverage and pricing -- and the work his firm performs on behalf of the university," said Dr. Alejandro. "Regarding the class being taught, he is being paid the same as other similar positions, and Mr. Bailey plans to donate his after-tax income to the endowment. The University is fortunate to have such expertise available to its students."

Regent Brian Harbour, pastor of First Baptist Church in Richardson, also teaches adjunctively at George W. Truett Theological Seminary. Dr. Alejandro reported that Dr. Harbour has been teaching at the Seminary since 1994, a year prior to being elected to the board. Furthermore, his salary is consistent with other adjunct faculty at Truett, so there is no conflict of interest.

The Board of Regents was also told there is no violation of the university's conflict of interest policy regarding Duane Brooks, who is the brother of David Brooks, Baylor's vice president for finance and administration.

"Duane Brooks is an appointee of the Baptist General Convention of Texas," Dr. Alejandro said. "We understand that there may be an issue regarding compliance with the convention's own conflict of interest policy in this case, and the University will be working with the BGCT to resolve that matter."

Baylor Regent Dale Jones said the Board plans to add a code of conduct for its members to provide further assurances to the university's constituents that its governing body is held to the highest standards of ethical conduct.

"It is clear that the Board will benefit from having a code of conduct," Jones said. "The Governance Committee has committed to delivering a proposed code of conduct by the November meeting."

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