Handling of conflicts of interest should be high on UBC’s governance reform

Any discussion of governance reform that will move UBC forward, and facilitate the task of the next president, must not only address the procedural irregularities around Gupta’s dismissal, but must also identify those who resisted the former president’s proposed changes and priorities, so that we can learn their reasons, their motives, and the extent of their reach to Board members and other power brokers.

The now famous leaked memo from the previous Board Chair to the former president suggests that he was preparing a case for removal based on style, character, communication skills, and other “personal deficiencies” of the former president. The relatively generous settlement given to Gupta points to a dismissal without any impeachable cause, more in line with keeping him quiet than reprimanded. But in the few interviews he gave after the leaks, the former president seems to be hinting at some organized resistance against his rethinking of priorities and refocusing on the academic mission.” He spoke on how “change can make some people uneasy.”

I suggest we pay more attention to these words. Who are these people that were resisting the refocusing on the academic mission? What are their connections to the Board, and more importantly, will they still be around, empowered and capable of stifling similar efforts by the next president, even if the latter is endowed with a Chancellor-approved dose of “emotional intelligence?”

A recent op-ed that appeared in two media outlets spoke volumes, though indirectly, to this issue and seems to carry an alarming answer. The author, who happened to be from the Sauder School of Business, was minimizing the scope of the governance crisis while pleading for the status quo. He was disparaging the leadership style of President Gupta while ignoring his strategic vision for UBC. He was fuming about a recent resignation of a governor/donor though it was totally unrelated to the faculty’s open displays of no-confidence. He was also laying all the blame for UBC’s woes on “the few friends of Arvind Gupta” in the Mathematics department. The bizarre op-ed can be viewed as a sequel to another by James Tansey, where he defends the actions of the former Board Chair/donor, while distorting Jennifer Berdahl’s perspective on why Gupta had resigned. What gives?

That the director of the Sauder-based Centre for Social Innovation & Impact Investing and his colleagues feel obligated to defend the actions of certain Board members is understandable. After all, the Sauder School is also home of the KPMG Research Bureau In Financial Reporting, of the Phillips, Hager & North Centre for Financial Research, and our current Chancellor seems to be the founding Director of the UBC Sauder School of Business Centre for CEO Leadership.

We may also accept that our colleagues in the Sauder School overestimate the reach of the UBC Mathematics department, not knowing that it is housed in the so-called “outhouse behind the crystal palace,” and unaware that the number of mathematicians roaming our university is a tiny fraction of the 800 of our colleagues who voted non-confidence in the Board.

But a transparent and accountable system should never tolerate UBC Presidents and Board members not being allowed to “speak out loud,” questioning hundreds of millions of dollars in commitments from capital and operating funds for non-core academic projects, just because an entrenched, entitled, and well connected fraternity had certified their business plans, their environmental case, and their contribution to “social innovation and impact investing.”

Some say that the “cozy relations” between the Sauder School and the UBC Board are natural and inevitable. I agree that if most government appointees on the Board are to be drawn from financial managers, developers, accountants and entrepreneurs, then it is obvious that, in one way or another, there will be a close connection to the Sauder School. And surely enough, many Governors seem to have “graduated” from various Sauder school advisory committees and councils to the Board of Governors. Some continue to participate.

But this only adds to the urgency of having these relationships and the so-called “Ivorywashing” closely monitored, since otherwise they are destined to create a perfect storm of bias, conflict of interest, skewed financial decisions, and worse of all, end-runs from Deans and individuals closely connected to specific trades and professions.

This is not to mean that Board members are unable to manage their conflicts. I will always remember and admire the strong, principled and courageous stands of former Chancellor Sarah Morgan-Sylvester and Governor Maureen Howe, including on deals and projects, where Sauder, their former alma matter, was implicated. These were the times when Boards supported the president and upheld their fiduciary responsibilities.

That UBC exploits, develops, and leases its relatively large land endowment with minimal academic focus puts it in a special category in terms of governance and oversight. The recent attempts to also make it some kind of a power utility, and a business model for experimental sustainability initiatives, make it even more so.

UBC’s involvement in so many non-academic ventures makes it an unusual university to govern and preside over. A review of its governance should call for a closer monitoring of the myriads of conflict-of-interest situations that such ventures are destined to create. Otherwise, no future president will be able to bring the university back to its core academic mission.

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6 Responses to Handling of conflicts of interest should be high on UBC’s governance reform

  1. Martin Barlow says:

    So how is Nexterra’s biomass plant at UBC performing? The Ubyssey article linked above was written 4 years ago. Did UBC waste $27 million, or has the plant been a spectacular success? (If the latter, I’m surprised we have not heard more about it.)

    • James Tansey says:

      It’s performing very well in terms of the thermal load. The fuel cost is below natural gas prices and it provides a significant amount of the campus heat load in the winter months. Some info here and we are updating the business case now based on actual performance. That document will be public:
      https://sustain.ubc.ca/research/signature-research-projects/bioenergy-research-and-demonstration-facility

    • Ghoussoub says:

      Martin, I wish I can answer your question. I see that Tansey did.

      Let me add that it is very hard to tell from the university’s brochures what’s going on. I know however that the project was delayed for several years (Board 4 in 2015, 5 years after Board 1) and that it had suffered several technical problems. It will surely not deliver what had been promised to the Board in 2010. For one, the steady increase in the prices of energy and fuel did not happen as predicted in Tansey’s models that were presented to BoG (and NO we’re not selling energy to BC Hydro!).

      But let me say, that the discussions around this project were the most informative and painful I’ve had to deal with during my six years on the Board of Governors. The amount of money involved was small compared to other capital projects, but this one had all the elements that illustrate the complexities of decision-making on the Board level and how diligent we need to be about the ethical aspects at that level of governance. Unless of course you are a rubber stamper.

      But also through this project, I got to witness first-hand the courage, integrity, and competence of very honourable government-appointed Board members. They were inspirational and are always on my mind.

      On the other hand, by sitting on BoG, one also confronts the sad reality that some faculty can sometimes be tempted to use their university credentials to give credence to business dealings and corporate interest.

      There is also another reality that a number of other capital projects at UBC have also been sold as research initiatives (“Campus as a living Lab!”) Hard to judge without proper peer review.

      All this can make a good subject for a Masters thesis in applied ethics.

      • James Tansey says:

        First, the models were not mine. They were built by UBC operations and paid consultants. The original design included heat and power generation. The power generation part was the real experiment and the benefit to researchers was from syngas production and testing in a small lab facility attached to the facility. In practice, there were some real challenges with the power generation part of the project.

        While you are correct that the project didn’t send power back to the grid, it did benefit from load displacement payments from BC Hydro, which compensate for projects that reduce electricity demand within the system.

        Fortunately, the thermal generation part, which still relies on syngas works extremely well and produces energy at a cost of around $3.50/GJ, which is lower than natural gas. In terms of funding, around $20m came from external sources with the balance paid by UBC. Operating in the thermal load alone, the payback period is quicker and the project had a positive IRR based on the reduced cost of future energy demand and the avoided carbon tax and carbon neutral government costs.

        I don’t know what faculty ‘business dealings and corporate interests’ you are talking about. I certainly didn’t have any and nor did any of the other faculty involved. And once the project gained traction, it was led and managed by UBC operations. While it doesn’t operate the way it was originally envisaged it was designed with an alternate use in mind that would still be of high value.

        Always good to get a grasp of the fact before speculating too broadly.

  2. Prof. Anon says:

    To Mr. Tansey – since you are reponding here in so many details, would you mind clarifying what exactly was your relationship with Nexterra? Your company seems to have extensive links with them http://www.offsetters.ca/about-us/current-news/2009/06/11/olympic-organizers-pick-bc-partner-to-offset-carbon-emissions https://www.biv.com/article/2009/12/james-tansey/ I would assume the UBC COI office folks were aware of these at the time you advocated the project?

    • James Tansey says:

      Thanks for your question. My COI statement at UBC explains my involvement in Offsetters.

      I have no stake or financial involvement in Nexterra and at the time the BRDF was being discussed, my role at UBC was as one of the academic directors of the Strategic Partnerships Office, reporting into the VP Research. Myself and a number of other faculty were involved in looking at the academic case for bringing the technology onto the campus but all investment decisions were made by UBC operations, the VP of Finance and ultimately, the UBC board.

      Around the Olympics, a number of clean technology companies were invited by VANOC and the Province to showcase their technologies as part of a carbon neutrality programme that also involved Offsetters. Those companies, including Sempa, Lignol, Ballard and Nexterra. In the end, Nexterra was not in a position to contribute to the offset programme, although they were recognized as a supporter. Offsetters did not receive any funds from Nexterra and has not undertaken any consulting work for them. But I do think Nexterra is an important example of a local clean technology company that is trying to change energy supply solutions.

      The reason I know a lot about the technology is because I use the BRDF as a case study when we teach about clean technology on the campus. I co-authored a chapter on the UBC case, that includes many of the challenges the teams faced when implementing a new technology, which is why I am familiar with the numbers. I was also involved in the CIRS building for many years and have been a champion for the Living Lab concept.

      I hope that answers your questions.

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