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Tuesday, May 25, 2004

Diamandopoulos is an Attorney General's Best Friend

Universities should be more careful. If Boston University had been more careful, it would not have flushed millions of dollars down the toilet to make Daniel Goldin go away (see UD, 1/10/04, "Money Blindness"). If Cornell University had been more careful, it would not have had to deal with the embarrassment of indicted felon Mark Belnick on its faculty (see UD, 3/1/04 and 3/16/04, "Teaching Today"). If Claremont College had been more careful, it would not have elevated to sainthood a professor with a not-inconsequential criminal record who turned out to have hate-crimed herself (UD, 3/18/04). If the University of Colorado had been more careful...well, you know about that one (UD, 3/25/04).

If Adelphi University had been more careful, it would not, a few years ago, have had to fire its entire board in order to get rid of a university president whose expense account routinely featured such items as a $454.65 bar tab, which included, according to the Chronicle of Higher Education (12/18/98), "$150 glasses of cognac that he shared with [John] Silber, a former Adelphi trustee, who later said that he had been unaware of the cost of the drinks."

Ooh, wait, Professor Diamandopoulos, selfsame ex-president of Adelphi -- he is currently living semi-underground as a professor of moral philosophy (you can't make this stuff up) at Boston University, a position to which he was appointed, despite unimpressive credentials in his field, by cognac consigliere John Silber -- is going to turn out to be pertinent to TODAY's post!

Eliot Spitzer, New York's attorney general, has been chatting about ex-president Diamandopoulos... Journalists have tried to contact Diamandopoulos about this, but he is too busy pondering the age-old problem of good and evil and doesn't want to be disturbed... (The BU philosophy department website provides no information on Diamandopoulos, but here's a sample comment about him from a recent student - one of fourteen comments, mostly negative, on the Rate My Professor website -- "Be prepared to teach yourself from the readings. Google his name and find out about his moral character and then see if you'll stick around to hear him babble in his designer duds."). Anyway, we'll get back to him in a minute.

If New York University had been more careful, it would not have packed its board of trustees with unsavory businessmen, one of whom, Richard Grasso, also recently got an honorary degree from the place (Grasso never graduated from college, which to me only makes his rise from modest beginnings more impressive, but he apparently felt otherwise, and fudged on the matter for quite some time, reportedly claiming a degree he didn't have).

Cheek by jowl with Mr. Grasso on NYU's board sat his generous and pliable friend Kenneth G. Langone, former chair of the New York Stock Exchange's compensation committee (appointed to the position by NYSE head Mr. Grasso, certes ... Apparently John Silber was head of the compensation committee at Adelphi during the Diamandopoulos jubilee...I think there's an essay on homosocial bonding in here), and largely responsible for Mr. Grasso's rather controversial (see page one of today's New York Times) severance package from the exchange, an organization which is, like a university, a not-for-profit.

NOT. "Mr. Grasso's total compensation," notes today's NYT, "was...close to two hundred million dollars."

Despite Mr. Grasso's gracious willingness, once the merde hit the ventilateur, to give back forty eight million, he was forced to resign in disgrace.

Anyway, let's see, he's still got around one hundred and fifty million... He figures he'll take his toys and go home... But now Attorney General Spitzer is suing to make him give back one hundred million ['"You can't pay the head of (a) not-for-profit that much money," Spitzer said.'] and ... Jesus Mary and Joseph! That only leaves fifty million! What the fuck!

So now everybody's screaming and suing and Mr. Grasso is in a very principled way refusing to give up one cent (here he is in today's Wall Street Journal: "For me, this dispute has never been about money.") and his friend Mr. Langone (also named in the action and already up to his neck multitasking other unrelated lawsuits) has eloquently defended him ("I believe that Dick's pay is fair and reasonable.")...

Jack O'Dwyer, a "veteran public relations watcher," quoted by USA Today [9/17/03], sums it all up: "No PR can possibly help Grasso. There is no answer to pure greed."

Still, Mr. Grasso is certainly in a position to hire good lawyers, so Spitzer is working extra-hard on his case -- and that is where Papa Doc Diamandopoulos comes in:

NEW YORK, May 24 (Reuters) - New York Attorney General Eliot Spitzer's legal playbook for recovering some of the $140 million paid to former New York Stock Exchange Chairman Richard Grasso is likely to draw on state law applied to Adelphi University seven years ago.

While the relative serenity of Adelphi's academia differs greatly from the Big Board's frenetic, bare-knuckled commerce, they share an important characteristic that will guide Spitzer in the pursuit of Grasso's bonanza: Both are not-for-profit corporations under New York state law.

"As a not-for-profit, (the NYSE) lives and exists within a different framework," Spitzer said at a news conference on Monday announcing a civil lawsuit against Grasso. Compensation must be commensurate with services rendered, he added.


In the Adelphi case, the New York State Board of Regents removed all but one of the trustees overseeing the private university, based in Garden City, New York.

With the trustees removed, the president -- who technically could not be removed by the regents -- later left the school.

The Board of Regents said the trustees permitted then-university President Peter Diamandopoulos to pocket a "compensation package unparalleled among presidents of comparable universities in the face of plummeting student enrollment, rising tuition and fees, shrinking student services and course offerings."

In their argument, the Regents cited New York state's Not-for-Profit Corporation Law. Such entities, as stated in the document, have the power to hire executives and "fix their reasonable compensation ... Such compensation shall be commensurate with services performed."

Diamandopoulos, now a faculty member in the Boston University philosophy department, did not immediately return a call seeking comment. He is scheduled to teach History of Ancient Philosophy in the fall 2004 semester.

He went to work for Boston University under John Silber, former BU president who also was one of the Adelphi trustees removed from office by the Regents in 1997.

Hired by Adelphi in July 1985, Diamandopoulos was provided with a starting base salary of $95,000 per year and a retirement fund match of 13 percent of his salary. The university also provided him with a house, car, $17,000 for domestic expenses and other benefits.

At the end, the Regents said, he was earning about $330,000 in base salary for the 1995-1995 academic year. Adding in all the other benefits, the Regents' report stated his overall compensation was nearly $840,000.

The Board of Regents oversees all educational institutions in New York, public and private.

What particularly interests Spitzer is that, as the Boston Globe[12/5/98] reported, when "state Attorney General Dennis C. Vacco sued to recover what he alleged were 'millions of dollars misspent by former Adelphi University trustees to support a lavish life style for the college's ex-president,'" he managed to get quite a lot of money back. "As part of a settlement reached last month, Mr. Diamandopoulos did not admit any wrongdoing but agreed to surrender his tenured post at Adelphi, to repay the university $649,583 for excessive compensation, and to relinquish more than $765,000 in deferred compensation and sabbatical pay." Altogether, "Diamandopoulos and 18 former Adelphi trustees, including Silber, agreed to repay the university $4.3 million for some of Diamandopoulos's compensation and legal fees, after the New York State Board of Regents faulted the trustees for overpaying him."

During the heady days of post-Diamandopoulos Adelphi, the Chronicle reported at the time, "the university's recent advertising slogan,'Good Is the Enemy of Great,' which had been plastered all over the campus, [was] revised by faculty critics to read, 'Greed Is the Enemy of Good.'"

See, universities are not-for-profit institutions... Just like the New York Stock Exchange... People are supposed to behave differently around them... It's what I've been trying to tell you...

postscript: Cognac and dinner with Silber or with Kramer [another Adelphi board member]? Maybe both; maybe different dinners. Anyway, UD discovers the following comment on, circa 1996:

Who could fail to take special note of the report in the New York Times of the $707 dinner Adelphi President Peter Diamandopoulos and art critic and Adelphi trustee Hilton Kramer shared at the fancy Links club in Manhattan--charged to big D's university expense account--not long after the scandal broke involving Diamandopoulos's $523,000 salary, the second highest among college presidents in the nation? According to the report, $552 of the tab went for a 1983 Chaval wine and Martel cognac. Now that's what we call "trusteeship"!

I highly respect Kramer's writings on the state of American universities (in an earlier incarnation, UD's banner included a quotation from him); what a pity he's also capable of contemptuous behavior toward them.