The criminal conviction of Kenneth Lay may prompt his alma mater to reconsider the use of a $1.1 million Enron-backed gift donated before the company’s collapse.
A day after a Texas jury found company founder Lay and former Chief Executive Officer Jeffrey Skilling guilty of conspiracy and fraud, a University of Missouri curator on Friday said the system’s flagship campus should speak with Lay about “alternative uses” of the donation.
“I think we can negotiate with Mr. Lay and his representatives and hopefully achieve a change in charitable purpose,” said John Carnahan III, of Springfield.
Lay is a southern Missouri native who received bachelor’s and master’s degrees from the University of Missouri-Columbia in 1964 and 1965, respectively.
In 1998, he agreed to donate more than $1 million worth of Enron stock in exchange for creation of the Kenneth L. Lay Chair in Economics, an endowed position that has yet to be filled.
The university quickly sold the 16,500 shares of stock and set the proceeds aside for its intended use, avoiding the huge losses that plagued other Enron stockholders once the company went bankrupt. With state matches and interest, the account now stands at $1.8 million, a university spokesman told the Columbia Missourian.
Last year, Lay asked Missouri to redirect the proceeds from his donation to help Hurricane Katrina evacuees in Houston, the city where he now lives and the site of the recently concluded trial.
The university refused that request and a subsequent one by a Lay attorney to return the unspent endowment to offset Lay’s legal fees. Carnahan’s comments aside, school officials don’t seem to be in any hurry to change course.
“We are actively working to keep our end of the deal,” said system spokesman Scott Charton. “The university considers this university property.”
According to the contract between Lay and the university’s Board of Curators, any change in the donation’s status must be approved by Lay.
After Lay’s earlier request, University of Missouri-Columbia Chancellor Brady Deaton recommended to his boss, system President Elson Floyd, that the school return the money. But lawyers for the university and the state attorney general’s office questioned the legality of such a move.
Subsequent negotiations with Lay for “possible alternative uses” of the donation were unsuccessful, according to a written statement released by the university earlier this week.
Soon after Enron Corp. filed for bankruptcy in December 2001, a group of 28 university professors urged Deaton and other campus officials to reconsider the endowed chair and the notoriety it might bring.
Given Lay’s interest in using the donation for his legal fees, the university should instead act unilaterally, at its own expense, to waive all educational fees for former Enron employees and their family members, suggested sociology professor Clarence Y.H. Lo, who signed the original letter.
Lo also urged campus leaders to waive such fees over the next two years for academically qualified residents of California, where the state pension fund suffered sizable losses after heavily investing in inflated Enron stock.
“If we keep the money from Lay and Enron, we have a responsibility to address some of the injustices in the situation at Enron that helped produce the money the university is holding,” Lo said.
Concern over attaching the name of a convicted felon to a prestigious teaching position apparently hasn’t affected interest in the endowed chair.
Applications from more than 60 candidates have been reviewed in the past eight months, with interviews planned for two finalists, Charton said. The job will pay between $150,000 and $200,000 annually, university records show. Three other candidates have previously turned down the job, those records show.
Lay’s sentencing is scheduled for September. The nine University of Missouri system curators, a group of both Democrat and Republican political appointees, next meet in late July.