AUB-Gate: A Scandal in the Making?

The American University of Beirut is “riddled with mismanagement, corruption, and malpractice, costing millions of dollars each year,” according to the leaked executive summary of a damning report filed by a former university Trustee.

Nabil Chartouni may become the whistle blower the American University of Beirut (AUB) always knew about but failed to silence.

After a decade of raising alarm bells inside the administration’s hallways about alleged multi-million dollar cases of corruption and malpractice, the wealthy Lebanese businessman compiled a long list of allegations of corruption and mismanagement into a 500-page report last June and demanded a proper investigation.

Allegations include supplying electricity to non-university users over three decades, multi-million dollar endowment fund losses, inflated retirement compensation packages, and shady drug supply practices at the university’s renowned Medical Center.

The report is now under examination by an ad hoc AUB committee and has caught the attention of New York’s attorney general (AUB operates under a NY State license).

Chartouni said he expects the board to take decisive measures against those involved in the corruption, in order to clean up the prestigious academic institution and build a promising future for its students.

Chartouni told Al-Akhbar that he prefers not to issue a statement on the corruption allegations before the meeting of the general assembly.

“I am waiting to see if the culprits will in fact be exposed,” he told Al-Akhbar. “I refuse, however, any attempt to bury the issue, if the investigation reveals that what I had documented in my report is true,” he said.

Chartouni’s name was withdrawn from the board’s elections in March 2011 after he wrote a 500-page report in which he detailed the scale of corruption at the university. In the report’s summary, Chartouni claims that head of the board of trustees, Phillip Khoury, called him out of a meeting and informed him of the decision in a corridor without further explanation.

Chartouni’s report details numerous examples of waste and mismanagement that take place at the university. It states the university has been providing electricity to off-campus residences in the adjacent neighborhood of Ain el Mreisseh for the last 30 years, at an estimated loss of 1.5 million dollars. The practice, the summary says, was stopped only after Chartouni raised the matter and the audit committee looking into the matter feared external intervention.

The summary also refers to a lack of transparency in designating the university’s financial share when providing residences for professors, particularly off campus.

The university’s endowment fund has lost over 200 million dollars in the past 10 years due to mismanagement, according to the report’s summary.

The report further claims that the university paid one of its lawyers US$616,000 upon his retirement. Based on the trustees’ estimates, the pay out should not have exceeded US$300,000 dollars.

Even vital institutions like AUB’s Medical Center were not spared such excesses according to Chartouni’s report.

In 2000, the vice president of administration at the time, George Tomey, concealed a 300-page report by a consulting firm exposing mismanagement and lack of transparency at the hospital administration, the summary claimed.

The report continues by claiming the university failed to take any measures against Tomey, even after Chartouni told the board of trustees about the concealed report. Tomey remained in his position, and two years later, retired with a pension that amounted to three million dollars.

Chartouni’s report claimed a variety of shady practices were taking place at the university hospital, particularly those surrounding the purchase of medical drugs.

Drug companies often give 30 percent of any sale for free, but these free drugs are unaccounted for in hospital records Chartouni’s report said.

When Chartouni exposed this violation, he claims the head of the board of trustees at that time, Tom Morris, responded: “That is the university’s biggest secret. How did you find out about it?”

(Photo: Marwan Tahtah)

Among the related issues raised in Chartouni’s report is the absence of transparency at the hospital’s critical purchasing department. Moreover, certain companies appear to monopolize the selling of drugs to the university.

Chartouni said that ever since his dismissal last March, he has written several open letters to Khoury, but has yet to receive a response.

One of the letters, which was accompanied by a report that Chartouni and his lawyer had prepared, got the attention of the attorney general of New York, where AUB’s university license was issued.

This prompted the board of trustees to meet in June 2011 and decided to launch an investigation under the supervision of a committee. Chartouni’s lawyer requested that the New York state attorney general not take any decisions pending the result of the investigation.

When asked about the reason behind his great interest in the university, even though he is no longer a member of the board of trustees, Chartouni says that the irregularities occurred when he was a member of the board between May 2001 and March 2011. Therefore, he feels partially responsible and wants the truth to come out.

Chartouni’s report is expected to be the topic of discussion at the upcoming general assembly of AUB's board of trustees.

The committee is said to have conducted an investigation into a number of accusations related to lack of transparency and mismanagement, including theft. According to a former trustee, the resulting financial loss to the university amounts to tens of millions of dollars per year.

The board of trustees committee consists of the president Ayman Asfari, Marwan Mausher, former Foreign Minister of Jordan, Abdulsalam Haykal, Yusef Rabah Abu Khadra, and Carol Bellamy.

AUB's public relations office in Beirut declined to comment on the case.

This article is an edited translation from the Arabic Edition.