A Scandal in the Making? At American Univ. of Beirut, an AUB-Gate?

Nabil Chartouni, a wealthy businessman and a member of American Univ. of Beirut (AUB) Board of trustees between May 2001 and March 2011, has blown the whistle on AUB alleged multi-million dollar cases of corruption and malpractice. Chartouni’s 500-page report says that the irregularities occurred when he was a member of the board.

After a decade of raising alarm bells inside the administration’s hallways, Chartouni decided to compiled a long list of allegations of corruption and mismanagement last June and is demanding a proper investigation. Chartouni said to the Lebanese daily Al Akhbar: “I 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. I am waiting to see if the culprits will in fact be exposed. I refuse, however, any attempt to bury the issue, if the investigation reveals that what I had documented in my report is true.”

The allegations include:

1.  Shady drug supply practices at the university’s renowned Medical Center. Drug companies often give 30 percent of any sale for free, but these free drugs are unaccounted for in hospital records. 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 university failed to take any measures against Tomey, even after Chartouni told the board of trustees about the concealed report. When Chartouni exposed this violation, Tom Morris, head of the board of trustees at that time, responded: “That is the university’s biggest secret. How did you find out about it?”

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.

My question to hospital administrators: What are the various methods adopted to distributing 30% additional profit on drugs? For example, what could be the normal proportions allocated to distributing this bounty among the medical, administration, pharmacy, and nursing staffs?

2. The university has been providing electricity to off-campus residences in the adjacent neighbourhood of Ain el Mreisseh for the last 30 years, at an estimated loss of 1.5 million dollars. The practice was stopped after Chartouni raised the matter: The audit committee looking into the matter feared external intervention. (I personally don’t see this practice bad if electricity is provided to the common residents in the neighborhood, knowing that Lebanon is suffering huge shortage in energy…)

3. The university’s endowment fund has lost over 200 million dollars in the past 10 years, due to mismanagement by the board of trustees.

4. Inflated retirement compensation packages. For example, the university paid one of its lawyers $616,000 upon his retirement. Based on the trustees’ estimates, the pay out should not have exceeded $300,000 dollars. George Tomey remained in his position, and two years later, retired with a pension that amounted to three million dollars

5. A lack of transparency in designating the university’s financial share when providing residence for professors, particularly off campus.

Student elections took place in AUB this week. (Photo: Marwan Tahtah)

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.

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.

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

Note 1: The report is now under examination by an AUB ad hoc committee and has caught the attention of New York’s attorney general. (AUB operates under a NY State license.)

Note 2: 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 the head of board of trustees, Philip Khoury, called him out of a meeting and informed him of the decision in a corridor without further explanation.  Ever since his dismissal last March, Chartouni has written several open letters toKhoury, but has yet to receive a response.

Note 3: 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.

Note 4: Faten Elhajj published an edited translation from the Arabic Edition on Saturday, Nov. 19, 2011