healthy4u: Brown University

Continuing Dissection of the Infamous Study 329

On the 1BoringOldMan blog, semi-anonymous blogger Mickey has been dissecting in detail the infamous Study 329 that GlaxoSmithKline used to promote Paxil (Seroxat, paroxetine) as safe and effective for children and adolescents, when the study data, rigorously analyzed, showed that was not the case.  Study 329 was an important part of the US Department of Justice case against GSK that resulted in a record $3 billion settlement (see this <a href="http://hcrenewal.blogspot.com/2012/07/giant-gsk-settlement-provides-reminder.html">post</a>).  The posts so far are: <a href="http://1boringoldman.com/index.php/2012/08/19/26298/">A Pretty Rotten Era   </a> <a href="http://1boringoldman.com/index.php/2012/08/21/a-movement/">A Movement</a> <a href="http://1boringoldman.com/index.php/2012/08/22/to-make-distortion-possible/">To Make Distortion Possible</a> <a href="http://1boringoldman.com/index.php/2012/08/24/the-lesson-of-study-329-the-basics/">The Lesson of Study 329: the Basics</a> <a href="http://1boringoldman.com/index.php/2012/08/25/the-lesson-of-study-329-efficacy-drift-to-trends-and-2s/">The Lesson of Study 329: Efficacy Drifts to Trends and 2s</a> <a href="http://1boringoldman.com/index.php/2012/08/26/the-lesson-of-study-329-conventions-and-protocols/">The Lesson of Study 329: Conventions and Protocols</a> <a href="http://1boringoldman.com/index.php/2012/08/29/the-lesson-of-study-329-uh-oh/">The Lesson of Study 329: Uh-oh</a> <a href="http://1boringoldman.com/index.php/2012/08/29/the-lesson-of-study-329-data-transparency/">The Lesson of Study 329: Data Transparency</a> <a href="http://1boringoldman.com/index.php/2012/08/30/the-lesson-of-study-329-the-authors/">The Lesson of Study 329: the Authors</a> This does not seem to be the end of the series, but the last post yesterday did have a striking conclusion: <blockquote>But, for the moment, I am stuck on the piece that is, to me, the most fundamental lesson from this story, and unfortunately many similar stories in the industry-funded clinical trial literature that fills our journals. The authors of this study did not function as physicians, clinicians, scientists, or even authors. Some were there because of their previous credentials. Others were there to build up future credentials. But they weren’t there to do what they presented themselves as doing. Researchers are practicing medicine too. I might be seen as naive to see this as the center of this story. If that’s the case, I’ll go to my grave being naive. Medicine has been my life, and this isn’t Medicine. There’s no place or tradition for physicians, particular physicians in high places, taking part in this kind of bullshit – particularly all the while claiming otherwise. The fact that it has been a widespread practice isn’t an excuse. That’s also an even stronger indictment. There are many principled neuroscientists working in this difficult area of medical science who’ve been tarnished by this kind of pseudoscience. There are many psychiatrists and other practitioners who’ve actually trusted these deceitful articles. And there are untold numbers of patients who’ve been medicated un-necessarily or even directly harmed by this and other capricious advise coming out of these studies – this one in particular. Rather than functioning as the advisers of ill people, these were physicians who actively participated in capitalizing on patients’ illness. </blockquote>However, despite the seriousness of these concerns, and their corroboration in the Justice Department document that pushed GSK to settle for so much money, my alma mater, Brown University, where Dr Martin Keller, the lead author of Study 329, was Chair of Psychiatry, has consistently refused to revisit the study, and consistently failed to publicly refute the accusations against Dr Keller, nor to accept them and take appropriate action.  The University supposedly conducted an internal investigation of the matter, but has not seen fit to make it public.  When <a href="http://chronicle.com/article/Academic-Researchers-Escape/133325/">asked again</a> about this, Brown's new President, Christina Paxson, referred the inquiry to the public relations people: <blockquote>'The recent announcement by the U.S. Department of Justice did not suggest that any further reviews of the paper by the university are immediately warranted,' Darlene Trew Crist said in a written response. 'We have no further statement to make at this time.'</blockquote> Given the seriousness of the allegations, and the <a href="http://www.brown.edu/about/mission">University's mission</a>: <blockquote>The mission of Brown University is to serve the community, the nation, and the world by discovering, communicating, and preserving knowledge and understanding in a spirit of free inquiry, and by educating and preparing students to discharge the offices of life with usefulness and reputation. </blockquote>the logic of the administration's refusal to have a public discussion of this case escapes me. As I have <a href="http://hcrenewal.blogspot.com/2008/09/brown-university-student-journalists.html">said before </a>(in 2008!), the appearance of continued stonewalling, now going on for years, can easily be interpreted to imply that the institution has something really big and bad to hide. Also see comments by Alison Bass <a href="http://alison-bass.com/blog/2012/08/why-academic-researchers-involved-in-fraudulent-paxil-study-escape-scrutiny/">on the Alison Bass blog</a>, and by Dr Howard Brody <a href="http://brodyhooked.blogspot.com/2012/08/ghostwriting-still-no-consequences-for.html">on the Hooked: Ethics, Medicine and Pharma blog</a>. ADDENDUM (4 September, 2012) - There have been two additional posts on the 1BoringOldMan blog on Study 329: <a href="http://1boringoldman.com/index.php/2012/09/02/the-lesson-of-study-329-the-hurdles/" rel="bookmark">the lesson of Study 329: the hurdles… </a> <a href="http://1boringoldman.com/index.php/2012/09/04/the-lesson-of-study-329-naked-emperors-fractious-queens/" rel="bookmark">the lesson of Study 329: naked Emperors, fractious Queens… </a> ADDENDUM (4 September, 2012) - See also <a href="http://alison-bass.com/blog/2012/09/calls-for-action-against-authors-of-fraudulent-paxil-study-are-getting-louder/">this post</a> on the Alison Bass blog. ADDENDUM (5 September, 2012) - See <a href="http://www.pharmalot.com/2012/09/controversial-paxil-study-author-retires-from-brown/">this post</a> on the retirement of Dr Keller by Ed Silverman on PharmaLot. ADDENDUM (10 September, 201) - See the final two posts in the 1BoringOldMan series: <a href="http://1boringoldman.com/index.php/2012/09/06/the-lesson-of-study-329-were-only-as-sick-as-our-secrets/" rel="bookmark">the lesson of Study 329: “we’re only as sick as our secrets”… </a> <a href="http://1boringoldman.com/index.php/2012/09/08/the-lesson-of-study-329-epilogue/" rel="bookmark">the final lesson of Study 329: epilogue… </a> His conclusion in the next to last post of the series: <blockquote>Something terrible happened in psychiatry, an alliance between the pharmaceutical industry and a number of our leaders who allowed their academic credentials to be used for commercial purposes. It happened on a large scale, and in the process shamed all of us, whether we were involved or not. Many of the people we looked to to guide us fell into the role of key opinion leaders – a marketing term that meant that they could influence what we did and how we practiced. And in that new role, medical degrees, academic positions, the methods of science, and psychiatric experience became little more than marketing tools in a commercial campaign. Such was the case with Study 329 – an article that has become exemplary because it is now so painfully well known – a symbol for the failings of an era. It needs to be retracted simply because it was wrong on purpose – and we all know it. And yet no involved person, institution, or organization highlighted in that last paragraph has swallowed their pride, or guilt, or denial, or arrogance and called for retraction.</blockquote>[Italics and bold typeface added for emphasis]

Continuing Dissection of the Infamous Study 329

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31 Aug 2012

A University President, But No Longer a Goldman Sachs Director

A frequent topic on Health Care Renewal is how leaders of not-for-profit health care organizations now frequently value their "margin," that is, revenue generation more than mission.  (One good example <a href="http://hcrenewal.blogspot.com/2007/04/medical-schools-to-faculty-show-me.html">here</a> shows how medical school leaders value faculty most for how much money they bring in, rather than the quality of their teaching, research, or patient care.)  "Masters of the Universe" as Leaders of Academic Medicine As we have cast about for reasons behind this important and unfortunate transformation, we noticed that many of the members of the boards of trustees of some of the most prestigious universities that house medical schools, medical schools, and teaching hospitals seemed to be leaders in the finance industry. The importance of that finding became more relevant after the global financial collapse, aka "great recession," became evident.  Since then, we noted the influence of finance leaders on the leadership of <a href="http://hcrenewal.blogspot.com/2009/04/investment-bankers-strike-back.html">Dartmouth College</a>, <a href="http://hcrenewal.blogspot.com/2008/12/what-linked-parallel-declines-of.html">Harvard University</a>, <a href="http://hcrenewal.blogspot.com/2009/04/hedge-fund-u.html">Yeshiva University</a>, and the <a href="http://hcrenewal.blogspot.com/2009/10/board-of-trustees-or-social-club-for.html">Hospital for Special Surgery</a>. Although it seems that the complex relationships between various "masters of the universe" and academia, particularly academic medicine ought to have generated considerable discussion, they remained almost as <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic</a> as many of the other issues discussed on Health Care Renewal. Therefore, with some regret, I will take up the latest example of such relationships from my own alma mater, Brown University.  ((Full disclosure: I am an alumnus of the College at Brown, and of the Medical School. I am a former full-time Brown faculty member, and currently a voluntary Clinical Associate Professor in the  Alpert Medical School.)  (Also note that <a href="http://hcrenewal.blogspot.com/2009/04/pension-fund-scandals-payment-agents.html">here </a>we discussed some of the questions about the financial dealings of a prominent member of Brown's Board of Fellows, the inner circle of the Brown Corporation, the equivalent of its board of trustees, who was also the very wealthy leader of a prominent hedge fund.  We noted then that his connection to Brown was not noted in current media stories about the controversy.) A Goldman Sachs Director as University President Last week (9 February, 2010), the Brown Daily Herald published <a href="http://www.browndailyherald.com/simmons-won-t-be-buffeted-about-on-boards-1.2144610">an interview</a> with the President of Brown, Ruth Simmons, about her service on the board of directors of Goldman Sachs, one of the most prominent, profitable and controversial investment banks.  Some of the main points were: - President Simmons seemingly denied responsibility for any of the company's past actions that have inspired criticism: "There are lots of things in a complex institution that go on." So, "you're not in charge of everything that your friends do and every policy that organizations that you're affiliated with issue." - She also implied that she joined the board expressly and only to advocate for women and minorities in finance: "We had a big push to think about how we could improve the knowledge and ability of women to manage their financial affairs." Also, "at the same time, there was a good deal of interest in the fact that women have not done so well in the financial sector and on Wall Street." The goal was "to make certain fields more accessible to women and minorities through her service on the boards of Goldman, Texas Instruments and Pfizer." "She called her work with women and minorities on boards meaningful to her in 'a way that a lot of people won't understand.'" She stated "the seniority she now enjoys on Goldman's board allows her to advocate for programs to help women and minorities." - She implied that she served on the board to learn something about economics, "her service on Goldman's board gave her the economic savvy to take certain risks...." So in summary, in her role as a member of the board of Goldman Sachs, one of the most important financial companies in the world, which had major involvement in the events that lead to the global economic collapse, or "great recession," President Simmons claimed that her major role was to advocate particular political positions on the board, implied that she did not know much about the company's core business when she joined the board, and took no responsibilities for any actions of the company which might have inspired criticism. Presdient Simmons' responses might have made sense were she just a member of an advisory board on diversity.   However, she <strike>is</strike> was a member of the board of directors. In this interview, she seemed to ignore her fiduciary duties as a board member to show "unyielding loyalty"  to the stockholders of the company and their interests  [Per Monks RAG, Minow N. <a href="http://www.amazon.com/Corporate-Governance-Robert-G-Monks/dp/1405116986">Corporate Governance</a>, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]. She in particular seemed to disavow any responsibility for overseeing the actions of hired Goldman Sachs management.  It is a testament to the power of the anechoic effect that an interview showing a member of the board of directors of one of the most important and controversial finance firms involved in the global financial collapse seemed to dodge responsibility for the firm's overall direction and financial practices seemed to inspire only one piece of commentary beyond Brown.  Felix Salmon <a href="http://blogs.reuters.com/felix-salmon/2010/02/10/revamping-goldmans-board/">opined</a> <blockquote>In all the bellyaching about the governance of the biggest banks, and the fact that their boards were spectacularly unqualified to provide any kind of oversight of what they were doing, Goldman Sachs has gone largely unmentioned. But what’s true of Merrill Lynch and Bank of America is true of Goldman too: its executives need some kind of adult supervision, seeing as how they work for their shareholders, rather than just for themselves.</blockquote> He then noted, <blockquote>this interview with one Goldman board member, Ruth Simmons, hardly instills in me the confidence that she can or will understand what Goldman is doing, stop them from acting in a reckless manner, or keep a close eye on compensation as she wears her hat as a member of the compensation committee....</blockquote>A Rapid Resignation However, what happened next does suggest maybe the times they are "a-changing." On 13 February, 2010, <a href="http://www.bloomberg.com/apps/news?pid=20601087&sid=aNg3joWQ08zs&pos=5">per Business Week</a> <blockquote>Goldman Sachs Group Inc., the most profitable securities firm in Wall Street history, said Ruth Simmons will leave its board after 10 years because of 'increasing time requirements' in her role as Brown University president. </blockquote>This despite the small fortune that President Simmons had made learning to develop "economic savvy," <blockquote>According to a Feb. 5 filing with the U.S. Securities and Exchange Commission, Simmons owned 27,386 restricted stock units in Goldman Sachs, worth $4.2 million at yesterday’s closing share price of $153.93. According to the filing, the units convert to shares on the first trading day in the third quarter of the year following her retirement from the board. Simmons also has 10,000 options that she can exercise on the date she ceases to be a director, according to the filing. </blockquote> Felix Salmon then <a href="http://blogs.reuters.com/felix-salmon/2010/02/13/simmons-leaves-goldmans-board/">commented</a>, <blockquote>I said after Tuesday’s interview with Simmons was published that she seemed to think about her membership on Goldman’s board much more in terms of what it could do for her and her pet causes than in terms of being a shareholder representative tasked with overseeing senior management, and I called for a revamp of the board. Friday’s news is exactly the step in that direction that I was looking for: maybe Simmons took my comments to heart!</blockquote>Summary So in the end, the complex relationships among academic, and academic medical leaders and the finance industry are at least less anechoic. The issue is likely not over at Brown. While the initial Brown Daily Herald interview focused on whether President Simmons' position on the Goldman Sachs board might have lead to a direct conflict of interest, he did not ask whether her position in the leadership of Goldman Sachs had any relevance to the prominence of financial leaders on the Brown Corporation.  In fact, the same day that the Brown Daily Herald published the interview, it published <a href="http://www.browndailyherald.com/trustee-may-face-lawsuit-from-ex-wife-1.2144625">an article</a> on the legal travails of a Brown Corporation who has become one of the richest hedge fund leaders in the world.  The 2008-09 Brown Corporation (webpage no longer works <a href="http://brown.edu/Administration/News_Bureau/Info/Corporation.html">here</a>, but cached <a href="http://74.125.47.132/custom?q=cache:ZAu0jiCokecJ:brown.edu/Administration/News_Bureau/Info/Corporation.html+Brown+Corporation&cd=5&hl=en&ct=clnk&gl=us&client=google-coop-np">here</a>) included three other current or retired Goldman Sachs leaders, a <a href="http://www.brown.edu/Administration/News_Bureau/2004-05/04-022.html">former partner</a>, <a href="http://www.brown.edu/Administration/News_Bureau/2004-05/04-146.html">head of merchant banking</a>, and former leader <a href="http://www.brown.edu/Administration/News_Bureau/2006-07/06-166.html">with less specified responsibilties</a>.  It also included numerous other leaders of various other finance companies.  In the aftermath of the global economic collapse, and in an ongoing health care crisis, it seems reasonable to hypothesize that some of the problems of academia, and particularly the problems of medical academia, may have been at least enabled by leadership more used to working in an increasingly amoral marketplace than to upholding the academic mission.  I hope that Brown's latest travails will inspire more interest in who now leads academia, especially medical academia, how they got there, and what they have wrought.  Academic medical institutions and other not-for-profit health care organizations need leaders who value their missions more than the money they may bring in.

A University President, But No Longer a Goldman Sachs Director

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15 Feb 2010

Pension Fund Scandals, Payment Agents, "Chooch" and the Anechoic Effect

As we get closer to graduation season for most institutions of higher education, another story about the leadership and governance of higher education, involving an institution housing a prominent medical school, has come into view, albeit indirectly. Let me try to explain this complex story, which on its surface has something to do with the ongoing financial crisis, but nothing to to with academia, by quoting, as usual, from media coverage. We start with <a href="http://www.nytimes.com/2009/04/17/nyregion/17pension.html">an article </a>from the New York Times last week: <blockquote> The man leading the Obama administration’s efforts to restructure the auto industry has been described in Securities and Exchange Commission documents as having arranged for his investment firm to pay more than $1 million to obtain New York State pension business. Although he is not named in the documents, a person with knowledge of the inquiry said the investment executive is Steven Rattner, co-founder of the Quadrangle Group, the prominent private equity firm. The S.E.C. complaint, filed as part of an expansive state and federal investigation into corruption at the state pension fund, details the efforts of Quadrangle to gain business from the pension fund beginning in 2004. The person who received most of the $1 million-plus payment has been indicted, accused of selling access to the fund. </blockquote> Here are the details of allegations of how Mr Rattner interacted with intermediaries to get NY state pension fund investments into his company. <blockquote> Investigators are scrutinizing the fees paid by investment firms to intermediaries who arranged deals with the $122 billion pension fund. While such payments are legal, they often raise questions about conflicts of interest and would be illegal if used to bribe public officials. In a 123-count indictment issued last month, two aides to Mr. Hevesi were accused of selling access to the fund. The aides, Hank Morris, who was Mr. Hevesi’s top political consultant, and David Loglisci, the fund’s chief investment officer, have denied any wrongdoing. The S.E.C. complaint, which was released Wednesday, describes steps undertaken by the Quadrangle executive to win $100 million worth of business from the pension fund in 2005. That amount accounted for nearly 5 percent of a Quadrangle private equity fund and helped the company raise money from other investment funds. In October 2004, the executive met with Mr. Loglisci to seek the pension fund investment and Mr. Loglisci 'reacted favorably' and 'began taking the necessary steps to secure approval' for the investment, the complaint said. Two months later, in December, the same executive met with Mr. Morris, who, according to prosecutors, was working in tandem with Mr. Loglisci to generate millions of dollars in fees from the investment firms, and within weeks had agreed to a deal to pay an obscure securities firm that employed Mr. Morris 1.1 percent of any money that the retirement fund invested with Quadrangle, as a placement agent fee. That worked out to $1.1 million, of which Mr. Morris received 95 percent. The timing of the meeting with Mr. Morris was significant, the complaint indicated, because the Quadrangle executive had already met with Mr. Loglisci and would presumably not need a placement agent. In addition, Quadrangle had previously retained a separate placement agent. The executive also met with Mr. Loglisci about a low-budget movie Mr. Loglisci was producing, 'Chooch.' Soon afterward, GT Brands Holdings, a company owned by one of Quadrangle’s private equity funds, made a deal to acquire the DVD distribution rights to 'Chooch,' an agreement that made the film’s producers nearly $90,000. The Quadrangle executive called Mr. Morris after the distribution deal was closed, and told him of the deal’s 'connection to Loglisci.' Three weeks later, Mr. Loglisci 'personally informed the Quadrangle executive that the retirement fund would be making a $100 million investment' in Quadrangle, the complaint said. </blockquote> Later, the Washington Post published <a href="http://www.washingtonpost.com/wp-dyn/content/article/2009/04/17/AR2009041701908.html">an article </a>which alleges possible conflicts of interest affecting Mr Rattner in his current position as "automobile czar," <blockquote> The questions around Quadrangle and Rattner follow others that came to light soon after he emerged as a candidate to lead the Obama administration's efforts to prop up Chrysler and General Motors. Quadrangle was, at least indirectly, previously involved in a deal involving Chrysler's majority owner, Cerberus Capital Management, a private equity firm. That connection has led some Chrysler investors to doubt whether Rattner can decide without bias how the government should aid Chrysler. In the summer of 2007, Quadrangle purchased Dennis Publishing, the owner of magazines including Maxim and Blender. The estimated price was $250 million. Quadrangle's new magazine company was renamed Alpha Media and it took a loan of $125 million, much of it coming from Cerberus. A year after Quadrangle's purchase, the publishing company's profits began to plummet. The company announced last month that it would cease publication of its Blender magazine. Quadrangle has written the Alpha Media investment down to zero on its books, and Cerberus, the company's major creditor, is now effectively in control of Alpha, a person familiar with the matter said. </blockquote> This week, a NY Times <a href="http://www.nytimes.com/2009/04/22/business/22quadrangle.html">article</a> revealed that Mr Rattner and Quadrangle are facing a wider investigation, and may be a target of investor lawsuits: <blockquote> Two months after Steven Rattner left Wall Street for Washington, his private investment company is facing a widening investigation into corruption in public pension funds — and fighting for its future. As state and federal authorities examine Mr. Rattner’s dealings with the New York State retirement fund, questions are emerging about his efforts to gain business from several other public funds, including ones in New Mexico and New York City. His private investment firm, the Quadrangle Group, is moving to calm anxious pension managers, who have entrusted the firm with hundreds of millions of dollars. Mr. Rattner, who is leading the Obama administration’s efforts to revamp the auto industry, has left his small but prominent firm in a bind. Because he was integral to Quadrangle, investors can try to withhold additional money that they have pledged to the firm now that he has left. No charges have been filed against Mr. Rattner, who did not respond to e-mail messages on Tuesday, or against Quadrangle, whose executives declined to comment. While Quadrangle’s funds have not suffered as much as some other private equity funds, its investors have suffered losses in other parts of their portfolios. Some of them might try to capitalize on the inquiry to avoid making good on their pledges. Another crucial question, however, is whether money from one Quadrangle fund was used to lure investors to a second fund. That possibility that might expose Quadrangle to investor lawsuits. </blockquote> Furthermore, a Washington Post <a href="http://www.washingtonpost.com/wp-dyn/content/article/2009/04/22/AR2009042203942.html">article</a> raised the question of a failure of honest disclosure: <blockquote> Government officials are expanding their investigation of Quadrangle, the private-equity firm founded by the Obama administration's lead auto negotiator, as new details emerge about an alleged kickback scheme involving the New York state pension fund. On Wednesday, the New York City Comptroller William C. Thompson Jr. said he is working with the state's attorney general, Andrew M. Cuomo, to determine whether the city's pension funds were 'intentionally misled or deceived' by Quadrangle's failure to disclose the use of a middleman who has since been indicted, Hank Morris. New York City's comptroller on Wednesday said Quadrangle never disclosed that it had paid Morris fees in connection with the city pension funds' investment in Quadrangle. The city invested $85 million in 2005 and $40 million in 2006. The city has a rule that use of placement agents must be disclosed, but that rule was implemented in 2008 and does not apply to the Quadrangle investments. But as part of the due diligence for receiving the investment, Quadrangle said in writing at the time that it used only two placement agents, Monument Group and London-based Helix Associates, the comptroller's office said. 'We take any ethical lapses by our managers seriously and will consider any remedies available to investors,' Thompson, the city's comptroller, said in a statement. </blockquote> In response to all this, New York state government officials decided to ban middle-men from influence over pension fund investment decisions, <a href="http://online.wsj.com/article/SB124040821903043595.html">according to the Wall Street Journal</a>: <blockquote> New York state said its public pension fund, one of the nation's largest, would ban the use of middlemen to help private-equity funds and other investors secure its business. The move marked a pivotal development in a burgeoning controversy that has grown from a local corruption probe to a broader examination of the tactics that investment firms used to win lucrative business from vast public pension pools. In most states, charging placement fees is legal if they are disclosed as required. But potential conflicts of interest are rife, especially for officials with a legal obligation to make informed, well-intended decisions about how pension-fund money is spent. Lawyers say a gray area emerges when finder's fees are paid to individuals or firms that do little more than trade on their access to public-pension-fund executives. Such alleged behavior is at the heart of the scandal unfolding in New York. The state attorney general and the SEC have accused a former top fund official and a political adviser of giving investment funds access to billions of dollars of state pension money, in exchange for kickbacks and other payments for personal and political gain. One such middleman already has pleaded guilty to securities-fraud charges. Some officials across the country have expressed concern about so-called pay-to-play practices -- that is, paying to influence people who direct the investments of public-employee retirement funds. Pay-to-play can range from illegal kickbacks, which in some instances have led to jail time, to legal activities such as campaign contributions to elected officials on the boards of pension funds. Pension funds are especially vulnerable to such accusations because their boards are often populated by elected officials or people with limited financial experience who need to rely heavily on outside advisers. New York state's comptroller, Thomas DiNapoli, said that in light of the allegations contained in the case brought by the state's attorney general and the SEC, 'the best way to restore the pension fund's reputation is to say we won't be involved with any transactions that involved placement agents.' </blockquote> Meanwhile, several commentators raised questions about Mr Rattner's suitability to be "automobile czar." David Rothkopf, the author of Superclass, <a href="http://rothkopf.foreignpolicy.com/posts/2009/04/17/and_now_introducing_the_kickback_czar">dubbed Mr Rattner </a>the "kickback czar" on the Foreign Policy blog, <blockquote> Are you joking? The Obama Administration somehow thought that it was okay to give a pass to Steve Rattner? They thought it was okay to appoint a guy to a key job after he apparently acknowledged to them that he was under investigation for providing a million dollar payment to pension consultant in exchange for receiving an assignment to manage a big chunk of pension fund money for New York State? They thought it was okay in the middle of a justified surge of global disgust with Wall Street to embrace a big time Wall Street player who is smart enough to be arguing the legal technicalities of the transaction but not smart enough to recognize that it might just seem to be sleazy, dubious and a gross disservice to the people who were depending on the State to use appropriate methods and metrics to find stewards for their retirement money? They even thought it was okay when part of the deal involved payments to support a movie called 'Chooch.' (What’s worse than bad ethics and bad taste all wrapped up into one sordid exchange? The New York Post called 'Chooch' which scored an amazing 00 rating from Rotten Tomatoes “the kind of vanity project that gives amateurs a bad name.”) What's more they did all this while giving Rattner the job of auto czar for which he had no material auto industry experience? I thought the way high ethical standards worked was that you didn't just bar people convicted of crimes, you tried to weed out people who had done things that were wrong or contrary to the public interest. </blockquote> On BlackStarNews, Edward Manfredonia <a href="http://blackstarnews.com/?c=121&a=5582">wrote</a>: <blockquote>I believed Rattner’s efforts to take the Times private should have disqualified him from an appointment with the Obama Administration; especially the key post of trying to stabilize the collapsing auto industry. The White House still insists that the Administration fully supports Rattner; that reminds me of Bush proclaiming backing for Don Rumsfeld when it was clear he should have been shown the door as defense secretary. Here's why Rattner deserves the boot. An even more egregious form of activity that what I previously covered has become public. Rattner, who has extensive ties to Bill and Hillary Clinton, has been identified in several published news reports as the Quadrangle Fund executive who paid $1.1 million to receive more than $100 million from New York State’s multi-billion dollar pension fund to manage. The manner in which the payments were made leaves no doubt that they were meant for 'pay to play', which is illegal in my opinion. </blockquote> Not surprisingly, a NY Times <a href="http://www.nytimes.com/2009/04/22/opinion/22wed1.html">editorial</a> was milder, but did allow, <blockquote>Mr. Rattner showed some bad judgment in the 'Chooch' deal, and the public has a right to expect more of him in his new, highly sensitive position. </blockquote> It's an interesting story, with implications in many areas, and it has hardly played out. Anyone reading this far is probably wondering, however, what this has to do with leadership, governance, and ethics in health care. None of the articles quoted above mentioned anything related to health care, or academics for that matter. Here is where I pull the rabbit out of the hat. Steven Rattner, in fact, has an important leadership position relevant to academics, and to academic health care. He is a <a href="http://www.brown.edu/Administration/News_Bureau/Info/Corporation.html">member of Brown University's Board of Fellows</a>, the "upper house" in the university's bicameral board of trustees, called the Brown Corporation. Brown University includes the <a href="http://med.brown.edu/">Alpert Medical School</a>, and the Division of Biology and Medicine. (Full disclosure: I am an alumnus of the College at Brown, and of the Medical School. I am a former full-time Brown faculty member, and currently a voluntary Clinical Associate Professor.) And thus the issue here is really about the <a href="http://hcrenewal.blogspot.com/2007/08/bling-bling-poltical-correctness-and.html">anechoic effect</a>. Even though this convoluted case raises issues about Mr Rattner's role at Brown analogous to the issues it raises about his role as "automobile czar," there has been to date not even any media mention of his role at Brown, much less discussion of its implications for the university, academic leadership and governance, etc. To survey the local coverage, the Providence Journal has not published any relevant news stories so far. It did print an <a href="http://www.projo.com/opinion/contributors/content/CT_rick15_04-15-09_DJDVGHK_v17.3e650b1.html">op-ed </a>questioning Mr Rattner's suitability for the "automobile czar" position, which had to do with the lack of sympathy an "investment banker" might have for the United Auto Workers. The Boston Globe ran <a href="http://www.boston.com/news/nation/washington/articles/2009/04/18/auto_task_force_chair_tied_to_investment_investigation/">a story </a>from the Washington Post about the case, but one that had nothing on the local, or the academic angle. The Brown Daily Herald published a two news stories (<a href="http://www.browndailyherald.com/2.12235/alum-may-become-obama-s-car-czar-1.1668270">here</a> and <a href="http://www.browndailyherald.com/2.12235/alum-to-advise-treasury-on-bailout-of-u-s-automakers-1.1667893">here</a>) about Mr Rattner's appointment as "automobile czar," which did note he is a "corporation member," but has not covered the current controversy. I am aware of no recent open discussion, or any discussion at all of Mr Rattner as a member of the Board of Fellows, in light of the recent unpleasantness. Thus, our local angle on the New York pension/ placement agents/ Quadrangle/ "Chooch" affair mainly demonstrates how at many academic institutions, it is simply not done to bring up issues that question leadership and governance, especially at the highest levels. Parenthetically, we have posted many times, most recently <a href="http://hcrenewal.blogspot.com/2009/04/investment-bankers-strike-back.html">here</a>, about the leadership and governance of Dartmouth College. Some might have interpreted these posts as hostile to that institution. They were anything but. In fact, it has only been possible to discuss leadership and governance at Dartmouth so thoroughly because that institution is much more open about its leadership and governance than is the typical US academic institution. Half of the he Dartmouth Board of Trustees, as we noted, used to be elected by vote of the alumni. The alumni could nominate their own candidates for the Board, through a petition process. The successful attempt to decrease the overall proportion of elected Trustees sparked a tremendous amount of open discussion and debate. Issues of leadership and governance at Dartmouth seem to be frequently discussed in local publications, on blogs, and sometimes even in the national media. I suspect that a governance system at Dartmouth marked by more than average representativeness and accountability has lead to much more vigorous debate and discussion of academic governance and leadership than occurs at more typical universities. (Note that even after the "board packing," Dartmouth still has a larger proportion of alumni-elected trustees than does the typical university, and it is still possible for alumni to put people on the ballot via petition.) Brown University, on the other hand, is lead by a Corporation most of whose members are appointed by the Corporation itself. While a minority (14 of 42) of the Board of Trustees (the lower house) of the Corporation are <a href="http://alumni.brown.edu/about/elections/trustee_bg.html">elected by alumni</a>, to my knowledge, all the election candidates are hand-picked by the Brown Alumni Association, and there is no provision for petition candidates. Although a few fiesty students occasionally call for more light to shine on the Brown Corporation, (e.g., see <a href="http://www.browndailyherald.com/2.12227/ben-bernstein-09-why-the-corporation-matters-and-how-they-get-paid-1.1667634">here</a>), for the most part, questioning the leadership and governance of the university is simply not done. Thus, Brown seems to be typical of most major US academic organizations. However, more transparent, accountable, governance, clearly guided by ethical principles and the organization's mission might allow US academia, and academic medicine to address some of the problems that we too often have opportunities to discuss on Health Care Renewal.

Pension Fund Scandals, Payment Agents, "Chooch" and the Anechoic Effect

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24 Apr 2009

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