UK-LIBYA: LSE director resigns over Gaddafi donation

As Howard Davies, the embattled Director of London School of Economics, resigned on Thursday night over the institution's acceptance of money from Libya, questions were being asked about how universities in Britain seek out overseas funding from unsavoury regimes.

The university in London, which boasts a large number of the world's prime ministers and presidents among its alumni, has come under scrutiny in the last two weeks over a donation from Saif Al-Islam, son of the Libyan President Muammar Gaddafi.

Apart from accepting the resignation from Davies, who will stay on until a successor is found, the LSE's governing council meeting on 3 March "commissioned an independent external inquiry into the school's relationship with Libya and with Saif Gaddafi and into related matters".

Related matters appears to refer to the academic authenticity of Saif Gaddafi's PhD thesis, awarded by the LSE in 2008 and currently being examined in response to claims that it had been plagiarised.

The Council said in a statement that the inquiry was to "establish the full facts of the school's links with Libya, whether there have been errors made, and to establish clear guidelines for international donations to and links with the school".

The row that led to Davies' resignation erupted two weeks ago when it came to light that the institution accepted a £1.5 million (US$2.4 million) donation from a foundation headed by Saif Al Islam in 2009, after the dictator's son had been awarded a PhD from the LSE.

Some £300,000 of the money was received, and in a hasty bid at reputation management last week after students occupied the building and demanded the money be returned, the LSE said it would be used for scholarships for students from North Africa and no other donations would be accepted from the Libyan regime.

This was not enough. The LSE was criticised for not doing enough to distance itself from a questionable regime. Further intense scrutiny by British media, most notably The Times newspaper, revealed that the university had secured a deal worth over £1 million to train future leaders for the Libyan regime.

Diplomatic cables released by Wikileaks revealed that the LSE had agreed to bring to London 400 members of the Libyan elite for leadership and management training, and another 250 to be trained by the institution in Libya, the newspaper said.

The LSE in its statement on Davies' resignation referred to a £2.2 million contract between the LSE and Libya's Economic Development Board "to train Libyan civil servants and professionals, £1.5 million of which has been received to date and payment of £20,000 for tuition of the head of the Libyan Investment Authority."

Other payments included a US$50,000 fee to the university in 2007 for advice on how Libya should invest its oil wealth. The payment went into the general scholarship fund, according to Davies.

Davis said in his resignation statement: "The short point is that I am responsible for the school's reputation, and that has suffered."

"I advised the council that it was reasonable to accept the money and that has turned out to be a mistake. There were risks involved in taking funding from sources associated with Libya and they should have been weighed more heavily in the balance.

"Also, I made a personal error of judgment in accepting the British government's invitation to be an economic envoy and the consequent Libyan invitation to advise their sovereign wealth fund.

"There was nothing substantive to be ashamed of in that work and I disclosed it fully, but the consequence has been to make it more difficult for me to defend the institution."

He also added: "To the best of my current knowledge (though we are currently reviewing the evidence), the degrees to Saif Gaddafi were correctly awarded, and there was no link between the grant and the degrees."

However, the wider question of how British universities secure funding from private sources is still being debated as it emerged that another institution, Liverpool John Moores University, has contracts with Libya worth £1.2 million

Conservative MP Rob Halfon said of the LSE debacle shortly before Davies resigned: "This has become more than just a handing over of money. This is becoming quite sinister and insidious."

Labour party MP Margaret Hodge, a graduate and former governor of the LSE, questioned "the inevitable chickens coming home to roost for an institution that had allowed institutional greed to triumph over ethical traditions."

Hodge said: "Priorities have shifted from nurturing the next generation to getting the money in. The scandal surrounding Saif Gaddafi is not a one-off. It reflects a worrying shift in culture and purpose."

Anthony Glees, Director of the Centre for Security and Intelligence Studies at Buckingham University, said the problem was much wider than the LSE's dealings with Libya. "There needs to be a proper inquiry into the funding of British higher education by Arab and Islamic states whose records on human rights are absolutely appalling.

"Our universities have sacrificed their basic ethic values in the pursuit of money."