Compliance with Applicable Laws and Regulations
We will learn and abide by federal, state, and local laws that affect our campus roles-
This means that each member of the campus community
- Complies with the terms and conditions of contractual agreements
Perspective: A Real World Illustration
A July 2004 Boston Globe newspaper article reported on two top officials of the Institute of International Development at an east coast university being found guilty of having conspired to defraud the US government. They made personal investments in Russia while working on a federal contract to help that nation's transition to capitalism.
The judge also found that the university breached its contract with the government.
Federal prosecutors had asked the judge in the case to levy punitive damages against the university under the False Claims Act, which would have held the university responsible for triple the $34 million amount of the original contract. But the judge denied that request, meaning that the most money the university would have to pay would be the $34 million, plus interest, that USAID paid for the contract after the two began investing in Russia's securities market and oil industry.
The university project, which operated from 1992 to 1997, was one of the top foreign aid programs helping to overhaul the nation's economy, with university officials hired by the government to give impartial advice to Russian officials.
In its 2002 suit, the government argued that the two official's personal investments were a conflict of interest, because they were designing laws and regulatory institutions for the Russian government at the same time they were investing money in certain businesses. That alleged violation of the university's contract tainted $350 million in US projects, hurt Russia's economic development, and damaged US-Russian relations, the government said.
The judge concluded that the university did not know that the two were breaching the government contract. And he said the university had no reason to scrutinize its employees' activities without any information that a problem existed. However, the judge wrote, the university did breach its contract with USAID simply because its employee, one of the two, violated the conflict-of-interest policy the university signed.
The judge found the greatest fault with one of the two, writing that he "was at least acting in reckless disregard" of his contractual obligations. He loaned money to his father for the purpose of an investment, the judge said. "I find this attempt to 'launder' the money through the father and girl friend ineffective," the judge wrote.
Despite the mixed results of the decision, both sides portrayed it as a victory yesterday. "We're still in the process of completely analyzing the court's decision, but at this point we're pleased with the decision," said the government attorney prosecuting the case, noting that the judge ruled in the government's favor on several claims.
"The university regards the decision as consistent with the view we have expressed to the court from the beginning of the litigation," said an outside attorney representing the university. "The court has found that the university was not engaged at any time in fraudulent conduct, and had no knowledge of any events involving other people which may have been the basis for the government's complaint."
As for the finding that the university breached its contract, even that "was not a function of institutional conduct by the university," he said. The university has argued that even if found to have breached its contract, it doesn't owe any damages because the Russia project was a success.
"Our belief regarding the project is that [the institute] performed very valuable work in Russia, in creating and supporting institutions and infrastructure which is viable today," the university's attorney said.
Last Revised 5/23/2006