What LSE needs to do next

By James Maltz, December 6, 2011

The revelations of the Woolf Report made for painful reading for the London School of Economics. The outcome was that there must be a coherent ethical investment policy.

LSE came under intense scrutiny for accepting donations from the Libyan regime. Lord Woolf's exhaustive review of LSE's engagement, which started with the admittance of Saif Al-Islam Gaddafi to LSE in 2003, revealed how the school's senior management never truly established the source of donations, given under the guise of the Gaddafi International Charity and Development Foundation.

In fact these donations were actually given by three unknown companies with considerable financial interests in Libya. So, it is not surprising that Saif's PhD has also been called into question.

The report revealed that he paid the Monitor Group, an American lobbying group, to help him conduct some his research for his final thesis. However, as it turns out the University of London commissioned a report and decided that his PhD shouldn't be revoked.

Unfortunately, this episode has tarnished the school's otherwise distinguished reputation in the world of academia. As an institution built by the Fabians to provide for the best and brightest from around the world, LSE is said to have students representing more countries than at the UN and is known for its students from extra-ordinary backgrounds. It must be said that this saga is not a reflection of those who study at the institution, but rather errors made by the previous Council and certain individuals including the former director of the LSE Sir Howard Davies.

So what is next? The Council, LSE's highest governing body, is to help create a new ethics code. Creating an ethics code will certainly be difficult due to the complexities of finding out where the money is actually coming from. When making a decision, the Council will have to balance between the aim of engaging with individuals, institutions and governments worldwide, and managing the risk that comes with affiliating with them.

This is not the first time that the LSE has come under question for its links with dodgy donors. In 2006, the controversial Sheik Zayed Foundation gave £2.5m donation to LSE to build the Sheik Zayed Theatre. The student's union and some members of Council opposed this donation, however it was finally decided that the school should accept it.

This foundation, named after the former dictator of the United Arab Emirites Sheik Zayed al Nahyan, was alleged to have sponsored several antisemitic publications. LSE students then and now expressed serious concerns about this issue, especially for Jewish students on campus.

I believe much of the problem lies in the way that universities have dealt with problematic countries. In LSE's case that meant strengthening ties with a "transforming" Libya at a time when the West was trying to help Libya develop into a liberal democracy.

It is possible that dodgy donors such as China or Iran, regimes that show a disregard for the basic rights of its citizens on a governmental level, will try to legitimise their actions abroad by offering large donations. Universities should not be apathetic to this fact, and instead of insisting that "money is money", they must actively carry out due diligence before accepting these funds. This can only be done through a tangible ethical investment policy.

LSE is certainly not the Libyan School of Economics. The students at the university are clearly not complicit in the decision to accept the donation and many students may not have even known about it. My own experiences at the university have been nearly wholly positive, and being a student at this institution, I align myself with its values. These values include a tradition of using academic expertise to better the world around us. As Lord Woolf says, this relationship has been damaged as a result of its links with Libya.

With the current cuts in government support to universities, many will further face tough choices in their search for funding. I believe it can only be a matter of time before this happens again, if not at the LSE somewhere else. LSE should look back at this difficult time to make sure that changes are made for it not be repeated and to redeem the schools reputation both for the sake of its students and universities as a whole.

James Maltz is an undergraduate student at the LSE. He was elected Student representative on the LSE Council. Follow him on Twitter.

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Last updated: 4:52pm, December 6 2011