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Foundation’s Forgivable Loans to U of Texas Law Profs Draw Fire; Former Dean Got $500K

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Foundation’s Forgivable Loans to U of Texas Law Profs Draw Fire; Former Dean Got $500K

Nov 15, 2012, 01:42 pm CDT

A program of forgivable loans used to supplement the salaries of some law professors at the University of Texas and a former law dean lacks transparency and should be ended, the general counsel for the UT System and the state attorney general's office have recommended.

Although legal, the loans, which came from a private nonprofit foundation associated with the law school, are a problem because they weren't disclosed to those in charge of administering the university at the time they were made, according to the two. The loans were part of the compensation package received by some law profs and former UT law dean Larry Sager, the American-Statesman reports.

While he was still serving as dean, Sager sought and got a forgivable loan of $500,000 from the UT Law School Foundation, the newspaper says.

“Obviously, this lack of transparency and accountability is unacceptable and, at a minimum, it creates an impression of self-dealing that cannot be condoned,” wrote Barry Burgdorf in a report. He is vice chancellor and general counsel for the UT System. In a review of Burgdorf's report, the state attorney general's office went a step further and called for the foundation to "extinguish" existing loans, so that the law school's executive management could "establish a properly controlled compensation program governed by applicable university policies and procedures."

Sager, through a spokesman, said he had good reason to think the university administration did know about the loans at the time they were made and called a suggestion that he had approved his own financial benefits "grossly inaccurate."

A TaxProf Blog post provides additional details and links to other news articles.

Earlier coverage:

ABAJournal.com: "UT Law Dean Asked to Resign over ‘Divided Atmosphere’ Caused by Faculty Largesse"

ABAJournal.com: "UT Chancellor Orders Review of Law School Foundation Funds in Wake of Dean’s Resignation"

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