Wednesday, November 9, 2011

Penn State President Under Pressure to Quit Amid Scandal - Businessweek

Penn State President Under Pressure to Quit Amid Scandal

November 09, 2011, 9:34 AM EST

By John Hechinger and Sophia Pearson

(Updates with board investigation in fifth paragraph.)

Nov. 9 (Bloomberg) -- Graham Spanier, after 16 years as president of Penn State University, is under mounting pressure to resign amid allegations that a former athletics department assistant molested boys inside the school’s sports complex.

The Harrisburg Patriot-News and Pittsburgh Tribune-Review called for Spanier, 63, to step down, and state Senate Majority Leader Dominic Pileggi questioned whether he could continue to hold office. Newspapers also urged football Coach Joe Paterno to resign. The university’s board is scheduled to meet Nov. 11, and Governor Tom Corbett has said he plans to attend.

The scandal ranks among the most serious governance crises at U.S. colleges, including the handling of rape allegations involving Duke University’s lacrosse team in 2006, said Terry Hartle, senior vice president of the American Council on Education, which represents college presidents. Penn State’s board has a tough decision, especially since Spanier is credited with raising the school’s stature and selectivity, he said.

“The ultimate issue is what’s in the best interest of the university, how do we continue to run a very large institution in light of these extremely serious charges,” Hartle said in a telephone interview from Washington. “One of the questions that the board will have to ask is, ‘Can Graham continue to lead the university?’”

In a statement, the board said it is taking “swift, decisive action,” and will appoint a committee this week to conduct an investigation into the allegations.

Spanier shouldn’t remain as Penn State’s president if there isn’t an explanation of why university officials didn’t report the allegations, said Erik Arneson, a spokesman for Pileggi.

‘Admired Leader’

Spanier, appointed president of the university in State College, Pennsylvania, in 1995, was formerly chancellor of the University of Nebraska-Lincoln. A sociologist and marriage and family therapist, he has been popular on campus as an executive who helped student move into dorms and dressed up as the school Nittany Lion mascot.

“He is a widely recognized and admired leader,” said Robert M. O’Neil, former president of the University of Virginia and University of Wisconsin system, who called the scandal “a novel and deeply troubling situation” that he hadn’t seen in half a century in academia.

Spanier said yesterday he was postponing the 35th annual Renaissance Fund scholarship dinner, scheduled for tomorrow. The dinner, which was to honor him and his wife, Sandra, an English professor, was postponed “until spring” because “our attention is so heavily focused right now on the troubling charges by the Attorney General,” the university said in a statement.

Sandusky Charges

“Spanier needs to step aside,” according to an editorial, posted on the Patriot-News website. “If he doesn’t, the university board of trustees needs to take that step when it meets this week.”

Gerald “Jerry” Sandusky, a former defensive coordinator for the football team, is facing 40 criminal charges tied to alleged sexual assaults on eight boys stretching back to 1995, when he was running a charitable organization for young people. A centerpiece of the investigation is an eyewitness account of a late-night assault that allegedly occurred in March 2002 in the locker room of the Lasch Football Building on the University Park campus.

Timothy Curley, Penn State’s athletic director, and Gary Schultz, vice president for finance and business, were charged by state prosecutors on Nov. 5, the same day as Sandusky, with failing to report allegations related to Sandusky and then lying to a grand jury about their knowledge of the allegation.

Criminal Versus Civil

On Nov. 6, Spanier issued a statement saying the two men had his “unconditional support.” Later that day, Schultz, 62, retired, and Curley, 57, requested administrative leave so he could defend himself.

Pennsylvania Attorney General Linda Kelly said Nov. 7 that Paterno, who set a record for coaching longevity, isn’t a target of her office’s investigation and had cooperated in the inquiry. Kelly wouldn’t comment at a news conference when asked if Spanier was a target of the probe.

Spanier could face legal liability if he knew the details of the allegations and failed to report them to authorities or if he wasn’t truthful with authorities, said Michael Bachner, a New York criminal defense attorney, who isn’t involved in the case.

“If Spanier was aware of it and put his head in the sand, that raises possible exposure issues greatly,” Bachner said.

Ken Julian, a former federal prosecutor now with Los Angeles-based Manatt Phelps & Phillips LLP, said Spanier may avoid criminal charges, though not civil claims.

Grand Jury Testimony

If Spanier “did not get information that it was sexual it might insulate him from criminal liability, however there is a huge competency question,” Julian said in a phone interview. “He should have conducted a full internal investigation and had people interviewed and really run this to ground.”

Jack Raykovitz, chief executive officer of the Second Mile youth group Sandusky was associated with, told the grand jury that Curley informed him the information had been internally reviewed, according to a statement on Second Mile’s website.

Spanier testified that Curley and Schultz came to him in 2002 to report an incident with Sandusky that made a member of Curley’s staff “uncomfortable,” according to the grand jury report. Spanier described the incident as “Jerry Sandusky in the football building locker area in the shower with a younger child and that they were horsing around in the shower,” according to court documents.

What and When

The Penn State president said he didn’t know the identity of the staff member who reported the behavior, and denied that the incident was reported to him as sexual. He acknowledged that Curley and Schultz didn’t tell him they had plans to report the matter to law enforcement. Spanier also denied being aware of a 1998 University Police investigation of Sandusky for incidents involving children in football building showers, according to court papers.

The board of trustees will have to evaluate Spanier’s response and the university’s control structure, said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

“It’s what did he know and when did he know it,” Elson said in a telephone interview.

Steve A. Garban, a former Penn State treasurer, chairs the university’s board. Its vice chairman is John P. Surma, chief executive officer of U.S. Steel Corp. Chuck Rice, a company spokesman, said yesterday Surma declined to comment and referred questions to the university. Messages left at the office of the board of trustees and for Lisa Powers, a university spokeswoman, weren’t returned.

--With assistance from Erik Matuszewski and Curtis Eichelberger in New York, Dawn McCarty in Wilmington and Romy Varghese in Harrisburg. Editors: Lisa Wolfson, Larry Siddons

To contact the reporters on this story: John Hechinger in Boston at Sophia Pearson in Philadelphia at

To contact the editors responsible for this story: Jonathan Kaufman at

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Posted via email from Tony Burkhart

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