Under the noses of 52 people, $21-million just slips away

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By HOWARD TROXLER

© St. Petersburg Times, published June 23, 2000

There is a perfectly good reason the trustees of Eckerd College were not paying attention while most of the school's endowment was being spent.

They were busy guarding the nuclear secrets at Los Alamos.

Here is a quaint, old-fashioned opinion: There ought to be more to being a trustee than eating shrimp cocktail at receptions. There is a certain ... well, a certain trust involved. A trustee's job is to make sure the hired help is running the joint properly.

It would be one thing if Eckerd's president and chief financial officer had conspired to bamboozle the entire 52-member board.

(By the way, that is the first sign of trouble. Can you imagine a 52-member committee good at overseeing anything?)

If the staff had, let's say, printed up fake financial documents for board meetings, lied about the entire situation from top to bottom, counterfeited a few bank statements -- in that case, who could blame a board of trustees for being taken in?

But there is no such excuse. If anything, there were warning signs. The college's 1998-1999 audit was only recently completed. There was no comptroller for a year. The college could not supply its auditor with enough information to complete its last annual report on time.

If Eckerd College were a publicly traded corporation, it would have been de-listed by now. The SEC would be asking questions.

The focus of the blame will be on the school's otherwise accomplished president, Peter Armacost, who is retiring, and its less-accomplished vice president for finance, J. Webster Hull, who has resigned.

But the real blame falls on the trustees. Making sure this kind of thing never happens was their main job, which they utterly failed to do. If anybody should resign here . . .

At least the board chairman, Arthur Ranson III, had the grace to admit this, sorta.

"There is certainly a responsibility on the part of the board to ask questions when reports are not being timely presented," Ranson said. "The board could have been more aggressive in demanding updated financials."

Could have.

We are not talking about a bunch of nitwits here. Skipping down the list, we see a retired GTE executive, the chairman of Lykes Bros., the mayor of St. Petersburg, the chairman of Eckerd Corp., a retired bank chairman, the president of Tech Data Corp., and the chairmen and managing partners of various other corporations.

Presumably, they made sure their own outfits produced auditable books in the past year. Or, what the heck, maybe they didn't.

This goes to the tenor of the times, and to human nature. If by some miracle I had been on the board, I can't claim I would have done any better, and neither can you.

Imagine sitting in a room with all those smart folks, and there's good old Dr. Armacost over there, who everybody loves, saying, hey, the audit is gonna be a little late, but it's no big deal, trust me ... who is going to speak up?

People talk about running institutions "like a business," but once again, the problem at Eckerd was it ran too much like a business -- a business in today's dot-com, pipe-dreaming, anything-goes, no-sense-required economy.

People also get on their high horse these days about "personal responsibility." By that, they mean of course, to criticize other people's irresponsibility: poor people, kids, unlucky stiffs caught in the mire of bad credit, or petty criminal records, or unwanted pregnancy.

Well, here is more than $21-million worth of irresponsibility in one big, stinky pile. It was put there by the smartest, most powerful bunch of folks you can imagine. You know what this world needs? More accountants.

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