The New York Times reports this morning:
The City University of New York is investigating whether a recent $500,000 donation intended to bolster the humanities and arts at its flagship school may have been improperly diverted.
The inquiry was prompted by senior faculty members at the school, the City College of New York, who learned that an account that should have contained roughly $600,000, thanks to the donation, had just $76. Faculty members asked City College officials for an explanation, but were met with “silence, delay and deflection” before appealing directly the university’s chancellor, James B. Milliken. Mr. Milliken then asked Frederick P. Schaffer, the university’s general counsel and senior vice chancellor for legal affairs, to look into the “the expenditure of monies donated,” according to documents obtained by The New York Times.
This is part of a followup to a piece the Times ran last spring, which I blogged about, and which claimed:
Documents obtained by The Times indicated that the college’s 21st Century Foundation paid for some of Ms. Coico’s personal expenses, such as fruit baskets, housekeeping services and rugs, when she took office in 2010. The foundation was then reimbursed for more than $150,000 from CUNY’s Research Foundation. That has raised eyebrows among governance experts, because such funds are typically earmarked for research.
It’s unclear what the $600,000 went to, and who made the decision. Hence, the investigation, which involves federal prosecutors. But at a minimum, it seems clear that the money was used for purposes it was not earmarked for.
I used to think that corruption was just one of those do-gooder good-government-type concerns, a trope neoliberal IMF officials wielded in order to force capitalism down the throat of developing countries. After years of hearing about stuff like this at CUNY, and in some cases seeing much worse, I’ve come to realize just how corrosive and politically debilitating corruption is. It’s like a fungus or a parasite. It attaches itself to a host, a body that is full of possibility and promise, a body that contains so much of what we hope for, and it feeds off that body till it dies.
One of the reasons why, politically, it’s worse when corruption happens at an institution like CUNY or in a labor union—as opposed to the legalized or even illegal corruption that goes on at the highest reaches of the political economy—is that these are, or are supposed to be, sites of opposition to all that is wrong and wretched in the world. These are institutions that are supposed to remove the muck of ages.
It’s hard enough to believe in that kind of transformative work, and those kinds of transformative institutions, under the best of conditions. But when corruption becomes a part of the picture, it’s impossible.
Corruption is pure poison. It destroys everything. Even—or especially—the promise of that transformation.
{ 46 comments }
hix 08.30.16 at 2:10 pm
Isnt that embezzlement or sth like that instead of corrupton ? (im a bit lost even with the German legal terms here, but it still looks wrong)
BenK 08.30.16 at 2:47 pm
Institutions will never ‘remove the muck of the ages.’ Especially not powerful institutions – as it goes, that power corrupts. This is the single most important insight against the tendencies of the left, which are to empower monopoly institutions.
Corporations, if not tied directly to government (the monopoly beyond all monopolies and the source and destination of all monopolies), have a difficult time being corrupt without attracting the attention of upstart competition. Labor, as well (unless, again, it has a monopoly sanctioned and enforced by the government).
The power of reform and repentance is with individuals, not organizations.
casmilus 08.30.16 at 3:21 pm
Make “Last Exit To Brooklyn” a compulsory text for all Humanities students at CUNY.
awy 08.30.16 at 3:31 pm
cheers for highlighting a serious problem
Frank Wilhoit 08.30.16 at 6:06 pm
You say “corruption”. The plants hear “fertilizer”.
map maker 08.30.16 at 6:51 pm
I think the first post of Corey’s I’ve ever agreed with. Wow.
Stephen 08.30.16 at 7:08 pm
“labor union[s] … are, or are supposed to be, sites of opposition to all that is wrong and wretched in the world. ”
Strewth. I have clear memories of the antics of (some of) the UK trades unions in the 1970s and 1980s, or even nowadays, and I have heard interesting things about the Teamsters in the US. I think “supposed to be” is carrying an intolerable amount of weight her.
Sebastian_H 08.30.16 at 7:20 pm
“I used to think that corruption was just one of those do-gooder good-government-type concerns, a trope neoliberal IMF officials wielded in order to force capitalism down the throat of developing countries.”
About every 5-10 years I look back at things like that where I’ve dismissed things as overblown and found that they are correct or at least have a lot more force than I thought. It turns out we can’t be right about everything.
Brett 08.30.16 at 9:12 pm
@8
I can sort of see where Corey might be coming on this. Anti-corruption has been used to justify some shady stuff in the past, like voter registration laws in the early 20th century. But it most definitely is not overblown in truth – corruption is absolutely corrosive to society.
As for large labor unions, they’re human bureaucracies. Any sort of large, hierarchical bureaucracy tends to pile up problems over time even with some degree of democratic accountability in theory – corruption, nepotism, ladder-climbers, Company Men, in-fighters, self-righteous vested interests/gatekeepers, etc. Maybe it’s why it doesn’t bother me especially when they have the same kind of problems as other big organizations, only if they’re exceptionally bad.
milx 08.30.16 at 10:05 pm
This is the wisest Corey Robin post I’ve ever seen.
otpup 08.30.16 at 10:21 pm
I had a student job at Hunter this decade for a few years. I heard endless (and bitter) gossip about the cronyism of the administration new at the time.
otpup 08.30.16 at 10:32 pm
The problem with the neo-liberal critique is making a invidious distinction between the for-profit and not-for-profit sectors. Both have legal (but immoral) varieties of corruption and illegal varieties. Both have trouble aligning the needs of executives (or other powerful individuals) with the needs of the organization or its mission. Both can be insulated from supposedly corrective forces (i.e., the market or the polity). Both suffer from the danger of executive “entrepreneurialism” in proportion to potential spoils.
Cranky Observer 08.30.16 at 11:59 pm
Ah, the power of the invisible hand. Would that it were so. The only corporations of any size I have ever observed that managed to maintain strong and reasonably effective control of peculation were the (now essentially defunct) regulated utilities: telephone companies, electric utilities, some banks. In all cases they were helped on the path to righteousness by strong external regulatory and audit agencies, some degree of a spirit of public service in the operation and workforce, some degree of public view into their operations and incentives for members of the public to use that view, and legal limits on allowable profit. How fast that all can go away in the corporate world, and the usual run of mutual board appointments, back scratching, nest feathering, every man for himself and the most he can grab, etc take its place can be measured from 1994 in the electricity industry. Took about 5 years IIRC.
F. Foundling 08.31.16 at 1:08 am
OP:
>I used to think that corruption was just one of those do-gooder good-government-type concerns, a trope neoliberal IMF officials wielded in order to force capitalism down the throat of developing countries.
>It’s hard enough to believe in that kind of transformative work, and those kinds of transformative institutions, under the best of conditions. But when corruption becomes a part of the picture, it’s impossible.
That sounds a bit too maximalistic and seems to concede too much ground to the neoliberals and libertarians. Yes, corruption is very demoralising and debilitating, but almost all institutions, movements, regimes and social forces exhibit corruption to some extent, even when they are beneficial or less harmful than their alternatives. They don’t need to be perfect to be worthy of defence. Contrary to the rhetoric of the Right, a trade union in which some corruption occurs can still do some good work and its corruption is not a justification for busting trade unions, and a state in which some corruption occurs can still do some good work and its corruption is not a justification for privatisation or for abolishing the state. Similarly, a government in which some corruption occurs can still do some good work and/or be preferable to its opposition.
Tabasco 08.31.16 at 1:50 am
The $600,000 might or not be missing because of corruption. If it was spent on a legitimate purpose of the university, such as paying salaries of the IT staff, or fixing the plumbing, then that’s really bad, because the money was supposed to spent on the humanities and arts, and it might be criminal, but it’s not the same as paying a bribe or just someone just stealing the money.
bruce wilder 08.31.16 at 2:08 am
Of course, “we have no idea what happened to the money” means that it is not a prosecutable offense. Just an occasion for an investigation upon which no one could possibly comment until the news cycle has passed several times over.
Everybody’s doing it. Nothing to see here.
LFC 08.31.16 at 3:11 am
Stipulating that corruption can be found in a variety of different contexts, the countries in which it’s most severe, to the point at which it becomes an inadequate descriptive word, tend to be those in which regimes loot the surplus from resource extraction with the tacit or perhaps in some cases active participation of multinationals operating in the country. There are various possible examples (including several in subSaharan Africa and [I think] the former Soviet central Asia) but I happen to be thinking specifically of Angola, which until the decline in oil prices had, if I’m not mistaken, the most expensive (by some measures) city in the world (Luanda) alongside one of the highest rates of child mortality in the world, if not the highest. In general the so-called resource curse is pertinent here, i.e. regimes/countries that have put all their eggs in the oil basket or something comparable. The issue is not so much tsk-tsking about ‘poor governance’ but rather trying to sort out the ways in which the global political economy and its m.o. facilitate or at least create permissive conditions for these situations, in tandem w/ the local contexts.
LFC 08.31.16 at 3:48 am
p.s. In June, the SEC issued a good rule on disclosure of payments to govts by resource-extraction companies:
https://www.sec.gov/news/pressrelease/2016-132.html
J-D 08.31.16 at 4:45 am
The tendency of the corporate form is both to increase organisation and to increase power. If all power tends to corrupt, that must include the power vested in corporations and the power vested by corporations in individuals. The dictum is not restricted to ‘monopoly power tends to corrupt’ or ‘government power tends to corrupt’.
J-D 08.31.16 at 4:48 am
Corruption, embezzlement, and dishonesty are hard to eliminate; so long as there is trust, there will be breaches of trust. But it is no solution never to trust. This is not to say that corruption should be ignored when found, nor that anti-corruption efforts should be abandoned; only that hope should not be abandoned solely because corruption persists.
bruce wilder 08.31.16 at 5:29 am
Trust?
Trust in leadership.
“The fish rots from the head” is an expression, I think.
There’s a lot of abstract hand-wringing on the centre-left about “inequality” that seems oddly reluctant to connect the rapid increases in chief executive pay to a variety of ways in which institutional trust and mission commitment can be undermined to fund executive “compensation”. This case looks like it will turn out to be a remarkably complex case, in which the corruption of the donors is at much at issue as the corruption of the fund-raisers.
maidhc 08.31.16 at 6:47 am
I think there is a need to have independent accountants conduct periodic audits to verify that all money was used for its intended purpose. That’s true for public institutions because they use the people’s money, and it’s true for publicly traded companies because it’s the shareholders’ money. This is common practice at any large corporation I’ve been involved with, and I’m rather surprised that it doesn’t happen at a university.
The chancellor of UC Davis just lost her job for misusing university money, specifically by hiring relatives into sinecures at inflated salaries. And other things. It’s nice to hear that sometimes there are consequences.
Most universities I know about are rather nit-picky about how you can spend money. Like you can buy a tablet because it’s a computing device, but you can’t buy a phone because it’s a personal item.
When it comes to things like spending large amounts of other people’s money, or counting votes in an election, I don’t want to have to trust people. There should be a system in place to, in the words of Ronald Reagan, “Trust but verify”.
That doesn’t solve the problem of inflated salaries at the top, but that’s a different problem.
david 08.31.16 at 7:58 am
“Several faculty members worried that the money had been spent instead on helping the college close a budget deficit at the end of its fiscal year on June 30.”
… which would have triggered a heroic resistance against capitalism and debt and budget cuts; instead, whoops, it’s tawdry embezzlement.
Ms. Coico tried to be too careful. The trick to making insiders comfortable with kleptocracy is to just spend money freely on your mates, then blame capitalism when the bill comes. If you run around asking for budget cuts and fee increases, don’t be surprised when they suddenly take notions like fiduciary duty and the sanctity of donor intention or tax-funded grants very seriously indeed. And even if it turns out that your embezzlement is a fraction of the deficit, your head will still roll – the faculty can’t stop legislatures from refusing to fund them, but they can lash out at you instead.
Ebenezer Scrooge 08.31.16 at 11:02 am
Corruption is a matter of kind, as well as degree.
I live in a large Northeastern city, which has had moderately corrupt leadership and moderately clean leadership. The clean leadership could afford to be clean because it was funded–completely legally–by the plutocracy. The moderately corrupt leadership has been far more democratically accountable, somewhat more effective in providing public services, and has been reasonably modest in its skim. I’m not saying that corruption is necessary for democracy–I’ve also lived in squeaky-clean local governments that are pretty responsive and responsible, and a damn sight lower in taxes. But corruption is not inimical, if it’s the right kind of corruption.
Corruption, I think, is worse in civil society institutions than in government. Civil society institutions are inherently not democratic–especially universities! (No–senior faculty is only a demos in the Athenian sense of the term.) These things are governed by fiduciary principles, which are inimical to corruption of any kind.
SamChevre 08.31.16 at 2:28 pm
The best introduction I know to the uses and dangers of corruption is the section on the NYC police in The Autobiography of Lincoln Steffens.
Basically, some kinds of corruption can serve to align interests; Roosevelt’s crackdown on police corruption made for more damaging and predatory crime, and more violence (both state and non-state.)
Michael Epton 09.01.16 at 7:11 am
This is why I took Larry Lessig’s quixotic presidential candidacy seriously this year. In addition to helping me understand how patent and copyright on steroids threatens the future of civilization, he has lately undertaken the attack on corruption: the greater threat.
Charles Peterson 09.01.16 at 5:10 pm
Corey hasn’t explained why he’s come to view corruption as “destroying everything.” I’m still with Foundling in #14 that there are things that are worse…and in a neoliberal meritocratic society that’s almost everything. Corruption at least tends to leave things unchanged rather than reformed towards universal wage and debt slavery.
Charles Peterson 09.02.16 at 5:18 am
The greatest of science, art, literature, and philosophy are all the residue of earlier corruption. Charles Darwin was a gentleman, and it is impossible to imagine otherwise. That’s to say he was the beneficiary of an ancient corruption, the original theft.
It is precisely the successors of that original theft who would be the beneficiaries of the perfect investment, if it were possible, which would benefit only the investor and neither be a cost nor a benefit to anyone else in society.
That is to say that all the benefits to anyone and everyone else have come through the corruption of capitalism, rather than its perfection.
Maria 09.02.16 at 7:18 am
Corey, it may amuse you and other social scientists to know that in my time at the World Bank, corruption by client states implicitly encouraged by bank lending was known by the euphemism ‘political economy’.
Anarcissie 09.02.16 at 8:16 pm
BenK 08.30.16 at 2:47 pm @ 2 —
I see you have not worked much in private corporate environments.
It might be noted that what is considered ‘corruption’ may vary as to environment and ideology, and what would be considered corrupt in a government or a union or other den of leftist iniquity may not be corrupt in business. For example, a large brokerage house I once worked for decided it had to give its field agents a new customer information system. Requests for proposals were circulated and proposals received. A committee of hotshot engineers investigated them full-time, and the opinions of dozens or maybe hundreds of others sought. A strongly evidenced, strongly reasoned recommendation was made. The CEO then played golf with Paul Allen of Microsoft, and the recommendation went out the window. Ultimately this decision wasted hundreds of millions of dollars. That would have been a crime in government, in a union, or in many other institutions, but in business it’s entirely legal and quite common. And there is no recourse, except through the market; and markets are mentally unstable, and often sort of dumb, just like the humans who constitute them.
I think, though, that you started well. ‘Institutions will never “remove the muck of the ages.” Especially not powerful institutions – as it goes, that power corrupts.’ Well said. But then the Faith took over, and led you astray.
Charles Peterson 09.03.16 at 3:49 am
I’d be very suspicious of accusations of corruption. That has led, for example, to discriminatory voter ID laws. And now the impeachment of leftist populism in Brazil, notably by those more corrupt. Successful anticorruption can generally be assumed to be the greater corruption demolishing a lesser one. The greatest corruption never falls unless overtaken by one even greater.
And generally, if crime doth pay, none dare call it crime. So we have private healthcare insurance, very costly to society, which performs exactly one function–the death panel function. And then, Wall Street. I should have started with outgoing call marketing and spam, but those are technically criminal in some cases.
But why stop there, when about the highest price is paid to rain endless warfare, or in some previous brief periods the mere threat of it, on the imagined possible threats to global plutocracy.
Charles Peterson 09.03.16 at 4:24 am
And Tobacco, Oil, Coal, Fracking, Agrifuel, Agribusinesses of many kinds, the list of legal criminality goes on.
Terry Corcoran 09.03.16 at 3:01 pm
Have you seen this letter to the Chronicle of Higher Education?
“September 2, 2016
Original Source for Article About ‘Missing’ CUNY Funds Is Flawed
To the Editor:
I am writing in response to the article, “CUNY Investigates Possible Misuse of $600,000 at City College of N.Y.†(The Chronicle, August 31), which is based on a New York Times article, “Missing City College Donation Prompts Inquiry,†published on August 30. The New York Times article is filled with unsubstantiated assertions and misleading innuendo and suggests, without offering a single piece of evidence, that there were improprieties when there are none whatsoever. This was made clear to the New York Times reporter but ignored. The record must be set straight.
There are absolutely no “missing†funds of any kind. The fact is that the terms of the generous donation to City College, referred to in the article, state that the funds are to be used “for the arts as determined by the President†of City College, and that is precisely what happened. The donor was consulted, twice, and both times approved how the funds were utilized to support adjunct arts faculty. Any assertion that “it is unclear who withdrew the money,†as the New York Times article says, is absolute nonsense.
The fact is that this was a generous private gift used in accordance with the donor’s wishes. I met yesterday with faculty members who had raised questions about the funds. In that meeting, none offered evidence of any improprieties or suggested there was any.
Lisa S. Coico
President
City College of New York”
Brett Dunbar 09.04.16 at 2:35 am
Capitalism does not have an evolution towards wage and debt slavery, the opposite in fact is the case in advanced capitalist societies. Wage slavery is basically an oxymoron. An essential element of slavery is that the slave is forced to work for the master an essential element of employment is that the employee is free to withdraw from the contract. Eighteenth century terms of employment for mariners might qualify, they were paid only on completion of the voyage. In the meantime borrowing from the captain against the wages for spending money, if they jumped ship the whole salary was forfeit and they were still in debt to the captain. This type of contract has been illegal for centuries; the employee is entitled to be paid up to the point of resignation.
In rich countries debt is relatively easy to void, the time to discharge of bankruptcy under English law is normally one year. Debt slavery occurs in situation where the insolvent debtor cannot compel the creditors to accept a sum in full and final payment and the creditor can make a claim against ongoing earnings.
js. 09.04.16 at 4:16 am
Instinctively, this is pretty much where I’m at. But I think it’s a complicated problem, not least because there are problems with classification. Not just what Maria says above (@29), but also the fact that Enron, e.g., doesn’t generally get discussed under the rubric of corruption (Cranky Observer @13 notwithstanding). So mostly, if somebody’s banging on about “corruption”, I tend to be a little sceptical, but the kind of thing you’re pointing to is obviously a real, genuine problem.
LFC 09.04.16 at 4:38 am
Corey R.
a trope neoliberal IMF officials wielded in order to force capitalism down the throat of developing countries.
Corruption in its various forms almost certainly hurts the poor in developing countries more than anyone else. Moreover, the IMF has never really been in the business of forcing capitalism on developing countries but rather a particular form of (capitalist) economic policy, in contexts where other forms of (capitalist) economic policy were the immediate alternatives.
It’s not analytically helpful to suggest that subsidizing rice or cooking oil for the urban poor is “uncapitalist” but not subsidizing those items is “capitalist”. IMF ‘structural adjustment’ loans had and have to do not w capitalism per se, but w particular kinds of austerity and particular kinds of ‘market-oriented’ policies.
Moreover, except for a few quasi-autarkic regimes like N. Korea, every country is involved in the global economy whether it wants to be or not. And when oil prices fell and someone like Maduro was in charge, the result in Venezuela is there’s about to be a full-scale social explosion b/c there’s no food in the shops except for a smallish number of connected people.
That’s not a defense of ‘capitalism’ (or nec. a criticism of ‘socialism’) but it does seem to be the case that doctrinaire leftist regimes in small countries operating in a global capitalist economy are capable of producing very bad outcomes. I’m no expert on Venezuela and it may be that the current govt has been uniquely incompetent, I don’t know.
But to return to the beginning: the IMF has never strictly speaking been in the business of forcing capitalism on poor countries, and what the IMF has forced on poor countries it prob cd have done equally effectively w/o mentioning corruption.
Trillions of dollars that are the product of some kind of criminal activity, broadly defined, flow out of Russia, China, and a whole bunch of other, poorer countries into bank accounts in the West every year. Anyone who thinks that does not, on net, hurt poor people around the world is prob. kidding herself/himself.
LFC 09.04.16 at 4:42 am
In fairness, other left-oriented regimes in Latin America have done good things in recent decades, e.g. the substantial reduction in poverty rates in Brazil. But something has gone seriously wrong in Venezuela and it may well be connected to the overreliance on oil (see my comment on that further upthread).
T 09.04.16 at 1:42 pm
Corey @OP
Any news about the CUNY response?
“There are absolutely no “missing†funds of any kind. The fact is that the terms of the generous donation to City College, referred to in the article, state that the funds are to be used “for the arts as determined by the President†of City College, and that is precisely what happened. The donor was consulted, twice, and both times approved how the funds were utilized to support adjunct arts faculty. Any assertion that “it is unclear who withdrew the money,†as the New York Times article says, is absolute nonsense.” — President of CUNY
http://www.chronicle.com/blogs/letters/original-source-for-article-about-missing-cuny-funds-is-flawed/
Brett Dunbar 09.04.16 at 7:14 pm
The IMF is able to insist on loan conditions because they are willing to lend at far below the market rate available to those countries. They require that policies intended to improve the economy, and therefore the ability to repay, are followed. If a country already has a sound economy then it can borrow on the bond markets at a reasonable rate without the lender imposing any policy conditions. For the IMF to have much leverage a country has to be a poor credit risk unable to borrow at a reasonable rate. That the IMF has the power to impose loan conditions is a consequence of the existing policies being failures.
LFC 09.04.16 at 8:34 pm
They require that policies intended to improve the economy, and therefore the ability to repay, are followed
The prob w this analysis is that IMF-imposed policies have often not been great successes, regardless of metric used. As is well known, the IMF has typically insisted on a package of ‘reforms’ that emanate from a particular worldview. If you agree w that worldview and its consequences, you will not have an objection to structural adjustment lending; otherwise, you very well might.
LFC 09.04.16 at 8:39 pm
P.s. A 2014 article analyzed IMF lending from 1980 to 2000 and found that “as the proportion of neoliberals in the borrowing government increases, IMF deals get comparatively sweeter” in terms of waivers granted. So the IMF, according to this analysis, played favorites depending on the ideological complexion of the borrowing govt, apparently irrespective of performance.
http://howlatpluto.blogspot.com/2014/05/abstract-of-day-biased-imf-lending.html
Brett Dunbar 09.05.16 at 12:54 am
The policies are those that the IMF believe will be beneficial, it is possible that they are mistaken in this. It remains true that the IMF only has this power due to the country being unable to use the bond market as a source of finance. That is that the state’s existing policies aren’t working. The type of reforms the IMF favours limit the involvement of the state in the economy; more hands on policies give a much greater danger of bureaucratic corruption and incompetence.
The IMF might be more inclined to be generous to those governments already inclined to implement the kind of market reforms the IMF favours. They might also be more inclined to give sympathetic governments the benefit of the doubt.
curious987 09.05.16 at 7:35 pm
Is this a field of academic study, by researchers with no axe to grind?
If not, why not? Can we get some land-grant colleges to shift their energies into studying it?
curious987 09.05.16 at 7:39 pm
From the CUNY letter, though, it does seem that the college was unfairly maligned in the article.
http://www.chronicle.com/blogs/letters/original-source-for-article-about-missing-cuny-funds-is-flawed/
js. 09.06.16 at 4:22 am
LFC @36 — I took the reference to capitalism to be more of a relative thing: structural adjustment, forced privatizations, etc., all in the name of saving people from “corrupt governments”, with the stress on “government”. You’re not wrong that corruption hurts the poor the most, tho maybe it hurts the middling poor, the lower middle classes, as much if not more than the extremely poor (I’m thinking of India—I’m not sure I’m totally right there, and I’m certainly not sure that this generalizes). In any case, the problem as I see it (and what I read Corey as gesturing at) is that the cure was worse than the disease. Washington Consensus–type reforms caused more harm faster to wide swathes of populations in developing countries than petty corruption ever could. Obviously, this requires more of a defense, but it’s a fairly standard sort of argument.
LFC 09.06.16 at 2:48 pm
js.,
I’m sure the cure was sometimes worse. The two issues though (corruption and imposed ‘reforms’) may not always be closely linked. One problem is that almost (there are a few exceptions) any regime in power in country X is legally entitled to sell X’s resources on the global market and use the resulting proceeds as it wants, whether that’s in ways that help the general population or some significant part of it or, as is sometimes the case, simply to enrich the people in power.
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