March 4 (Bloomberg) -- Howard Davies said he resigned as director of the London School of Economics and Political Science, where U.S. President John F. Kennedy and billionaire George Soros once studied, to protect the university’s reputation.
It was a mistake to accept a 1.5 million-pound ($2.4 million) donation from Libya’s Gaddafi International Charity and Development Foundation and an error to accept a British government invitation to advise Libya on its investments, Davies told the British Broadcasting Corp. today.
“I jumped,” said Davies, 60, a former chairman of the Financial Services Authority, the U.K. regulator. “The reputation of the school is my responsibility.”
The LSE was founded in 1895 by figures including the playwright George Bernard Shaw to assist “the betterment of society,” according to its website. The university has commissioned an independent inquiry by England’s former Lord Chief Justice, Harry Woolf, into its relations with Libya.
He will examine the donations, the acceptance of $50,000 in return for Davies’s advice to Libya’s sovereign wealth fund, a contract to train Libyan civil servants and the academic authenticity of the 2008 doctoral thesis it awarded Muammar Qaddafi’s son Saif.
Davies will remain on Morgan Stanley’s board, where he has served since 2004, a person briefed on the situation said, declining to be identified because the plan isn’t public. The New York Times reported the New York-based firm’s intent to keep him earlier today. Jeanmarie McFadden, a bank spokeswoman, said she couldn’t comment. Davies will stay on the board of London-based Prudential Plc, Edward Brewster, a spokesman for the insurer said.
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Forces loyal to Qaddafi, who seized power in a 1969 coup, fired tear gas and live rounds during anti-government protests today, according to witnesses cited by the Associated Press, while clashes in the town of Misrata left 33 people dead, according to Al Arabiya television. Qaddafi loyalists have used violence to quell a rebellion against the regime following popular uprisings in the neighboring countries of Tunisia and Egypt.
“Accepting the money was wrong,” said Ana Meno, a 19 year-old Spaniard studying economics at LSE, who was today participating in a demonstration at the school to commemorate Egypt’s revolution.
The LSE has 9,000 students from 140 countries and counts 16 Nobel Prize winners among past students and teachers.
The university needs to “wrap up the issue on the donation pretty quickly,” Colin Ellis, chief economist at the British Venture Capital Association, who has a master’s degree from the LSE, said in a telephone interview. “Choosing to fall on his sword for the sake of the institution and sorting out the donation issue should do the job” in repairing its reputation.
An LSE degree is “still a fantastic qualification to have,” said Brendan Brown, chief economist at Mitsubishi UFJ Securities International, who also holds a master’s degree from the institution. “All of this in the background doesn’t affect my view of the academic qualification.”
“We accept his resignation with great regret and reluctance but understand that he has taken an honorable course,” Peter Sutherland, chairman of the LSE’s court of governors and a former chairman of London-based oil company BP Plc, said in a statement yesterday. Sutherland is also non-executive chairman of Goldman Sachs International.
“Responsibility for this terrible mistake goes far beyond Howard Davies,” John Sidel, a professor of international politics at the LSE, said in an interview today. “There are many, many people here at the LSE who feel strongly that Howard Davies should not have fallen on his sword.”
Sidel said that Fred Halliday, a former professor of international relations at the LSE who died last year, “vehemently opposed” the decision to accept the Libyan funds.
“Maybe nothing wrong has been done, I really don’t want to judge, but the mere connection with Qaddafi, a dictator, might have caused a shadow to fall on the university,” said Stanislaw Gomulka, a former Polish deputy finance minister who taught at the LSE, said in an interview.
At the pro-Egypt demonstration at the LSE, students wrote messages of support such as “Egypt is an inspiration to others” on a pyramid. There was also a written note for Davies.
“Come back Howard! Go on holiday to Egypt, see how you feel, then come back?”
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