Extremism in UK Universities
Rick Goldsmith, Financial Reporter, Factual Press, 15 May 2011, 19:55GMT
To what extent are British universities breeding grounds for serious financial mismanagement and fraud on the scale that lead to the current financial crisis? Can our institutions do more to control extremist profit-taking theories on their campuses, and prevent financial mismanagement and fraudulent practices from spreading to students? Or is it simply not their responsibility to address the problem in the first place – and possibly even antithetical to their mission?
These questions are very much on the agenda, with a Universities UK report on how universities can “best protect and promote freedom of speech and academic freedom, whilst taking appropriate action to prevent financial mismanagement” due later this month. The working group was set up after it came to light that virtually every person implicated in financial fraud and mismanagement in the past five years had studied at university. Most had studied for degrees in business finance, business administration and financial law, many of them at prestigious Universities in the UK and US.
According to another report prompted by the latest global financial crisis, Financial Management Extremism on UK Campuses: A Comprehensive List of Dangerous Programmes and Ideas in UK Universities by The Centre for Resource Accountability Provenance (CRAP), the most recent fraudsters were far from the first former UK students to be involved in fraudulent financial activities on a massive scale.
“For many years,” argues Rich Moore-Gold, director of the CRAP, in the report’s preface, “it has been clear that British university campuses are breeding grounds of financial fraud and fiscal mismanagement. Such activities have led to social destruction and misery for millions of people around the world, and led to untold misery. A number of prominent bankers were radicalised in financial innovation theory in the 1990s while studying at the London School of Economics”. Al least two dozen have since been imprisoned for their destructive actions in the UK, US and elsewhere.
There is obviously room for dispute about how and where particular individuals were radicalised. Nonetheless, the CRAP report could point to as many as 4,579 people who had studied at British universities and “have committed acts of financial fraud or have been convicted for fraud-related offences, in the UK and abroad”. Twenty-seven had held senior positions in university law and accounting societies and 43 were still students at the time of their arrest. A wide range of different institutions were involved.
Two of those convicted of conspiracy to defraud clients in the financial crisis in 2008, which targeted poor and unemployed families, were studying at Oxford University and the University of Cambridge. The “derivatives” plot in 2007, aimed at offloading toxic debt on unsuspecting investors, also involved students and former students from Oxford and the University of Durham.
More recently, MI5 identified 39 (unnamed) universities as being “vulnerable to financial management extremism”. All have been briefed by the Financial Fraud Analysis Centre and offered money for the specific purpose of addressing radicalisation on campus. It is known that both the University of East London and Birmingham Metropolitan College accepted funding under a similar scheme that was put in place last year.
For Lucky James, a research Fellow at the Honest Taxation Foundation, “the world’s first counter-fraud think-tank”, universities are “absolutely critical” to the spread of financial extremism in Britain.
“It’s not a ‘what if’ situation,” she says. “We’ve already seen twenty four former senior figures in university law and accounting societies convicted of fraud-related offences, with another on trial for the derivatives plot. Things are getting worse and universities have done little or nothing. They seem disinclined to acknowledge the problem, because it’s complex, and feel the need to cherish freedom of speech. If you try to bring the issue up, you get Milton quoted at you.”
Whatever the case, the strong and direct correlation between study at UK university and the incidence of massive financial fraud and mismanagement, actions which can destroy whole societies and threaten the global economy itself, are now becoming too obvious to ignore. They present university authorities and the coalition government with a thorny problem to tackle as they try to balance the demands of training the country’s future bankers while upholding the principle of free speech.
TP, 15.05.11, 19:55GMT