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Report Documents Alexander's Business Dealings

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When he was president of the University of Tennessee, U.S. Secretary of Education Lamar Alexander steered university business to political associates and an inn in which his wife held an interest, while intentionally concealing the connections, the Tennessee state comptroller has concluded.

The comptroller's report, released late last month, is the product of a year-long investigation ordered by Gov. Ned McWherter, a Democrat, when questions about Mr. Alexander's financial dealings spurred senators to delay his confirmation to the federal post. (See Education Week, March 20, 1991.)

In a statement, Mr. Alexander said he "saw nothing really new in the report,'' adding that the firms he hired "did a good job for the university.''

Although the report draws no conclusions about the legality of Mr. Alexander's actions, Comptroller W.R. Snodgrass sent copies to the state attorney general and a state district attorney's office.

The report indicates that:

  • At Mr. Alexander's direction, the university held 14 events at Blackberry Farm at a total cost of $64,626. University officials said Mr. Alexander told them he had relinquished his interest in the inn, but they did not learn until he resigned that he had merely transferred the interest to his wife. They also said they had complained about the inn's high prices.

In his response to the report, Mr. Alexander said the state attorney general told him this arrangement would be legal, that he believes the inn gave the university discounts, and that he sold the stock in 1991 for about the same amount he paid for it.

  • The Ingram Group, a consulting firm whose officials had been political advisers to Mr. Alexander, was paid by members of the university board of trustees, first for advice on selecting a president and then for advising Mr. Alexander early in his presidency.

One of the firm's officials, Lewis Levine, played a similar advisory role during Mr. Alexander's first days as Secretary. The firm was also paid $36,472 through a third party for assisting the university's athletic department.

  • Bailey, Deardourff and Associates was paid directly by trustees and through a subcontractor arrangement with another firm for creating advertising for the university. The firm is headed by Douglas Bailey, who worked for Mr. Alexander's gubernatorial campaigns.

The comptroller said university officials told Mr. Alexander that doing business with associates would be "acceptable if applicable university policies were followed'' but "might create the appearance of an impropriety.'' The report says Mr. Alexander arranged indirect payments to avoid that problem.

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