University Transactions Under Alexander Probed

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The Tennessee state comptroller is reviewing a series of financial transactions completed during Secretary of Education Lamar Alexander's tenure as president of the University of Tennessee.

The probe by Comptroller W.R. Snodgrass was spurred by weeks of revelations in state newspapers.

Under investigation are a pair of university contracts channeled to firms beaded by former aides to Mr. Alexander, as well as payments to a mountain retreat that was owned in part by Mr. Alexander's wife.

At the same time, other incidents ranging from a degree-peddling scandal at the university's space institute to the athletic director's indirect sale of $19,000 in nutritional milkshakes--while not involving Mr. Alexander personally--have also called into question the oversight exercised by the school's president and trustees.

"Over the last two weeks, Alexander's steel exterior has resembled an eggshell ," said a recent column in The Tennessean of Nashville. The column ran under the headline: "Tarnish on the hero in plaid shirt?"

Mr. Alexander has strongly denied any improprieties, however, and there have been no suggestions that the arrangements under investigation were in any way illegal.

Moreover, the comptroller's audit of the university's finance and spending practices has not uncovered any areas of inquiry other than the expenses that have been the focus of media attention, according to John Morgan, executive assistant to Mr. Snodgrass.

Mr. Morgan added that past audits of the university under Mr. Alexander's leadership have not revealed any uncommon problems.

However, some of the recently revealed transactions have been termed "highly irregular" and "inappropriate" by David Manning, Gov. Ned McWherter's finance commissioner. Governor McWherter is a Democrat, while Mr. Alexander is a Republican.

Former Aides Selected

According to university and state officials, the payments under review include: . About $36,000 over two years to the Ingram Group, a Nashville- based government-relations firm headed by three men who were top aides to Mr. Alexander while he was Governor.

The group, hired without competitive bids, reportedly offered advice to the university's athletic department on matters ranging from increasing sales of football programs to raising the athletic department's image.

The consultants were paid indirectly, through a Kentucky firm. A spokeswoman for Mr. Alexander said last week that he had "no knowledge" that the Kentucky firm had plans to hire his former aides. . Nearly $33,000 over two years to Douglas Bailey, a Washington-based political consultant, who previously had advised Mr. Alexander both during his gubernatorial campaign and term in office.

Mr. Bailey's firm produced promotional television spots for the university's athletic department. The firm was first brought on as a direct contractor on a no-bid basis. The bulk of the money paid to Mr. Bailey's firm, however, went to it as a subcontractor to a Nashville firm that was low bidder for the commercials. . More than $64,000 to Blackberry Farm, a retreat partially owned by Honey Alexander. The stake in the property had previously been held by Mr. Alexander.

On several occasions during his tenure--beginning with a get- acquainted session with faculty and staff members within days of his appointment-Mr. Alexander held functions at the mountain lodge. Ms. Alexander's interest in the property was not disclosed at the time.

Since Mr. Alexander's resignation from the university to become Secretary of Education, U.T. has severed its ties with the Ingram group, resumed producing its own promotional commercials, and curtailed functions at Blackberry Farm.

Hiring Called Proper

In February, Mr. Alexander faced inquiries from U.S. senators about his personal finances that held up his confirmation as Secretary for a month. They found no evidence that Mr. Alexander had broken any laws, but only one subject of the new investigation the Alexanders' interest in Blackberry Farm--overlaps the concerns raised in Washington. (See Education Week, March 13, 1991 .)

Education Department officials said Mr. Alexander has taken the questions in stride. In response to the recent revelations, he has praised the consultants' work, defended their hiring as proper, and said that he did not try to hide his wife's interest in Blackberry Farm.

"He's responded to every question that's been posed to him about decisions he made at U.T" said Etta Fielek, Mr. Alexander's spokesman. "He has been very forthcoming and willing to answer questions about any curiosity."

The Secretary returned to Nashville last month for a news conference to address questions about the transactions.

University officials said last week that payments tied to Mr. Alexander's associates and wife, as well as the incidents involving other university officials, have caused concern on campus.

"It certainly makes you sit back and take a hard look at yourself and say that we can do better," said Charles E. Moss, associate vice president for business and finance.

Vol. 11, Issue 01, Page 37

Published in Print: September 4, 1991, as University Transactions Under Alexander Probed
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