'Important alum': Donor Jones had role in Sullivan ouster
With the chair of the Darden School Foundation board Peter Kiernan having resigned to distance himself from raging fires of discontent over the ouster of UVA president Teresa Sullivan, attention turns to the power of other wealthy donors and their role in the forced resignation. It turns out that Kiernan wasn't the only UVA giver with advance knowledge of what has been defended as a confidential personnel decision.
Knowledgeable sources say that one man, already well known for pledging $35 million to build a UVA basketball arena in his father's name, had a key role in removing the president. That man, 1976 UVA grad Paul Tudor Jones, is a Greenwich-based hedge fund manager who began building his estimated $3 billion-plus fortune in the 1980s, and who sits, alongside fellow Greenwich resident Kiernan, on the boards of several corporations and nonprofits.
"We should all be elated," Jones says of Sullivan's ouster in a Sunday morning op/ed (see sidebar).
As previously reported, hours after news of Sullivan's firing broke on Sunday, June 10, Kiernan sent an email to members of the Darden Foundation board assuring them that University Rector Helen Dragas had the situation "well in hand"– and inadvertently laid out a roadmap to the most controversial move in recent UVA history.
Kiernan revealed that he'd been contacted several weeks earlier by "two important Virginia alums" who'd asked him to work on the confidential "project" with Dragas.
Who are these "important alums" who seem able, according to Kiernan's email, to influence the University's top job?
If Kiernan's donations to UVA have thus far flown under the radar, Jones' have not. In addition to providing the lead pledge to UVA's John Paul Jones Arena, 57-year-old Jones and his yoga-enthusiast wife, Sonia, are the money behind a proposed "contemplative center" that UVA announced in April after the Joneses authorized a $12 million pledge.
According to sources, however, both of those pledged multi-million-dollar gifts would pale in the shadow of what UVA was hoping to elicit from Jones: more than $100 million. Given that the school's Capital Campaign, launched in pre-recession 2004 with a goal of raising $3 billion in seven years, fell short by $400 million, a nine-figure gift would help close the remaining gap– and might encourage a flurry of smaller gifts.
But could a nine-figure gift have strings attached to the head of a president? Sources say yes– with the reasoning three-fold.
For starters, donors typically like to see their gifts spark other gifts, so-called challenge gifts. Kiernan and Jones, neither of whom replied to requests for comment for this story, reportedly told associates that they did not have full confidence in the fund-raising skills of Sullivan.
Another factor was the allegedly slow pace of restructuring at UVA. Rector Dragas revealed her thoughts on the subject when, in the wake of the controversial ouster, she wrote: "We do not believe we can even maintain our current standard under a model of incremental, marginal change. The world is simply moving too fast.”
The third piece of the puzzle revolves around the phrase that Kiernan used three times in his email: "strategic dynamism," a term heretofore hardly heard outside of Wall Street or the business schools that groom its leaders.
Sources indicate that Jones and Kiernan joined Dragas in asserting that Sullivan simply did not possess the will for "strategic dynamism," an ability to take rapid action. While Kiernan's email thus far remains the key public manifestation of his thinking, sources indicate that Jones had prior knowledge of Sullivan's ouster.
That Jones has been targeted for a nine-figure donation is well-known in the University administration. That Jones would allow his money and power to get wielded this way makes jaws drop.
One prominent alum and donor says he just can't fathom it.
"There's always a way to make a donor happy without the neck of the president," says Buford Scott, a seven-year veteran of the Board of Visitors.
Scott, whose heritage includes longtime ties to UVA as well as one of the state's most venerable investment firms, resigned his board seat in the 1990s before his final term expired to make room for a more racially diverse group.
Scott recounts the way things used to be done– how Depression-era university officials approached his grandfather to explain the need for a football stadium. For a donation of $300,000, he recalls, the new stadium received the Scott name, although he says that was not a demand.
"The names at the University of Virginia are not for sale," says Scott.
If anyone could buy things at UVA, it would be Paul Tudor Jones II. According to Forbes, which ranks him #106 on its American billionaire's list, Jones has wealth amounting to $3.4 billion.
In 2005, the year he made his Arena pledge, Jones earned at least $800 million at Tudor Ventures, the group of hedge funds he helms, according to a trade magazine. While a $35 million pledge might make some gasp, his Arena gift amounts to just two weeks of that year's pay. (And it's a pledge that, according to recent minutes of the Board of Visitors, he is still fulfilling at the rate of about $4 million per year.)
The paucity of information emerging about the rationale for terminating President Sullivan just two years into her five-year term has provoked a wave of speculation, some of it wild, including the notion that a celebrity has already been secretly tapped to lead the school or that a two-decades old bankruptcy book by Sullivan and U.S. Senate candidate Elizabeth Warren relied on faulty research.
One UVA alum working on her history doctorate at Duke poked through public records and then posited a theory that Wall Streeters hoped to privatize online education at UVA and use the ensuing profits to close the gap left by dwindling state support, which has fallen to just seven percent of UVA's annual budget.
"The theory I have is that Goldman Sachs’s Education Management Corporation, a for-profit education provider, wanted to make or made a bid to offer online education through UVA," writes Anne-Marie Angelo on a blog that's been turning heads.
While the Hook's sources downplay any planned privatization by Goldman Sachs, there's no question that Jones and Kiernan favor the idea of applying business principles to education. A year ago, the two helped launch the New York arm of StudentsFirst, the advocacy organization that openly embraces such reforms as eliminating teacher tenure, pushing merit pay, and supporting charter schools. Some of its officials have advocated outright privatization.
For all their strengths, business people can make mistakes.
Kiernan, a venture capitalist savvy enough to have served in the 1990s as a partner at Goldman Sachs, clumsily broadcast his roadmap all the way to the president's desk by using his email's "reply-all" function. Rector Dragas, a real estate developer from a family with voluminous experience in building houses and shopping centers, reportedly circumvented open-government laws by communicating the attack on Sullivan one-by-one to other members of the Board of Visitors.
"In the 21st century," writes UVA-based media scholar Siva Vaidhyanathan in Slate following Sullivan's ouster, "robber barons try to usurp control of established public universities to impose their will via comical management jargon and massive application of ego and hubris."
In the past decade, UVA's business school– which, along with its law school, stopped taking state money– appears to be fighting an internal battle over its level of independence. Fortune magazine recently offered a glimpse of this when noting that Darden School Dean Robert Bruner "has declined to follow the advice of some benefactors who urge real privatization." Under Bruner, Darden not only hasn't broken free from the University umbrella, but it willingly pays 10 percent of its revenue back to the university, a "tax" that appears to have gotten under the skin of some benefactors.
Such benefactors appear to have found a voice in the form of Rector Dragas, whose only post-college role at UVA prior to her governing board appointment was the two years she spent getting her MBA. In her explanatory letter to UVA faculty, Rector Dragas expresses a wish to "advance Mr. Jefferson’s University in a way that fulfills his original vision for it to be the most eminent in the United States."
However, historian Coy Barefoot, who has taught UVA history classes, notes that while Thomas Jefferson had bold ideas about UVA's desire for excellence– particularly with his famous quotation about not fearing to pursue the truth– the founder also expressed concern about the creeping influence of money.
"I hope we shall," wrote Jefferson, "crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and to bid defiance to the laws of their country."
Notes: This story was clarified at 10:08pm June 17 to clarify that Dragas received her undergraduate degree from UVA in addition to her MBA.
At 7:15am Sunday, June 18, this story received an additional sentence and a sidebar about Jones' public statements.This story is a part of the The ousting of a president special.