Lopez-de-Silanes case rattles community



When one of the Yale School of Management’s rising-star professors was pressured to resign due to alleged financial misconduct this week, many were struck most by the irony of it all — the internationally acclaimed expert on corporate governance had been working, after all, on a paper entitled “Theft Technologies.”

After a Yale investigation found that Florencio Lopez-de-Silanes had allegedly double-billed the University for about $150,000 in business and travel expenses in his three years as director of the SOM’s International Institute for Global Governance, many of the 38-year-old professor’s colleagues wondered how they could have so misjudged the man who swiftly had become a globe-trotting spokesman for good corporate governance.

“It’s a pretty sad situation,” Yale President Richard Levin said. “He’s done great work and he’s a very dynamic guy, but he just got himself into trouble.”

Although some SOM professors declined to comment on the sensitive case — “Florencio has undergone enough grief,” professor Ivo Welch said — those who did comment had overwhelmingly positive things to say about Lopez-de-Silanes.

“Florencio was a wonderful scholar and he has been a great addition to our faculty as a professor at Yale,” SOM professor Will Goetzmann said. “He has published a lot of papers, and has been an excellent citizen in terms of pulling the administrative burdens of the school.”

Many said their first reaction to the news had been one of total surprise.

“He was energetic, outgoing, utterly charming,” SOM professor Douglas Rae said. “He seemed always to have an extensive travel schedule.”

In as much as his work ethic kept his colleagues from suspecting he would be involved in any misconduct, so too did his professional background.

Lopez-de-Silanes, born in Mexico, had been hand-picked by the University from Harvard’s John F. Kennedy School of Government to become the first director of Yale’s corporate governance institute in 2001. Yale competed against other universities to woo the rising star; SOM Dean Jeffrey Garten and corporate governance expert Ira Millstein personally lured Lopez-de-Silanes away from Harvard.

When Lopez-de-Silanes left Harvard in 2001, there were no indications he would eventually be brought down by a financial misconduct scandal, Kennedy School spokesman Doug Gavel said.

“He was a faculty member in good standing and he left on good terms,” Gavel said.

After coming to Yale, Lopez-de-Silanes’ budding career continued to blossom.

He was named in 2003 as one of the 100 Global Leaders for Tomorrow by the World Economic Forum, joining a list that included Spanish Prime Minister Jose Maria Aznar, British Prime Minister Tony Blair, technology giant Bill Gates and Amazon.com founder Jeff Bezos.

But less than two years later, Lopez-de-Silanes finds his career in peril, his Yale colleagues said.

The Yale investigation and further allegations have prompted the World Bank, where Lopez-de-Silanes has worked as a consultant, to launch its own investigation.

“We are definitely holding an inquiry at this point, but it has only just started,” said Damian Milverton, a spokesperson for the Washington, D.C.-based bank.

Though Lopez-de-Silanes’ resignation has drawn attention to financial misconduct in the academy, Yale professors said such acts by academics are incredibly rare in university life.

“Most of our activities are life of the mind, not life of the money — in general we do not deal with money too much,” Goetzmann said. “Most professors are not in the position where you see a lot of accounting.”

Lopez-de-Silanes’ attorney, Peter Fleming, did not return phone calls requesting comment in recent days, but issued a statement on behalf of Lopez-de-Silanes on Monday. The professor accepted responsibility for the charges brought against him and has chosen to leave Yale because “it is the right thing to do,” Fleming said.

“I made a mistake and I deeply regret any unintended harm,” Lopez-de-Silanes said through his lawyer. “I have taken appropriate corrective steps with all affected parties and I can offer no excuse except the intensity of my focus on my work.”

Comments