News | 11:39 am | March 16, 2010 | By Alison Griswold and Vivian Yee

Yale sued over donation

The Skinner House at 46 Hillhouse Ave. was supposed to be named by a $4 million donation from BearingPoint Inc. Now that the company has filed for bankruptcy, it is suing the University to get the money back.
The Skinner House at 46 Hillhouse Ave. was supposed to be named by a $4 million donation from BearingPoint Inc. Now that the company has filed for bankruptcy, it is suing the University to get the money back. Photo by Alison Griswold.

Updated: 11:07 p.m. When BearingPoint Inc. was still one of the world’s largest and most successful business consulting firms, the company pledged to give $30 million to Yale’s School of Management to endow a professorship, name buildings and sponsor an employee education program. Now that BearingPoint has filed for bankruptcy, it is suing Yale to recover the $8.1 million it paid the University before filing for Chapter 11 in February 2009.

BearingPoint gave the University $2.1 million between December 2008 and February 2009 as part of an education collaboration agreement, as well as $6 million in 2007 and 2008 for naming rights at SOM — all of which the company needs back as it attempts to climb out of bankruptcy, according to documents filed in bankruptcy court Friday by BearingPoint’s government-appointed bankruptcy trustee, John DeGroote Services.

The naming opportunities did not generate any business for BearingPoint, the trustee said in the filing.

“No material consideration flowed to BearingPoint, and no benefit to its business or assets was derived from the endowing of chairs or the naming of buildings at Yale,” the trustee said.

In a statement provided by SOM spokeswoman Tabitha Wilde, the University said it has honored both of the two agreements with BearingPoint — endowing a professorship within the SOM and starting an educational collaboration arrangement between BearingPoint and the SOM — and has relied on BearingPoint upholding its end of the contract.

SOM Dean Sharon Oster declined to comment.

After University President Richard Levin and then-BearingPoint CEO Harry You GRD ’83 agreed to the donation in November 2006, Yale used the first $2 million BearingPoint gave to endow SOM’s BearingPoint Professorship of Management — a chair now held by psychologist Victor Vroom. Another $4 million was the first part of a larger donation meant to name the SOM building at 46 Hillhouse Ave. as well as an auditorium and a wing of the new SOM campus. The latest $2.1 million chunk paid for leadership workshops and other business training sessions held at Yale last year.

Under U.S. bankruptcy law, creditors can seek to regain some of what companies pay out in the two years before they file for bankruptcy. Since BearingPoint began giving its millions to Yale in 2007, the firm’s bankruptcy trustee can try to get back some of the donated funds to help pay off the company’s $2.2 billion debt.

Comments
  • Hey BearingPoint

    “No material consideration flowed to BearingPoint, and no benefit to its business or assets was derived from the endowing of chairs or the naming of buildings at Yale,” the trustee said.
    ……
    Well, I guess you should have thought about it before you drove your company into the ground while giving millions away in charitable contributions. Besides, I assume you got a tax break, right? I don’t see any reason for Yale to give it back other than perhaps avoiding Yale’s embarrassment of being associated with such losers.

  • Comic Book Guy

    Victor Von Vroom?

    The nemesis of the Fantastic Four?

  • y11

    Without any legal knowledge regarding this kind of thing, I’d say screw BearingPoint.

  • Sven

    Apple University is looking pretty good about now.

  • another donor

    “No material consideration flowed to BearingPoint, and no benefit to its business or assets was derived from the endowing of chairs or the naming of buildings at Yale,” the trustee said.

    I guess it wasn’t a donation, then, but a poorly disguised payment for services. It would be fitting to name the Skinner house after them, since its front is just a misleading façade.

  • skinner!

    Oh yeah I can’t wait for them to change another name of a historic New Haven house. They better not change the name of the Skinner house because its one of the oldest buildings left and its bad enough they make you call the Davies mansion the Betts house and the A+A Rudolph hall. Please. They can’t change the names of things, everybody still uses the old names.

  • ross

    They should have endowed a Chair in Business Ethics – or better yet, Business Optics – and then gone to the bloody classes! Disgraceful!

  • Rudy ’73

    There is no ethical lapse or betrayal in this situation. Neither BearingPoint nor its managers are trying to get the money back. The bankruptcy trustee has an obligation to those he represents, the creditors of the bankrupt corporation to try to retrieve assets or money expended in the “look back” period, apparently two years. One could reasonable direct anger toward BearingPoint managers for failing to steer clear of bankruptcy, even Chap 11, but I doubt there is any bad faith on anyone’s part.

  • GRD / SOM ’08

    My view? Give them the money back. Does SOM really want to be associated with a consulting firm that filed for bankruptcy? Presumably if SOM keeps the money they’ll have to continue to call it the Bearing Point chair? What’s next – the Enron Professor
    of Accounting? The Lehman Professor of Finance?

  • ’98

    I second the comments made bt #9, GRD/SOM ’08.

    In any case, it is not a question of Yale “voluntarily” returning money hastily donated to the SOM by a company facing bankruptcy; rather, the bankruptcy prevents such shady transactions as an improper fraud against legitimate corporate creditors.

  • Y ’10

    SOM is an unnecessary barrier between central campus and science hill. We don’t need them increasing travel distances, and they don’t need us walking through their space between classes. Move it to West Campus where anyone can rename anything they want and no one will mind.

  • yadda

    @6: Right, because money just falls out of the sky to pay for the renovations…

  • @11

    Right. When the SOM wasn’t around 35 years ago, travel times from central campus to science hill were magically shorter.

  • @#13

    35 years ago, other departments were on Hillhouse so travel times were less because students were already in the area. I think #11 is right about SOM unnecessarily dividing the FAS in two instead of having it contiguous as it used to be.