Under pressure from University officials, a leading Yale School of Management professor resigned from his tenured post after allegations of expense-account abuse and financial misconduct surfaced in recent months.
Florencio Lopez-de-Silanes, the 38-year-old head of the SOM’s International Institute for Global Governance, was forced to resign from Yale after an internal investigation alleged he had double-billed the University for about $150,000 in business travel expenses in his three years as director of the institute, a source familiar with the situation told the News on Monday evening.
Yale spokesman Tom Conroy declined to reveal the details of Lopez-de-Silanes’ alleged financial irregularities, but said the University has taken “appropriate corrective actions” against the professor, a specialist in finance and economics. He has been placed on unpaid leave until the end of the academic year on June 30, when his resignation will take effect, Conroy said.
Lopez-de-Silanes accepted responsibility for the charges brought against him and has chosen to leave Yale because “it is the right thing to do,” he said in a statement issued Monday by his lawyer, Peter Fleming III.
“I made a mistake and I deeply regret any unintended harm,” Lopez-de-Silanes said in the statement. “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.”
Lopez-de-Silanes did not personally respond to requests for comment yesterday, after the Wall Street Journal and Boston Globe first reported the scandal in their Monday issues.
Yale officials first questioned Lopez-de-Silanes’ expense accounts in September after they received complaints from the SOM’s administrative and clerical staff, said the source, who spoke on the condition of anonymity. At a Dec. 8 meeting convened by SOM Dean Jeffrey Garten and Yale General Counsel Dorothy Robinson, Lopez-de-Silanes’ colleagues at the SOM learned that he had been charged with mismanaging the research assistants assigned to him and that he had allegedly padded his expense accounts, the source confirmed.
Lopez-de-Silanes has since reimbursed the University for funds that were allegedly misappropriated, the source said.
The University’s investigation reportedly has prompted the World Bank, where Lopez-de-Silanes has served as a consultant on issues of corporate governance, to launch its own inquiry into various contracts he had been awarded. The investigation is ongoing, a spokesman for the Washington, D.C.-based bank told the Wall Street Journal.
After seven years as a professor at Harvard University, Lopez-de-Silanes was recruited in 2001 by Garten to launch the global governance institute at Yale. The institute, designed to bolster the SOM’s international profile, focuses on the study of corporate infrastructure and its relationship to the global economy. The appointment of Lopez-de-Silanes — a rising academic star who had been gaining international recognition and was pursued by several other universities — was considered a coup for Yale’s SOM.
Lopez-de-Silanes is known by his colleagues to be a workaholic and has developed a hard-driving management style, expecting the same long hours and commitment from his staff and research assistants, the source said.
A replacement for Lopez-de-Silanes as director of the institute will likely be named after Yale President Richard Levin appoints a new SOM dean to replace Garten, whose 10-year tenure as dean comes to an end this spring, Conroy said. The new dean will be responsible for finding a new director for the global governance institute.
“It’s an important research and education area for SOM and it will continue to be a vibrant part of the school,” Conroy said.
Peter Clapman, the institute’s chief counsel, said he was unaware of the charges against Lopez-de-Silanes until very recently. He declined to comment specifically about Lopez-de-Silanes and his management style, but said he hopes the SOM will continue to provide a strong corporate governance program.
“We want to accomplish results supportive of better corporate global governance,” Clapman said. “We hope that this unfortunate incident will be behind us.”