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UA, UCA exempt from conflict-of-interest law

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  • JAMES E. LINDSEY: UA trustee.
The Arkansas Times’ Insider column Aug. 18 pointed out that John David Lindsey, a subcontractor who installed artificial turf for the University of Arkansas football practice field at Fayetteville, is the son of James E. Lindsey, a member of the UA Board of Trustees. An earlier Arkansas Democrat-Gazette article about a dispute between the UA and private companies over alleged improper installation of the turf had not mentioned this connection. One of the companies blames John David Lindsey for any improper installation. The UA holds Lindsey blameless and says he only followed procedures given him by the other companies. Subsequently, the Times found time to ask about the legality, or propriety, of university trustees and their families doing business with the institutions they serve. Scott Varady, associate general counsel for the UA, said that Lindsey family involvement with the turf project was legitimate because 1) the Razorback Foundation, a private group that supports UA athletics, paid the bill, not the university itself, 2) the company that did the work, JDL Leasing, is owned by John David Lindsey, and his father has no financial interest in it, and 3) the company did the work at cost, and therefore no profit came to either Lindsey. Varady did not mention — may not have known — that even if Lindsey had owned part of his son’s company, and even if the University rather than the Razorback Foundation had paid for the turf installation, Lindsey still would not have been in violation of the law. Although state law prohibits the trustees of other four-year state universities from doing business with their institutions, the University of Arkansas system is exempt, for reasons that are unclear. The trustees of two-year colleges also are allowed to do business with their institutions. The situation is changing, though. Not by extending the law to cover the UA system and the two-year colleges, as one might expect, but by exempting the other institutions from the law. Lu Hardin, president of the University of Central Arkansas at Conway, said he learned of the quirk in the law when UCA wanted to purchase an apartment complex adjacent to the campus, but one of its trustees would have had an interest in the transaction. “To avoid a conflict of interest, the apartments were purchased by the UCA Foundation, which is a separate entity and has a separate board,” he said. But Hardin wanted the same exemption for UCA that UA and the two-year colleges have. If UCA had a banker on its board, for example, and the banker would lend the institution money at a lower rate than anyone else, UCA should be able to take advantage of that opportunity, Hardin said. He called on local legislators and they introduced a bill in the 2005 legislative session removing from the state law governing UCA trustees a provision that required them to swear “that he or she will not be or become interested, directly or indirectly, in any contract made by the board.” Similar language is in the laws governing the boards of the other four-year state institutions, except for the UA system, Hardin said. The UCA exemption was approved and is now Act 891 of 2005. “Late in the session, several other universities asked if we could amend our bill to include them, but it was too late,” Hardin said. “I suspect next session, they will want the same exemption.” It seems likely.

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