Degrees of dishonour

November was not the best of months for Mr Richard Pratt. On November 2, his Visy packaging company was fined $36 million for running a cosy price fixing scam with (what we all thought was rival firm) AMCOR. Since that day, Mr Pratt has had a lot of time to think (about his future) and to wait (and see how the public reacts to his plummet from grace).

And so he thought, and so he waited. In all, he waited 111 days.

During that time, he considered keeping them. And he considered handing them back. After weighing arguments on both sides, and no doubt taking sound advice, the billionaire box baron concluded that surrendering his honours - the Companion of the Order of Australia (AC - 1998) as well as the Officer of the Order of Australia (AO - 1985) - was the least dishonourable course of action.

So one infers from the Australian Financial Review’s political editor, Ms Laura Tingle, in a report: “Pratt forced to lose his two honours.”

Mr Richard Pratt yielded up the two awards on February 21, just as the Councillors administering the Order of Australia honours were switching the kettle on and slicing up some lamingtons, in preparation for a meeting, the point of which was to decide whether or not to strip the convicted colluder of these noble awards.

Several weeks prior to Mr Pratt’s Visy Industries being fined last November, the Governor-General, Michael Jeffrey introduced rules for terminating membership of the Order of Australia on several grounds. The Governor-General is now empowered to cancel or terminate an award on grounds including when a recipient has received a civil penalty under Australian or foreign law; when an adverse finding by an Australian or foreign court is made; or for that matter, bringing the Order into disrepute.

So far so good. Dishonouring Mr Pratt this way has indeed restored credibility to Australia’s highest civil awards.

But what about other honours that have been bestowed on Mr Pratt? Will they too be surrendered? And if not, what does that say about the institutions which have so feted the Kaiser of Cartels?

Good questions.

Lucky for him, Mr Richard Pratt holds honorary degrees from Victoria’s finest institutions: the University of Melbourne (Honorary Doctor of Laws - 2004), Monash University (Honorary Doctorate in Engineering - 1990), as well as Swinburne University of Technology (a generic Honorary Doctorate - 2000). If he held a similar honour from let’s say, the University of Massachusetts (Amherst) or for that matter, from the University of Edinburgh, then I’d wager he wouldn’t be sleeping quite as soundly as he currently is.

Let’s peek into just one Victorian institution, the University of Melbourne. And let’s go back to the winter of 2004.

In August of that year, Mr Richard Pratt was the focus of obsequious fawning by the university. The press release issued by the university gushed of his “very special” contributions, both business and philanthropic to Australia and to the university. In star struck adoration, the university conferred upon Mr Richard Pratt the highest award they possibly could: the Honorary Doctor of Laws.

The university grovelled in part:

Through the Pratt Foundation established in 1978, the Pratt family is among Australia’s most generous business families, giving directly and indirectly over $10 million each year to charity and other causes. Richard Pratt’s support for the University through the Pratt Foundation includes generous gifts to the Union Theatre redevelopment project (and the) establishment of the Pratt Family Chair in the Melbourne Business School.

Mr Pratt is (or was) associated with a wide array of organisations through his many activities including: Foundation Chancellor of Swinburne University of Technology, President of the Victorian Arts Centre Trust, Chairman of the Australia Foundation for Culture and Humanities, Chairman of the Australian Business Arts Foundation Chairman Mental Health Research Institute of Victoria, Chairman of the Finance Committee of the Australian United States Coral Sea Commemorative Council, and Breakthrough Appeal Chairman for the McFarlane Burnet Centre for Medical Research. He is also a significant donor to the Centre for Palliative Care Education, the Ian Potter Gallery, the Department of Fine Arts and Aboriginal health.

All noble endeavours, no doubt about that.

Some organisations have honoured him academically and others merely banked his handsome cheques. The University of Melbourne is guilty of the former, while its offshoot, the Melbourne Business School (arguably Australia’s second best b-school), is guilty of the latter sin. A good question to ask is: have the reputations of these two institutions suffered from their association with Mr Pratt?

The University of Melbourne Statutes allow for awards to be revoked if obtained by fraud, where “fraud” is defined as either an untrue or misleading certification by a candidate or appropriating the ideas or work of another person and passing them off as one's own.

A glance at the university’s web site indicates that there is no provision for revoking a degree where the recipient through his actions has impacted on the reputation of the university. How convenient indeed, for both the university and the recipient of an award.

So what exactly is a university’s reputation? And how have other institutions coped when an honorary degree recipient has done something that has impacted negatively on the university’s reputation?

Managing reputation is an essential responsibility of the governing board (for a company) or for the council (in the case of a university). The board or council must take into account all stakeholders, whose perception of the organisation will determine its reputation.

In many cases, when crises loom, organisations are either blind to the possible damage that could be done to its reputation, or the organisation believes that it can ride out the crisis.

Let’s look at a couple of examples.

In late May 2006, Enron founder Mr Kenneth Lay was found guilty of conspiracy and fraud in the mother of all corporate fraud cases.

On the sixth day of deliberations, a jury of eight women and four men convicted the former Chairman of misleading the public about the true financial health of Enron, whose collapse in late 2001 cost 4,000 employees their jobs and many of them their life savings. Investors lost billions of dollars. Kenneth Lay could have faced 20 to 30 years in jail, but he died of a heart attack, aged 64, early July 2006. He was to be sentenced in October of that year.

Fourteen years earlier, in May 1992, the University of Missouri conferred an Honorary Doctor of Laws on him. Around that time he donated US$1.1 million for the Kenneth L. Lay Chair in Economics. To date, the University of Missouri has not rescinded the Honorary Degree nor returned the donation.

Last year, over the matter of Zimbabwean President Robert Mugabe, we witnessed one university (Massachusetts) carrying on the spineless tradition of Missouri, while another university (Edinburgh) unleashing courage and in turn, enhancing its reputation immeasurably.

In 1986, when Mugabe received an Honorary Doctorate of Law from UMass, he was feted as a humane revolutionary who ended the so-called “oppressive” rule of Ian Smith, so as to establish an independent Zimbabwe in 1979. But in the two decades since, Mugabe has been condemned for attacks on political opponents and stands accused of starving his citizens into submission.

In April 2007, the University of Massachusetts (Amherst) considered revoking the honorary degree. (Granted, while Mugabe’s crimes are not directly comparable to Messrs Pratt and Lay, the point here is simply to highlight how some universities respond to an attack - real or perceived - on their reputations.)

Early last year, the student senate of the University of Massachusetts (Boston campus) passed a resolution asking the university to revoke Mugabe's degree.

In June the University of Massachusetts trustees voted to rebuke Robert Mugabe but not to rescind the honorary degree presented to him in 1986. According to The Boston Globe, the trustees concluded that they needed to establish an official policy on revoking honorary degrees before actually doing so.

Two weeks earlier on the other side of the North Atlantic, the lads at Edinburgh showed themselves as being made of sterner stuff. The University’s Senate understood that Mugabe was not only bad for Zimbabwe, but that he was terrible for the University, as he was polluting the university’s good name. It smartly rescinded the honorary degree it conferred on him in 1984, noting how the now 83-year-old dictator was lording over the country’s decomposition.

The University of Melbourne’s Vice Chancellor, Professor Glyn Davis has no doubt been very busy preparing to chair the Prime Minister’s 2020 Summit in April. This explains why he seemingly hasn’t given too much thought to his university’s ongoing relationship with the Kaiser of Cartels and the damage it’s inflicting on current students, alumni, staff and most of all, other honorary degree recipients.

Apart from the three abovementioned examples, the Vice Chancellor can ape the policies of two fine institutions (London’s) Brunel University or (Perth’s) Curtin University.

When considering revoking awards, Brunel University in West London is blunt:

On the recommendation of the Honorary Degrees Committee through the Senate, Council shall have the power to revoke the award of an honorary degree or fellowship … where it is satisfied that the individual concerned has acted in such a way as to bring the University into disrepute. Council Ordinance No.14.

And in regards to philanthropic donations, Perth’s Curtin University of Technology (PDF 93KB), too plays with a very straight bat:

The University reserves the right to decline any gift. Donation activities should be congruent with the University’s established mission, values and ethical codes. Principle 5.9 (ethical code) and Policy 8 (refusal of donation), Policy and Procedures, 2007.

The University of Melbourne has not only awarded Mr Richard Pratt an Honorary Doctor of Laws, but its Melbourne Business School deposited a $1 million cheque in 1998 from the Pratt Foundation, creating the Pratt Family Chair of Leadership and Decision Making.

It’s downright tragic that while one part of Melbourne Business School harvests the interest from Mr Pratt’s fat donation, in another part of the school, of all things, “business ethics” is taught (PDF 117KB).

Every now and again an organisation is caught napping, having done (what has proven in retrospect to be) the wrong thing. And once in a while, organisations have the opportunity to set things right; the chance to undo a previous wrong; the opportunity to say “no” to certain gifts; and the prospect of saying “yes,” to enhancing its reputation.

The window of redemption is currently open for the University of Melbourne.

Will Professor Davis do what needs to be done? Or must the students lead the Vice Chancellor, kicking and screaming, to the moral high ground?