By Joseph Lyell —
After two hours in closed meetings on Dec. 14, U of L’s Board of Trustees reconvened in open session to pass a resolution that it will not pursue litigation against the foundation.
The motion comes in wake of audit firm Alvarez & Marsal’s findings, published in June, describing excessive spending in the foundation’s management of the school’s $785 million endowment, and its attempts to cover it up.
“Since any action against the foundation would be costly, lengthy and disruptive, the board instead will focus on implementing future safeguards to ensure donor confidence moving forward,” university spokesperson John Drees said.
“The university and the foundation have not closed the book on future litigation, however the resolution signals the board of trustees’ confidence that all critical management issues have been addressed,” U of L Board of Trustees Chair David Grissom said.
Grissom said the special litigation committee will remain in effect, but did not speculate with whom potential litigation would be sought.
“The university does not have yet all the facts involving various parties,” Grissom said.
Grissom noted that the audit firm is no longer investigating the foundation, but general and outside counsel for the university are still gathering information.
“The foundation is us, and we are they,” Grissom said.
Grissom said the university would be suing itself if it pursued litigation against the foundation. The board is primarily concerned with preventing future misconduct at the foundation.
Grissom said only the foundation is released from liability by this agreement, not the foundation officers. The special litigation committee continues to look at courses of action against the officers and directors of the foundation.
“This agreement is both a vote of confidence and acknowledgement by the board of trustees that reforms designed and implemented by the foundation have addressed concerns over integrity, transparency and sound fiscal stewardship,” Interim Director of the U of L Foundation Kieth Sherman and foundation board member Earl Reed said in a press release.
“[The agreement] does everything known to man to close the door to bad behavior at the foundation going forward,” Grissom said.
Grissom said the litigation committee must wait for more facts about the parties involved before a decision can be made on whether it will further pursue legal action against foundation officers and directors.
Photo by Arry Schofield / The Louisville Cardinal