The second part of an audit examining former Arkansas State University Chancellor Tim Hudson includes notice of possible violations of state law concerning his efforts to get financial assistance for a family member.
The university released the audit and related documents on Thursday after making them available to members of its board of trustees. The report has been forwarded to the Arkansas Legislature’s Bureau of Legislative Audit, according to Arkansas State University System President Charles Welch, which can choose to accept the findings or conduct its own investigation.
More: Download the audit (PDF) and the notice of “potential noncompliance” with state law (PDF).
Hudson resigned from the university on Tuesday after news reports disclosed findings in the first part of the audit, conducted by the university, which found problems in A-State’s study-abroad program, headed by Hudson’s wife, Deidra.
The audit, prompted by an anonymous tip, found that overseas trips were poorly organized, some of the instructors abroad didn’t have contracts and students improperly paid for trips using a PayPal account instead of a university account.
“Obviously we are very disappointed in the findings,” Welch told Arkansas Business on Thursday. “You know, that’s something that — any time there is any appearance of noncompliance with either a system policy or certainly a state law, we’re going to take that very seriously, and we’re going to make sure that everything is done to make sure the university is protected and the issues are appropriately addressed.”
Documents disclosed Thursday showed three examples auditors said might amount to violations of a state law that prohibits a public servant from using his official position to gain special privileges for himself, family members or anyone with whom the official has a “substantial financial relationship.”
In one example, emails from November through January contained in the audit showed Hudson attempting to gain tuition discounts for a family member to attend the New York Institute of Technology, with which Arkansas State is partnering to bring an osteopathic medical school to Jonesboro. The name of the family member was redacted in the report.
“I would like to talk to you about … [family member] — [family member] is very interested in NYIT — but frankly we’d need some sort of help to make that a reality,” Hudson wrote. “Perhaps we can find a way to be mutually helpful.”
Later emails show Hudson and an unnamed person who appears to be affiliated with NYIT discussing an “exchange” between the schools that would provide discounted tuition rates for ASU employee dependents.
Welch said Thursday that the exchange program never happened, and Hudson’s family member did not choose to attend NYIT.
Other examples showed Hudson emailing Kevin Wildes, president of Loyola University in New Orleans, and Tony Waldrop, president of the University of South Alabama, seeking financial assistance beyond scholarships for Hudson’s family member. In both cases, Hudson offered the administrators his personal help if he “could ever be of assistance to your or anyone associated” with their respective schools.
The rest of the audit continued an examination of the study abroad program. Auditors found conflicts of interest between the Hudsons and the family of Alfonso Rubio, the CEO of Groupo Sense.
The European company owns Multisense, a language training and education company A-State contracted with for its study-abroad program in Lanjaron, Spain. The audit found that Hudson did not disclose that he had served on the board of Groupo Sense, which became a third-party provider for ASU without a competitive bidding process.
The audit also said Hudson violated university rules against nepotism when he “restricted fiduciary discussions with Alfonso to himself” and [Deidra Hudson], who reported to the provost. And the audit said that Deidra Hudson used her official position to get “special privileges” from Groupo Sense, when she arranged to use the Rubios’ Lanjaron apartment during the summer.
Auditors said those instances showed noncompliance with “state of Arkansas regulations and ASU policies, procedures and guidelines.”
First Steps
Welch said that while he was disappointed in the audit findings, he was pleased with the audit process, and said uncovering breakdowns in university policy is part of the reason ASU has an internal audit system.
“We will make sure that we’ve got the policies and processes in place in the future to try to avoid these things,” he said. “Obviously, policies were in place that [said] you couldn’t do some of these things, and you can’t enforce everything 24 hours a day, seven days a week. But we’ll try to see if there’s other ways that we can … do better training or prevent these things in the future …”
Welch said his first order of business is shoring up the policies and processes for the study abroad program, which is now seeking a new director. He said he wasn’t aware of any other immediate disciplinary actions that would follow from the audit, but that the university would continue to review its policies and procedures to learn what it might have missed and whether employees could have identified problems sooner.
“If it’s going to be a program we’re going to operate, we’ve got to do it the right way and have everything in place, and we’re going to do that or we’re not going to do it at all — that’s essentially what I’ve told our people,” he said.
Welch said the university’s relationship with NYIT is intact. The two have established a branch for the institute’s osteopathic program on the A-State campus that opens Monday. Welch said other projects launched during Hudson’s tenure — including an A-State campus in Mexico and a new hotel and convention center on the Jonesboro campus — are moving ahead.
“The projects themselves are Arkansas State University projects — they weren’t the projects of any one particular individual, and there are other individuals that are and have been involved in those that can pick up the ball and continue running with it, and that’s certainly what we intend to do,” he said.
On Wednesday, Welch named Lynita Cooksey, provost and vice chancellor for academic affairs and research, as acting chancellor. Welch said he expects her to fill the post for “days or weeks, not months” before he appoints an interim administrator for the academic year. He said a search for a permanent chancellor would begin in spring or summer.
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