LSE admits 'failings' on Libya cash

The head of the London School of Economics (LSE) today said a report criticising its acceptance of a £1.5 million donation from Libya showed "failings in our governance and management".

Colonel Muammar Gaddafi's most high-profile son, Saif al-Islam, studied at the school from 2002 until 2008, gaining a doctorate.

In 2009 the LSE received £300,000 from the Gaddafi International Charity and Development Foundation (GICDF), prompting protests from students and widespread criticism.

The payment was the first of a proposed five donations totalling £1.5 million, but the others were never received.

In March this year Sir Howard Davies resigned from his post of director at the LSE over the university's links to the Gaddafi family.

A comprehensive report by Lord Woolf into the scandal was published today, and found "the links which the LSE developed with Libya have clearly brought to light shortcomings in communication and governance within the LSE".

Professor Judith Rees, director of LSE, said: "It's a fairly forensic exercise.

"Obviously it's very hard hitting, it's very detailed, and it does show that there were clear mistakes made, and failings in our governance and management.

"It's sad, and certainly very painful reading for someone like me who has spent most of their career at the school."

Lord Woolf's report said: "Mistakes and errors of judgment were made and they contributed to the damage caused to the LSE's reputation.

"Some were individual errors that no system can prevent from occurring from time to time.

"Here, however, the mistakes and errors of judgment go beyond those that could be expected from an institute of the LSE's distinction."

The inquiry set out a number of failings, but criticised the school's management and the lack of an all-embracing code of ethics.

"The LSE is behind the standard of many global companies," he wrote.

"It falls down on the first hurdle for not having an embedded ethics code, adopted by the institution, which sets out clearly the values, principles and procedures with which everyone associated with the school ought to comply."

The report praised the Philosophy Department for not prejudicing al-Islam because of his father, but said it had an "element of idealism" because in educating him it considered it was doing "a great deal of good".

Of the donation, Lord Woolf found: "If what the LSE was told by Saif about the source of the donation is taken at face value, the due diligence obtained on the gift should have raised real concerns.

"On the available information the source of the donation could have been payments made to gain Saif's favour."

Al-Islam's PhD was shrouded in controversy before the donation scandal, even prompting the British ambassador to the US to deny claims he helped the dictator's son with his thesis.

At the time the Foreign Office confirmed that Sir Nigel Sheinwald met him during his time at the LSE but said he did not play any part in the writing of his thesis.

Lord Woolf said after the publication of his report: "I am pleased that the findings from my inquiry into the relationship between the LSE and Saif Gaddafi have now been published.

"Initial indications are that the LSE is taking the necessary steps to address the weaknesses exposed in its structures of governance.

"The recommendations I have made may have resonance for other universities dealing with donations and gifts.

"I hope that by implementing these recommendations, the LSE is able to move on from what has been a very difficult period."

Alex Peters-Day, general secretary of LSE Students' Union, said: "The report's findings clearly lay-out severe problems in the way LSE has conducted itself.

"LSE took a gamble with it's dealings with Saif Gaddafi, and the stakes were too high.

"The theme running through the report is one where, if there had been more scrutiny, more transparency and more student involvement, many of the issues surrounding the donation may well have been prevented.

"We hope the report signals a new era for meaningful student involvement in the school's decision-making, so that decisions made can never tarnish the integrity of the institution again."

PA