When Robert Steel, chair of Duke's Board of Trustees, was sworn in as undersecretary of the treasury for domestic finance Oct. 10, he accepted one of the highest-ranking financial positions in Washington.
Since his appointment, however, a number of Washington commentators have begun to raise concerns about the potential conflict of interest in Steel's roles at Duke and in the capital-concerns that Steel and other University officials said Saturday are not a major issue.
Steel, Trinity '73, reiterated that he would remove himself from any of the Board's financial proceedings that potentially could cause a conflict of interest with his new government position.
"I resigned and recused myself from everything involving [Duke University Management Company]," he said. "I have agreed to not be involved in anything connected to fundraising."
Both Steel and President Richard Brodhead said when Steel received the nomination from President George W. Bush Sept. 6, Steel made it clear to all relevant officials-including personnel at the White House, the Treasury, the Office of Government Ethics and the Senate Finance Committee-that he would only accept the nomination if he could keep his role at Duke.
"When Mr. Steel first mentioned to me that this was a possibility, the first thing that he told me was that he had told everyone, along every step of the way, that he intended to continue his commitment here," Brodhead said. "And if that was incompatible with the appointment, they should simply let him know and he would discontinue the process."
Despite the care that Steel has taken throughout the process, special interest groups have raised concerns that conflicting interests-or even the perceptions of such-could hinder Steel in his government role.
"There certainly is the appearance of a conflict of interest, if not an outright conflict," said Tom Fitton, president of Judicial Watch, a government watchdog organization. "There are very real concerns about a government employee spending a good deal of time working for an outside entity, especially an outside interest with the reach and influence of Duke."
Although Fitton said he greatly respects Steel, who he said is likely a "financial and economic genius," Fitton added that unavoidable financial conflicts could arise if Steel became privy to information that could benefit the University.
"Any diligent person is going to be torn because of the dual roles he plays," Fitton said.
Barbara Roper, director of investor protection for the Consumer Federation of America, said she felt confident Steel would never knowingly make an unethical decision but added that even the appearance of a conflict of interest was a problem.
"As a public servant, you have an obligation to avoid not just the reality but the appearance of conflict of interest," she said.
Roper said Steel's new financial knowledge at the Treasury posed the most immediate potential conflict as it relates to the University's investments.
"He is privy to information that would impact, say, the bond market with regard to budget numbers, trade deficit numbers," she said. "That would put him in a position to perhaps know whether an investment that Duke was considering might be ill-advised, and he would have to make a decision as whether to provide Duke with that information."
Roper said Steel could also find himself having a conflict of interest if Duke were to solicit funds from an entity that was simultaneously doing business with the government through the Treasury.
The issue has also garnered the attention of members of the Senate.
Sen. Charles Grassley, R-Iowa, told The Washington Post in a Dec. 1 article that he intended to personally monitor the situation. "I also want to make sure that serving as Duke's Board chairman doesn't take time away from Treasury duties," said Grassley, who is chairman of the Senate Finance Committee. "I've learned from my review of nonprofit organizations that serving on a board can be very time-consuming if the board takes its responsibilities seriously."
Steel is not the first Duke Trustee chair to find himself having a potential conflict of interest.
In the 1990s, John Koskinen served as both chair of the Board and deputy director for management of the White House budget office. Steel said Koskinen's role had more potential for conflicting interests than his own. "When John Koskinen was the head of the Board, this University took very ambitious projects," Brodhead said.
John Burness, senior vice president for public affairs and government relations, added that Koskinen, Trinity '61, was praised in his role as chair and that the duality of his professional life didn't hinder either role.
"You can go down a long list of people who hold government jobs in one form or another who serve on the board of trustees at colleges," Burness said.
Ryan McCartney contributed to this story.
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