Yale trustee comes under fire

by Michael Beckley | 5/11/93 10:00pm

Yale University's most senior trustee, Vernon Loucks, has been the subject of an ethics controversy that has led many students and alumni to call for his resignation.

Loucks, a member of Yale's class of 1957 and chief executive officer of Baxter International, the world's largest medical supplies company, recently pleaded guilty after being charged with violating U.S. anti-Arab boycott laws.

The company agreed to pay $6.5 million in fines and settled several other related charges for its attempt to get off an Arab blacklist.

Several prominent alumni, as well as students and the university's newspaper, have spoken out against Loucks' actions.

Loucks "was a central figure in deliberate evasion of the U.S. anti-Arab boycott legislation by a plan only partly exposed in the Chicago judgment of criminal liability," Leonard Horwin Yale '36 stated in a recent letter to the Yale Corporation.

Horwin, a graduate of Yale Law School, is a former diplomat, former mayor of Beverly Hills and former Counsel to the U.S. Board of Economic Warfare. His letter lists nine separate charges against Baxter, including an agreement to build a $45 million blood substance filtration plant that could also be used to produce heroin.

"Syria is a principal source of narco-terrorism," Horwin wrote. "Chief Executive Officer Loucks effectively was Baxter International Inc." Loucks is ultimately responsible for the corporation's actions, Horwin said.

A representative of Baxter said Loucks was out of town and could not be reached for comment for this story. He vehemently denied that Loucks was personally involved in any illegal activities.

At a Baxter shareholders' meeting last week, Loucks defended his actions. "It was always my belief that we were acting within the law, and on the advice and guidance of expert outside counsel.

"There is nothing unlawful about wanting to get off a blacklist," he added. "There is nothing unethical about wanting to open markets."

Although Loucks was not held personally accountable by the courts, Yale students recently formed Students for Business Ethics, a group designed to pressure him to resign from his trustee position. The group is circulating a petition and has obtained approximately 950 signatures, according to the Yale Daily News.

"Ethically, [Loucks'] presence implies that Yale condones violations of and disregard for the law," the petition states.

Loucks has said publicly that he has no intention of resigning and that his corporate affairs have no bearing on his service to Yale. But he had previously promised that he would resign from the Yale Corporation if Baxter was found to have acted in violation of U.S. law.

The Yale College Council, the undergraduate student governing body, recently voted to demand that Loucks honor his promise to resign, even though Council President Matthew Beredo objected to the decision. "The U.S. court system did not implicate Mr. Loucks directly," Beredo recently told The New York Times.

The editors of the Yale Daily News have also called on Loucks to resign.

"The settlement between Baxter and the Justice Department makes clear that ... Loucks had knowledge of -- and may have even directly overseen -- the scheme," the editorial stated.