By D. D. GUTTENPLAN
LONDON — As a textbook example of how not to manage the relationship between private industry and the academy, Deutsche Bank’s agreement with two leading German universities to sponsor their joint institute for applied mathematical research has a lot going for it. ....
Under the terms of the contract signed by Deutsche Bank, Humboldt University and the Technical University of Berlin, the bank agreed to put up €12 million, or $17 million, over four years, starting in 2007, to finance the Quantitative Products Laboratory, which would apply advanced mathematical techniques to the world of finance, and to pay the cost of two endowed professorships, one at each university.
In return the bank was allowed a say in the hiring of the two professors. It was also given the right to have bank employees designated as adjunct professors, allowed to grade student work. Appropriate topics for research and research strategy would be decided by a steering committee made up of two academics and two bank employees, with the managing director, a bank employee, casting the deciding vote in the event of a tie.
Deutsche Bank was given the right to review any research produced by members of the Quantitative Products Laboratory 60 days before it was published and could withhold permission for publication for as long as two years. The agreement even specified that the laboratory would be located “in close proximity to the Deutsche Bank” headquarters in Berlin.
Finally, the whole agreement was to be secret, which ensured that when Peter Grottian, a political scientist and emeritus professor at Humboldt, obtained a copy last month after becoming a shareholder in Deutsche Bank, the ensuing scandal produced huge headlines in the German news media.
“You cannot avoid the impression that science is for sale,” Michael Hartmer, director of the German Association of University Professors, told Der Spiegel.
Jörg Steinbach, president of the Technical University of Berlin, repeatedly claimed that such terms were business as usual, but Humboldt’s president, Jan-Hendrik Olbertz, acknowledged that there was cause for concern. He said that in any future contracts entered into by the university, “the independence of science would be articulated clearly and unequivocally.”
Would such an arrangement raise eyebrows elsewhere? Jennifer Washburn said it should. The author of “University Inc.: The Corporate Corruption of Higher Education,” Ms. Washburn said in an interview that while collaboration between the academy and industry is common and often desirable, “no university should ever sign a funding contract that allows the corporate sponsor to control what happens in the classroom.”
“That is corporate training, not education,” she said.
“The financial pressures on universities today are enormous,” Ms. Washburn added. As governments cut financing and university endowments decrease in value because of the financial crisis, “there has been a sea change in the relationship between corporations and universities which, in their eagerness to establish ties with industry, risk losing sight of the need to address the potential for serious conflicts of interest,” she said.
“Withholding publication is never acceptable,” Ms. Washburn asserted, while noting that there “are no hard and fast rules, no accepted codification for such relationships.” In the United States, for instance, “every university can set its own rules,” she said, though government agencies offer guidelines. Those from the National Institute of Health, for example, reflect “a fundamental belief that the role of a university is to rapidly disseminate new knowledge,” she said.
“Many collaboration agreements allow for a short delay on publication to protect intellectual property, so patents or copyrights can be applied for,” she said. “The National Institute of Health recommends that the delay in such cases be no more than 30 to 60 days.”
Some commentators have suggested that the two universities’ real mistake was to grant such concessions in writing. But Wolfgang Mackiewicz, a professor at the Free University of Berlin, disagreed. The concessions reportedly demanded by Deutsche Bank represent “a new dimension” and “a step in the wrong direction,” he said in an interview. “Such agreements are not in accordance with academic traditions in this country.”
He conceded that “there are many academic institutions in Germany that for a long time have had close relationships with companies in their region” and that such collaboration is a well-accepted fact of German public life.
Mr. Mackiewicz said public distrust of banks and bankers also helped fuel the furor. “If this had been Siemens there wouldn’t have been the same stir,” he said, noting that there had been no outcry this month when Google announced an agreement with Humboldt and two other German universities to finance an institute to study the impact of the Internet on society.
“The world of academia and the world of money-making are supposed to be separate, and somehow we want to believe that there should be a sharp demarcation between them,” Mr. Mackiewicz said. “But the world of academia, of research, is also part of our general social fabric. And in our social fabric, money is important.”
Could such a scandal happen in the United States? According to Cary Nelson, president of the American Association of University Professors, it already has. Mr. Nelson cited Florida State University’s acceptance of a $1.5 million donation by the conservative billionaire Charles Koch to finance positions in the university’s economics department. Under an agreement made public in May, Mr. Koch has the right to screen prospective faculty members for a new program promoting “political economy and free enterprise.”
With the disclosure of the secret contract between Deutsche Bank and Humboldt University, said Mr. Nelson, “what had so far been a rogue project by right-wing foundations to control faculty appointments has moved into the commercial mainstream.”
“To give a bank ultimate control over university appointments and grant them the right to embargo faculty research results for up to two years is to abandon any illusion of university independence and self-governance,” he said.
Mr. Nelson, who replied to a request for comment by e-mail while traveling in Germany, said, “I have had the opportunity to discuss the contract with my colleagues here, who assure me it steps over a line in ways they have not seen before.”
“All of us now have reason to worry that other corporations may be tempted to offer similar arrangements,” Mr. Nelson said. “The international higher education community must resist such trends, no matter what the financial inducements may be.”
What makes the German situation so significant, and so disturbing, Ms. Washburn said, is precisely the move from politics to economics.
“There is the whole idea of the ivory tower,” she said, adding that while isolation from the mundane was not always a good thing, academics were used to guarding their political independence.
The contract setting up the Quantitative Products Laboratory expired at the end of June. Deutsche Bank said the agreement would not be renewed.
Christopher F. Schuetze contributed reporting from Paris.