We posted on this issue in November observing that the Board needed to do more than initiate investigations and the like but had to address board leadership and governance process changes immediately: Penn State’s Board of Trustees: A “Heal Thyself” Imperative http://tinyurl.com/7j5xgb6

Karen B. Peetz was elected chair of Penn State’s Board of Trustees and Keith E. Masser was elected vice chair. They replace incumbents including previous chair Steve A. Garban, who had earlier served in the PSU administration and in a position overseeing PSU athletics during part of the period in question around the Sandusky case, and John P. Surma.

The media release notes that Ms. Peetz is a vice chairman and chief executive officer at The Bank of New York (BNY) Mellon, where she is responsible for the Financial Markets and Treasury Services Group, and that Mr. Masser is president of Sterman Masser Inc., a family farm in Sacramento, PA., that produces potatoes, cash grain and hay and processes dehydrated and fresh cut potato products. He is a graduate of Penn State with a degree in agricultural engineering and is actively involved with the University as a member of the Mount Nittany Society, the Penn State Alumni Association, the Alpha Epsilon Ag Engineering Honor Society and the Tau Beta Pi Engineering Honor Society.

The media release is silent about the terms of service of Messrs. Garban and Surma.

The PSU Board also heard a report on the investigation from Board member Kenneth Frazier which included some interim recommendation summarized below.

A key governance recommendation is the creation of a “fulsome Compliance Program, which includes Board oversight through a Compliance Committee. That committee would have oversight responsibility or all regulatory obligations, including the Clery Act, and the Chief Compliance and Ethics Officer would have a direct reporting line to the committee. The Board is fully committed to undertaking this responsibility.”

We observe that this action is appropriate to the circumstance, if obviously overdue.

We condense the other recommendation presented to the PSU board below as they are a functional extension of the core compliance focus above. The five action categories identified are [ful text]:

Strengthening Policies for Programs Involving Minors, including:
- Providing more clear and specific guidance to staff and others who interact with children, including enhanced background checks and “abuse awareness” training.

Prompt Reporting of Incidents of Abuse and Sexual Misconduct, including:
- Enhancing the visibility of the Office of Internal Audit’s Ethics Hotline and providing training on the importance of reporting misconduct and the University’s no-retaliation policy.

Compliance with the Clery Act’s Training and Reporting Requirements, including:
- Updating and providing training to University personnel with Clery Act compliance responsibilities. Utilizing outside experts on Clery Act obligations to provide this training, beginning with the Athletic Department and other “Campus Security Authorities.”

Administrative Reforms, including:
- Defining the role of and hiring/appointing a Chief Compliance and Ethics Officer who will have a direct reporting relationship to a Committee of the Board of Trustees for a more coordinated and complete response to all compliance matters. Among other duties, the Compliance Officer will be responsible for Department of Education compliance, including the Clery Act.

Athletic Department – Security Arrangements, including:
- Developing a procedure to ensure that the University immediately retrieves keys, access cards and all other University property from individuals who are not formally associated with the University, or who are no longer associated with the University.

Whether these actions and others that may follow from the completion of the investigation are sufficient will be the subject on continuing vigilance of the media and, one hopes, the board itself.

The alarming headline on the front page of the Philadelphia Inquirer of 20 January 2012 – Penn State trustees say they were in the dark – speaks to systemic governance issues that make take more than five action categories to resolve.

Mr. Frazier’s opening paragraphs from his report transcript http://live.psu.edu/story/57311 are worth reading below – and would give any board member pause in considering the responsibility and risk still ahead in serving Penn State and the global community that it serves in turn:

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The shocking details contained in the Grand Jury report that came to light in November 2011 rightfully elicited intense emotions among the Penn State community, the nation and the world, including rage, disbelief and overwhelming sadness. The allegations of unspeakable crimes against helpless children are extraordinarily serious, and have affected us profoundly.

It will take years to fully come to terms with this tragedy. But one element of doing so is to understand how the alleged acts could have happened at Penn State, where the breakdowns occurred, who knew what when, and what changes we can make to prevent such anguish in the future….

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David R. Curry
21 January 2012