The real scandal at the LSE

A tangled web of relationships with the last Labour government and Libya have brought a high-minded institution to its knees, says Peter Stanford

There is a revealing remark in the minutes of the debate that took place in October 2009 at the governing council of the London School of Economics over whether to accept a donation of £1.5 million from Saif Gaddafi, son of the Libyan dictator. Fred Halliday, the school’s professor of international relations, had warned the council that accepting the money would taint the LSE’s reputation, but his concerns were dismissed by a fellow academic, David Held, professor of political science. Refusal, Held protested, would cause “personal embarrassment” to Saif Gaddafi.

Concern for Gaddafi Jnr’s feelings, rather than Halliday’s hard-headed analysis, evidently won the day. The governing council accepted the loot (of which £300,000 was subsequently paid) from the Gaddafi International Charity and Development Foundation. The fact that among those members giving their assent to supping with the devil was Sharmi Chakrabarti, the director of Liberty and merciless scourge of those who compromise principles of justice, only adds to the air of unreality that surrounds the whole shameful episode. She has since spoken of her “bucketfuls” of regret.

They must all now be wishing that they had used a longer spoon because their decision, as the disgraced LSE director, Sir Howard Davies, observed this week, has backfired spectacularly. With Saif Gaddafi pictured on the streets of Tripoli brandishing a semi-automatic weapon and telling a global television audience that he would do anything to perpetuate his father’s regime, right down to “the last bullet”, Sir Howard has been forced to resign.

He leaves behind an institution in crisis, its good name compromised. Which is precisely what Fred Halliday (who has subsequently died) predicted, but at the time he was sidelined by colleagues who muttered in private that he was difficult and a heavy drinker.

Before rushing to condemn, of course, it is always worth dispensing for a moment with hindsight. Anyone who has sat on the board of a charity or educational institution will recall similar dilemmas (albeit on a smaller scale) to that faced by LSE’s council that day. An offer of money comes in, but there are unpalatable strings. You know you could put the funds to good effect – in this case to the study of civil society and democracy in north Africa – and you could do with a fund-raising success.

British universities, in particular, have been complaining for years that they are underfunded compared with rival overseas institutions. Various governments’ standard responses to such pleading has long been to tell them to seek private and corporate sponsors. So, even if they feel queasy about it, our higher education institutions would argue that they are being forced to turn a blind eye to the skeletons in the cupboard of donors likes Saif Gaddafi, and a deaf ear to those tiresome old-world souls such as Halliday who insist on mentioning ethics and morality.

That is certainly part of the story behind what happened this week at the LSE. In the wake of Sir Howard’s resignation, the focus has switched to the “accommodations” made by other universities with questionable donors. Liverpool John Moores, for example, has been accused by Tory MP Robert Halfon of also having dealings with the Gaddafis. It says it received only £14,000, to improve health care in Libya and said it was no longer involved in the work. “We are not ashamed of trying to help the people of Libya develop their economy and their infrastructure to improve their health services,” it said in a statement.

So is this just business as usual on the campuses and in the quads, or is there something deeper and more perverse going on at the LSE governing council, as a spokesman for the students’ union there has suggested? One headline has described the council as a bunch of “useful idiots”, a phrase borrowed from the tyrant Stalin who used it to mock Left-leaning academics who eulogised his brutal form of communism.

The degree to which the LSE outperformed others in abandoning principle to engage with a Libyan regime with a long, bloody and truly appalling history of crimes against both its own people and British citizens – supplying semtex to the IRA in the Seventies, and downing a jet over Lockerbie in 1988 – is now to be investigated by Lord Woolf, the former Lord Chief Justice. Among the issues for him to address will be the awarding of a PhD to Saif Gaddafi. The Labour peer Lord Desai, who examined the thesis, has praised the “idealism” Gaddafi displayed in his study, but others claim it was all plagiarised.

What is not disputed is that the interviews upon which the thesis was based were carried out not by the student himself, as is usual, but by a US-based consultancy, Monitor, whose board is made up of academics and former senior civil servants. An act of generosity towards a young man in a strange country? It seems it had more to do with Monitor’s ongoing mission to present a more pleasing image of the Libyan regime in the West. Monitor has since admitted that its actions were “misguided”.

A single, almost casual footnote on page 173 of the Gaddafi thesis should have alerted Lord Desai and his colleagues at the LSE to the peculiar gestation of the document. In reference to a section on the role of oil companies in improving transparency in democracies, this attribution is written: “Comment from Tony Blair in private communication with the author of this thesis”. It must be handy to be able to ring up the British Prime Minister to try out your pet student theory.

Also on Lord Woolf’s list of questions will be Sir Howard’s personal mission – as a former head of the Financial Services Authority, hardly an institution famous for taking a tough line with miscreants – to offer financial advice to the Libyans. “I wish I hadn’t done it now,” the former director said in his resignation interview, “but I was asked by the Government.” I thought it was only in Gaddafi’s Libya that you had to do what the government asked.

It is that web of relationships between government – specifically the Blair government – the LSE, Monitor and Saif Gaddafi that is at the heart of this whole debacle. Sir Howard’s predecessor as director was Anthony (now Lord) Giddens, guru of the Blairite “Third Way” and apparently such a starry-eyed admirer of the Libyan dictator that he wrote in 2005 of how Gaddafi senior cut “an impressive figure” and appeared “genuinely popular” with his own people.

Then there is Sir Mark Allen, former MI6 spy and adviser to Blair and BP, who is on the board of LSE Ideas, a study centre at the school for international affairs and “grand strategy”. It is chaired by another Blair adviser, Sir David Manning, and includes Jonathan Powell, former Chief-of-Staff, and Baroness Symons, a Blairite former Foreign Office minister.

For those tempted to think that the LSE’s current troubles are simply the result of being backed into a corner by the need for money, and then being conned by Saif Gaddafi into believing he was really a force for change at his father’s side, these connections are hard to explain away. There is, at the very least, the semblance of a calculated political and commercial plan here to win influence with the Gaddafis by peddling the good name of the LSE.

David Starkey, the historian who taught for many years at the LSE, has damned the whole farrago at his alma mater as “typically Blairite”. It is hard not to agree. Getting concessions from Gaddafi over nuclear weapons in 2004 may have shown the former Prime Minister at his pragmatic best, but the ill-advised, headlong rush thereafter to cosy up to an always ugly Libyan regime so as to get hold of the dictator’s billions, and his country’s oil reserves and revenues, has now ended up tainting many reputations.

Such a fate is often the lot of politicians, but it is a calamitous and self-inflicted blow to the academic institution set up in 1895 by George Bernard Shaw and social reformers Sidney and Beatrice Webb on such high-minded Fabian principles.