TU Delft facing heavy weather

Millions lost on real estate deals, government funding improperly allocated, integrity undervalued, were just some of the charges leveled at TU Delft in an NRC Handelsblad article about the university published last week.

In a two-page article, headlined ‘Ondernemende universiteit in zwaar weer’ (‘Enterprising university faces heavy weather’), Joep Dohmen, editor of the NRC Handelsblad (NRC), a leading Dutch daily newspaper, details how TU Delft, despite its enterprising spirit, is facing serious financial problems. Drawing from confidential reports and management letters that TU Delft’s accounting firm, PwC, compiled from 2006 to 2011, Dohmen contends that the university lost millions on real estate deals and improperly allocated government funding.

TU Delft biggest financial hit came on real estate deals, losing 9.1 million euros in 2010, according to the annual report.

In 2010, PwC warned that the university must relinquish control over real estate projects, as the risk was too high that funds could be improperly allocated, the NRC reports.

Last year, KPMG, the accounting firm, concluded that opportunities for fraud and corruption existed within the TU’s Facility Management & Real Estate department, because few governance measures in place and those in place were not well observed. Moreover, contracts were arbitrarily agreed, raising questions of conflicts of interest, and written contracts absent. In early 2011, KPMG concluded that the steps TU Delft had taken to address these issues ‘were, structurally, still not providing sufficient assurances’, the NRC reports.

According to the NRC, the 25 million euros the Dutch government wants returned, because TU Delft did not construct a new Architecture faculty building, has already cost 220,000 euros in legal fees. Moreover, the TU hasn’t yet adhered to legal the requirement of reserving funds for decommissioning the university’s nuclear reactor, scheduled for 2014.

TU Delft places great attention on knowledge valorization, the NRC reports, but for years failed to give sufficient attention to carefully and economically spending the 300 million euros in government funding it receives annually. ‘Recently this has occurred, however,’ the NRC writes.

Waas’ wife

The NRC reports that in 2009, the 198,00 euros annual salary of Marco Waas, dean of the Mechanical, Maritime and Materials Engineering (3mE) faculty, exceeded the ‘Balkenende-standard’ of 188,000 euros [a cap of 188,000 euros on governmental salaries, established by former Dutch Prime Minister Jan Peter Balkenende in 2009 – ed.]

The NRC article also detailed contracts that 3mE awarded to companies partly owned by Waas’ wife. Last year, Dirk Jan van den Berg, president of TU Delft’s Executive Board, cancelled two contracts with Waas’ wife that he deemed questionable. “Waas kept his job and the TU’s Executive Board forbid Delta, the university’s newspaper, from publishing articles about the affair.”

In June, the NRC reported that Waas was involved in six contracts awarded to his wife for projects worth three-quarters of a million euros. However, a PwC fact-finding report commissioned by Van den Berg, revealed that was not six but rather ten contracts for companies Waas’ wife partly owned, totaling 815,932 euros, the NRC reports.

The NRC reports that Van den Berg continues to maintain that Waas was ‘unfairly’ treated, although he has called the situation ‘perplexing’. The larger point is that there are apparently few rules to contravene. ‘There are no general regulations in place pertaining to submissions of multiple tenders,’ the PwC reported.

The university must however adhere to European Union procurement regulations, owing to the government funding it receives, but for years these were violated. PwC therefore concluded that some of this government funding was improperly allocated: 112.8 million euros total in 2007, 2008 and 2009.

Until two months ago, TU Delft had no code of conduct in place, although it does have an “additional employment regulation” for professors, deans and Executive Board members holding fulltime positions: they are permitted to work one day per week on part-time, external jobs. Income from these part-time jobs is unlimited. In 2005, the TU’s accounting firm warned that ‘higher risks of fraud’ existed among TU personnel holding part-time jobs.

Supervisory board

Van den Berg maintains that many issues raised in the NRC article predate his tenure and the Executive Board has taken the correct approach to the problems. The NRC article also raised questions about the Executive Board, including the fact that, in 2009 and 2010, Van den Berg’s annual salary also exceeded the Balkenende-standard. Consequently, the Dutch government demanded TU Delft pays back 19,000 euros, although Van den Berg did not pay this sum personally, by agreement of the TU’s Supervisory Board.

The Supervisory Board also approved chauffeur-driven cars and monthly expenses of 500 euros for Van den Berg and Rector Karel Luyben, plus a paid apartment in Delft since 2002 for Executive Board member Paul Rullmann (who lives in Haarlem), which costs 10,000 euros per year.

The NRC article concluded by examining various part-time positions held by Luyben, who failed to report in his TU Delft website profile that he was in fact a shareholder and director of an investment company, Buenko NV, until 2010. He also did not report this in a professional overview he submitted to the Supervisory Board. Luyben however maintains that he communicated this verbally to the Supervisory Board. Moreover, when Luyben was dean of the Applied Science faculty from 1998 to 2009, the faculty conducted business with Bird Engineering, a biotech company, in which Luyben held the position of president-commissioner. NRC reports that Luyben said there was “no private interest” involved in this and ‘thus no risk of conflict of interest.’

Responding to the NRC article, Executive Board member’s Dirk Jan van den Berg, Karel Luyben and Paul Rullmann sent an ‘Executive Board Message’ to university employees, which stated, in part, that the NRC article ‘gives a negative and false impression of our organisation…this piece in no way does justice to the present situation at TU Delft. We are outraged that such an article on our organisation was printed in the NRC and we feel that it does not do justice to the efforts of our colleagues and students. Let there be no misunderstanding: our university is not flawless. We are a large and dynamic organisation where things go wrong occasionally, but we also continuously try to improve things. That is a quite a different matter from what the paper suggests, namely that things are all wrong at our university.’ 

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