The moral of this story is don't accept money from a ruthless dictator, especially one whose son recently got his PhD at your school. Sir Howard Davies, the director of the London School of Economics, learned that lesson the hard way. Today, he announced he's stepping down from his post amidst an investigation into money the school—and he personally—received from the Libyan government.
In 2009, under Davies' watch, the Qaddafi International Charity and Development Foundation—headed up by Saif "I <3 Democracy" Qaddafi, who earned a PhD from the school in 2008—gave LSE's Global Governance Research Unit a grant of £1.5 million (about $2.4 million). After word of the donation got out last month, student protests broke out on campus. In response, the school announced that it would return most of Saif's money, and that it has commissioned an independent inquiry to look into the school's relationship with Libya. The commission will also look into why the LSE accepted the donation, a $50,000 payment Davies received for advising Libya's sovereign-wealth fund in 2007, and the authenticity of Saif's PhD dissertation.
Davies originally offered to resign when news of the grant first surfaced. But the LSE council stood by him. As the controversy mounted, Davies ultimately decided it was time to go. In his resignation letter to chairman of the court of governors of LSE Peter Sutherland, Davies is careful to note that, at present, there's no reason to think that there's any connection between Saif's degree and the grant money. Davies also accepts full blame for the school's epically poor judgment:
[H]owever laudable our intentions, in the light of developments in Libya the consequences have been highly unfortunate, and I must take responsibility for that. I advised the council that it was reasonable to accept the money, and that has turned out to be a mistake. There were risks involved in taking funding from sources associated with Libya, and they should have been weighed more heavily in the balance. Also, I made a personal error of judgment in accepting the British government's invitation to be an economic envoy, and the consequent Libyan invitation to advise their sovereign wealth fund. There was nothing substantive to be ashamed of in that (modest and unpaid) work, and I disclosed it fully, but the consequence has been to make it more difficult for me to defend the institution than it would otherwise have been.
Circumstances being what they are, Davies' resignation was all but inevitable. And his penitent letter seems genuine enough. But it's hard to believe that he was the only one at LSE to show such poor judgment. As our story on the Monitor Group and prominent academics' ties to the Qaddafi regime showed, there's no shortage of institutions who are willing to hold their noses and accept fat checks for autocratic leaders. Which begs the question: who else is still out there, hoping to avoid notice?