For years Sir Howard Davies has glided from one top job to the next. He is a rare cosmopolitan in Britain’s policy establishment, a technocrat who has worked with equal ease – and success – with politicians of right and left, and in the public and private sectors, around the world.

Yet this week the supremely self-confident jack-of-all-trades, renowned for his quick mind and acid wit, came unstuck. However, his downfall stemmed not from the office politics that classically ends such careers but something much more unexpected yet profound: Britain’s and his own London School of Economics’ unfortunate flirtation with the one-time pariah state, Libya.
The final chapter began on Tuesday evening, when the LSE’s governing body met at its cramped central London campus. The mood was tense. Sir Howard, LSE’s director, was under fire in the media as was the university for having accepted in 2009 a £1.5m donation from a charity controlled by Seif al-Islam Gaddafi, the Libyan dictator’s son.
Those present defended the director – described politely as “subdued and very tired” – and supported his plan to use the £300,000 they had received to date, for scholarships. But the public firestorm did not abate. Two days later the globe-trotting technocrat had resigned.
The saga has crystallized the dilemma in the western policy of recent years of engaging with and in effect embracing its old enemy, Muammer Gaddafi. It also highlights the tensions of modern university management competing in a global market for funds and students.
Sir Howard is the quintessential member of Britain’s public service establishment. In a career spanning decades he has worked for McKinsey, been a diplomat, an adviser to the Conservative chancellor of the mid-1980s, Nigel Lawson, head of the Audit Commission, head of the CBI employers’ organisation, deputy governor of the Bank of England and first executive chairman of the Financial Services Authority – and all this by his mid-40s.
His personal relationship with Libya began in 2007, at the instigation of Tony Blair’s government, when he became an “economic envoy” to Libya, offering advice on financial institutions. He still says he was very much a “bit-player” in the LSE-Libya relationship, offering technocratic advice. “I only had a cup of tea in Tripoli,” he has told friends. He only shook hands with Seif, an LSE alumnus, once, on his graduation, and has never supped with him.
But he was involved enough that ultimately he did not feel he was able to defend the institution. His brief resignation statement on Thursday night was written in his typical no-nonsense style. There was “ ... nothing substantive to be ashamed of” in his personal dealings with Libya. But “the short point is that I am responsible for the school’s reputation, and that has suffered”, he said.
In private, however, he has agonized over what he recognizes in retrospect was a serious misjudgment. In particular he rues taking an advisory role with the Libyan Investment Authority, the country’s sovereign wealth fund. At the invitation of Jacob Rothschild, the British financier, he joined other establishment figures, such as former German chancellor Gerhard Schroder, on its international advisory committee.
The saga raises questions for the LSE and rival institutions. Where should they draw the line in accepting money from unsavory donors even if there are no strings attached? Should a university insist on a more cautious stance towards foreign regimes than private companies or its own government? Should even an academic organization merely comment on global events or should it attempt to engage and seek to improve the world?
The LSE got some of the answers to these questions badly wrong. Images of a gun-toting Seif urging supporters in Libya to fight “until the last bullet” destroyed the one-time view that he was a reformer, who would steer his father’s regime towards democracy.
It is all too clear now that the critical moment for Sir Howard was in 2009 when the LSE accepted the Libyan donation on the basis of the good references from colleagues who knew Seif well.
In his defense Sir Howard had broad support at the LSE for accepting the donation. Minutes of a June 2009 LSE council meeting show the governing body understood the main threat in taking £1.5m for its Centre for Global Governance was “reputational risk”, but on balance it believed Seif to be genuine.
That October, Sir Howard, in absentia, backed the donation, but did not press his case strongly. Instead, he insisted the council should take into account the dissenting views of Fred Halliday, an emeritus professor of international relations who died last year.
Halliday’s view was that Libya remained a country “run by a secretive, erratic and corrupt elite” and that there was no meaningful separation between the charity donating the money and the regime. The decision again went against him. He did, however, commend the council’s “detailed deliberation”.
The saga must not only have a grip on fees and funding but also need a foreign policy. That LSE aspired to turn Seif towards democracy is not in dispute. But staff believed they had succeeded much better than they actually had.
Sir Howard’s supporters say ultimately he could have toughed it out. He was popular with students, staff and the governing body. He was also following a government lead in engaging Libya.
But in accepting responsibility for the LSE’s reputation, he did the honorable thing. Rather than fire an underling, he carried the can himself. Throughout his career he has prided himself on his sound judgment. In this case he can at least say he is not alone in being undone by the dictator.
(Source: The Financial Times)