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Latest Scandal at Stanford: Bookstore Perks

February 26, 1992

STANFORD, Calif. (AP) _ The attorney general’s office is investigating Stanford University’s non- profit bookstore following reports that managers got pricey perks such as a hot tub-equipped vacation home and fancy cars.

Stanford law professor Robert Weisberg, who serves on the board of the campus bookstore, said Wednesday that directors also have ordered an investigation into the matter.

″We want to know what problems may exist and whether they involved California law, federal law or any other standards of business propriety,″ Weisberg said, reading a statement from the board.

Even if no laws were broken, Weisberg said, ″There may be other matters which should be corrected beyond questions of legal compliance.″

During the investigations, bookstore general manager Eldon Speed and assistant manager Phil Chiaramonte, who benefited from the perquisites, will remain on the job, Weisberg said.

Speed and Chiaramonte, who each earn well over $100,000 in addition an array of perks, didn’t return telephone calls Wednesday.

The attorney general’s office wants to find out if the store’s employee compensation practices violate the state’s non-profit corporation law, a spokesman said.

The investigations began after the campus newspaper, the Stanford Daily, disclosed the perks in early February.

The two executives own a Gold Country vacation home and a mobile home that the bookstore leases for use by them and their senior employees, according to the article. The bookstore also spent $69,000 to furnish the home, including with a $4,300 hot tub and a $5,800 satellite dish, the newspaper reported.

The two managers and a half-dozen other store employees also drive top-of- the-line cars that have been purchased or leased by the store, the newspaper said.

The reports have shocked the campus and led to the protest resignation of a bookstore board member upset that the board wasn’t acting fast enough.

The probe of the store, which operates independently of the university, could become another black eye for the school that’s still under investigation for overbilling the U.S. government for federal research.

Federal auditors told Congress they believe Stanford overcharged the government more than $240 million from 1981 through 1988. The whistleblower who broke the scandal put the figure as high as $480 million.

Stanford has paid back $2 million in inappropriate research bills for items including maintenance for a school yacht and parties at campus administrators’ homes, but the school had denied widespread overbilling.

Stanford President Donald Kennedy and two other administrators have announced they will resign because of the scandal.

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