Fred Halliday was right: The LSE, Gaddafi money and what is missing from the Woolf Report

Fred Halliday has been vindicated in his long battle with the LSE over taking Gaddafi money. But the underlying reason - corporate and government pressure on the university is not addressed by the Woolf Report into the scandal.

Anthony Barnett
Anthony Barnett
1 December 2011

The Woolf Inquiry into LSE’s scandalous agreement to take money from Saif Gaddafi, after awarding him a dodgy PhD and making him a Miliband lecturer, has now been published.

Shamefully it does not state in its conclusions that Fred Halliday was right, that the LSE was lucky to have had him as a Professor and should not have ignored his advice. But the body of the reports spells this out clearly enough. It vindicates the argument that I set out in Fred Halliday, David Held, the LSE and the independence of universities here in openDemocracy in March, which I’m republishing in full below as it raises questions that Woolf should have tackled and didn’t.

Before I quote what Woolf says about Fred I want to highlight a grievous double omission from the Report. Woolf makes a great deal of the catalogue of failures in the way the Saif donation was presented to the governing body of the LSE, it's Council. On page 71 he lists six of them to each of which he devotes a great deal of painstaking attention. In the process he condemns the then director of the LSE Howard Davies, no doubt with justification.

But one of the people responsible for such a systemic failure of a Council’s process has to be its Chairman, in this case Peter Sutherland. What is the Chairman of BP and Goldman Sachs Europe and a man of great competence and decisiveness doing overseeing such a charade, over such an important issue? One answer might be, it only appears in a footnote (164), that

“At the beginning of the June council meeting, Peter Sutherland indicated he had what might be considered a conflict of interest and did not actively participate in the discussion although he was present during the discussion. That was because BP had a commercial interest in Libya at the time he removed himself as chairman because he had a conflict of interest as Chairman of BP”.

But this does not remove his responsibility for ensuring that the Council process was properly undertaken, indeed it increases his responsibility to ensure that all information was made available and fully aired before the money was taken.

However, Sutherland’s role is simply not addressed by Woolf. It is all very well criticizing Howard Davies, but this smells of scapegoating him. For anyone who knows anything about an organisation knows that its director or chief executive does not proceed to take controversial issues through its board or council against the wishes or inclination of his chairman, or if he does, he does so with great care and attention. It is inconceivable that Davies did not think he was carrying through a decision of which his Chairman knew and approved.

Woolf interviewed Sutherland and simply quotes this:

The June council meeting considered the issue of engagement, not the issue of the source of the money. As Peter Sutherland recollected in interview with me “the discussion ... was conducted on the basis that Libya at that time was being brought into the fold ... and every effort was being made to help Libya, so why should we resist and not take a donation…” (p 77)

But this is extraordinary. It is saying that the LSE’s role was to carry forward government policy. The issue is of particular relevance today. It demonstrates a total absence of any belief in the independence of universities from government policy. It is a matter that should have been directly addressed by Lord Woolf. But this is the only reference to Sutherland in the main body of the report. He then simply disappears.

Peter Sutherland’s disappearing trick becomes all the more amazing when Woolf examines the larger network of links between LSE and its personalities like Anthony Giddens (who chased after Gadaffi personally in the most slavish way). It is in the Report's section called ‘Incidental Links with Libya’ (pp 109 – 116). This apparently extensive survey nowhere mentions that the Chairman of BP who, along with Blair, had joined Gadaffi in one of his Libyan tents to sign a £500million deal then became Chairman of the LSE. Wasn't this an "incidental link with Libya"? Of course it was!

This is some of the things Woolf says about Fred:

Professor Halliday was the LSE’s foremost expert on the Arab world. No-one has sought to contest the supremacy of his understanding in their evidence to me. He was also an experienced, successful and pragmatic fundraiser. (p 84)

Woolf goes on to say that had the Council members been informed of what they ought to have known, then they would have found Fred Halliday’s concern “exactly right” and the Saif money was in reality Libyan state funds, and that Fred’s memo “gave an assessment of the situation which proved to be remarkably accurate” (p 84) and that the LSE "needs a 'rethink and formalisation' of its approach to fundraising called for by Professor Fred Halliday" (p97).

I got into writing about this after talking with David Held, who was the leading advocate of taking the Saif donation. He sent openDemocracy a justification which it was decided to publish but needed strengthening. He called and asked me my view, I told him we all make mistakes, “just say Fred Halliday was right”. Why do so many people find it so hard to do just this? I feared the Woolf Inquiry would see an attempt to sweep under the carpet Fred’s long battle with the LSE, fought at huge personal cost, to prevent the institution whose reputation he loved being tainted with corruption by a vile regime.

There was such an attempt. I’m glad it failed. I’m pleased the body of Woolf’s report vindicates Fred. I’m sorry Woolf couldn’t bring himself to make this one of his conclusions.

But in the process I learnt directly of a more dangerous pressure to undermine the independence of universities and civic institutions by an alliance of corporate and government influence. The Wolf Inquiry should have addressed this too as it is clearly the underlying reason for the fiasco. Perhaps the next Miliband Lecturer will be asked to address the question… or perhaps not.


Fred Halliday, David Held, the LSE and the independence of universities

First Published 31 March 2011 (including 22 comments from then)

 In the debate over Gaddafi and the London School of Economics, David Held should simply say that Fred Halliday was right. This will help clear the way for discussing the larger questions raised by the role the LSE played in the Blair government’s Libyan policy; namely, the independence of universities and how they can remain distinct from corporate and government interests.

I’ll declare my interest: Fred Halliday was one of my oldest friends. I cannot speak for him. But I want to try an ensure that a version of his case is set out briefly.

Alongside other Libyan connections which helped bring about the resignation of its director, Howard Davies, three things happened at the LSE: Saif Gaddafi was embraced as a genuine student rather than as a leading figure in a tyrannical regime; he was given a PhD despite suspicions that he was not qualified and would pay to have it written; and David Held raised a donation from him of £1,500,000 for the Centre for Global Governance which the LSE Council approved.

These three things were a process not an event. Halliday predicted that their combination would deliver “reputational damage” on the LSE and from 2002 to 2009 he warned his colleagues against the relationship that led to what happened.  He repeated his warnings at each stage of the process as he learned of them. He warned against the original decision to accept Saif as a PhD candidate, which took place under the directorship of Tony Giddens.  He strongly opposed taking money from the Gaddafis. He fiercely objected to the combination because it permitted the perception of the LSE as an institution that would sell its academic qualifications. Finally, when the Council reviewed the process after the PhD had been awarded and with the agreement for taking the money in place, Halliday sent its members the remarkable memo now published posthumously in openDemocracy. David Held spoke to the Council and opposed Fred’s memo although he does not mention it in his account, which is also published in openDemocracy.

Held takes responsibility for his own honest belief that Saif was a “credible reformer”, acting in good faith. Saif, he says, should and could have made a different choice when his father’s regime was threatened by the popular uprising last month. He didn’t. In defence of his support for Saif over the years Held sets out how many others, Ambassadors and distinguished individuals, human rights NGOs and Libyans shared his view and now, like him are surprised and now greatly regret that Saif backed his father’s regime.

Rather than list in the same way those who took a different view Held says that there were two general counter-arguments to his approach of “cautious” engagement: that he was “naïve” – because regimes like Libya have no spaces for people to work within – or, second, that he was “complicit” and could not but lend support to the tyranny.

We all make mistakes. I have no wish to be holier than thou or support John Keane’s attempt to give crocodile tears a bad name. But there is a glaring inadequacy to Held’s account. Halliday’s memo argues in favour of careful engagement with individuals in such countries as Libya. It does not regard scholarly engagement as either naïve or complicit, quite the opposite. What he opposed was what he saw as a high-risk embrace of the regime itself, especially by taking its money (“while encouraging personal contact with whatever Libyan officials we meet, I have repeatedly expressed reservations about formal educational and funding links with that country.”).

In his reply to a comment on his article, Held says that Mary Kaldor, the Co-Director of his Centre for which he raised the funding from Saif, “expressed strong reservations and opposition”. Clearly, she too is not guilty of the abstract reasoning Held says was put forward by those who took a different view from him.

Without mentioning or linking to Fred’s memo Held suggest, “One way of summarising the differences between us [Fred and myself] is that I thought Saif Gaddafi had choices, and that this, after all, is the space for education and critical dialogue. For Fred, in essence, he was always just a Gaddafi”. By describing their argument in this way Held is in effect saying that he was in fact right all along because, obviously, Saif could have acted differently. He also implies that Halliday remained in the wrong as it is clearly unreasonable to have opposed giving Saif “the space for education”. Finally, when Saif committed himself to the vengeful Gaddafi clan’s last stand the fundamental agreement of Held and his fellow democrats is clear for all to see. In this version the only person who has really made a serious mistake seems to be Saif.

But the argument was not a dispute about whether or not to enter a “critical dialogue” with Saif. I never knew Fred Halliday decline a critical dialogue with anybody. The dispute was over what risks the LSE should be taking. Having a “critical dialogue” with Saif is one thing. Taking the regime’s money through him and then having him give a Miliband lecture is another. The more you have dialogue with representatives of a tyranny’s ruling clan, the more important it is not to be beholden to them. This was the warning Halliday repeatedly put.

Even now Held remains deaf to it, it seems, by suggesting that Saif never was a representative and his money was not official. As evidence for his belief in Saif’s “independence” from his father’s regime Held writes that Saif “turned down a number of offers to work directly at the heart of the regime”.

This is absurd. Saif was by birth at the heart of the regime. Halliday describes this well (“In Arab states many of the most important positions have no official title, and kinship, and informal links, are more important than state function – and this, above all, in Libya.”). He also points out that 'Colonel' Gaddafi claimed to have no formal position either. And  Jeremy Fox in his comment on Held's article links to an interview with Le Figaro that Saif gave on 7 December 2007 on the occasion of his father’s state visit to Paris. In it he speaks as an authoritative representative of his country. He denies it has any political prisoners, claims its judicial system is “transparent” and that “Nous devons être un pays fort, heureux, riche et moderne”.

I’m not questioning Held’s sincerity. I am saying that Halliday has been proved right that Saif should have been treated all along as representative of the regime rather than a scholar in search of “space” for education and "critical dialogue".

But the argument was never just about the man it was about what kind of relationship would protect the independence of the LSE and ensure it was not engaged in legitimating the Gaddafi clan’s monstrous autocracy. Central to this was taking its money while giving Saif a doctorate.

Held writes, “with the terrible knowledge we have now, I would never have countenanced this funding option, nor would the Governing Council of the LSE. It was a mistake that is deeply regrettable”. This implies that the funding passed in front of Held as if he too was a Council member whose role was to “countenance” or merely permit a “funding option”. Whereas Held's role, as I understand it, was that he led the negotiations that secured the donation as well as the advocacy for taking the gift in the face of Halliday’s experience and furious warnings that it was wrong in principle, and in practice could well go horribly wrong too, to take money from the heart of the regime.

The cult of sincerity

Held did not act alone. He was not the only person responsible for what happened. Perhaps, even without him, the LSE would still have raised the money from Saif by another route. But in this case Held bears a personal responsibility borne out by the fact that others over a period of years warned him against what he was doing. Now he needs to salute them for being right when he was wrong.

I think it is important for David Held to agree this and not merely express his regret. First, it is owed to Fred. Second, it is only by his saying, 'Whoops I, a mere professor, should not have implemented this course of action', that we can move the discussion to the more important issue of the role of the Blair government and its agencies and why the LSE Council, its Directors and Chair were not wise enough to see that Halliday’s counsel of caution should prevail.

I’m exaggerating. We can of course have that discussion without Held’s agreeing he was mistaken. But it is much harder to do so in openDemocracy for which David Held is an important contributor, and has been since it began nearly ten years ago. When I was editor I commissioned an exemplary exchange between him and Paul Hirst on the nature of globalisation ‘The argument of our time which remains the best thing of its kind. As Bush and Blair finalised their invasion of Iraq in 2003 I published an essay on it by Held. It began, “Wrong war. Wrong reasoning. Wrong priorities. Wrong timing. The war against Iraq is worse than reaching a dead end in geopolitical affairs; it is in danger of dragging us back to a pre-legal order and a deeply uncivil international society.”

He should be proud of it. Today it may seem obviously right. Then, Held’s was a defiant judgment and his stubbornness served him well. He maintained his view against the opinion of the government, the press and many in his personal circle such as his close friend and colleague Tony Giddens, the then Director of the LSE, and the co-creator of their publishing company Polity. (Later Giddens wrote two cringing pieces lauding Gaddafi and comparing the dictator’s Green Book to Giddens and Blair’s ‘Third Way’. His intellectual reputation is permanently damaged.)

David Held's stand on the war shows he is not a Blairite. But there is a corrupting aspect to Blair’s influence. He made official the post-modern cult of authenticity - the idea that sincerity is how one should be held accountable. There was a glorious moment in the Chilcott’s Iraq War Inquiry when Lawrence Freedman asked Blair about his telling the House of Commons that there were “without doubt” weapons of mass destruction in Iraq. Freedman asked him to explain this judgment. Blair answered that he sincerely believed what he said at the time. This was not an answer, though he appeared to get away with it. The question was not about his sincerity - it was about how he came to make his claim. After all, Robin Cook was given a private intelligence briefing from Blair’s own security adviser and arrived at the opposite and correct conclusion.

Held’s account of his support for Saif threatens to become a tiny example of the same ineffable culture in which personal honesty displaces public responsibility. Asked to set out his defence, Held sets out why he sincerely believed in his position. That’s not the point. We need to understand how an institution permitted a serious error of judgment to be implemented when the case against it was clear and made.

It would not have happened had the British government warned  institutions like the LSE against dealing with Gaddafi. What was official policy towards Libya and its victims after 2002? What role did Downing Street expect universities to play in carrying this out?

Gaddafi's calculations

What seems to have happened is that after thirty years in power Gaddafi was experiencing growing opposition including a diaspora dissident movement. When 9/11 occurred he made the kind of crude but shrewd move that vicious rascals are often capable of. He heard Bush say to the American Congress on 20 September (with Blair present in the gallery)

“Every nation, in every region, now has a decision to make. Either you are with us, or you are with the terrorists. From this day forward, any nation that continues to harbor or support terrorism will be regarded by the United States as a hostile regime.”

Gaddafi seems to have calculated that if Libya declared itself to be with America and against “the terrorists” America would no longer regard it as hostile. By the same logic, once he was ‘with’ Bush he’d be an ally of America in the war on terror and therefore his own opponents could be defined as ‘terrorists’, and he could demand the western powers assist him to pursue them.

In 2003 he agreed to end his WMD programme and pay compensation for the Lockerbie bombing. In March 2004 Blair met Gaddafi and a £550 million gas exploration deal was announced with Shell. According to the BBC, Mr Blair said he had been struck by how Colonel Gaddafi wanted to make "common cause with us against al-Qaeda, extremists and terrorism", and the BBCs then political editor Andrew Marr said: "This is an absolutely pivotal moment in the history of the region, possibly even in the history of the war against terrorism."

A shocking aspect of this, it seems, was the treatment of Libyan dissidents that followed, according to Gareth Peirce who represents many defendants in the UK’s miscarriages of justice. She writes that immediately after the 7/7 London bombings of 2005, Blair “initiated an agreement with Colonel Gaddafi on the deportation of Libyan dissidents who had sought asylum and whose presence, he [Blair] claimed, constituted one of the gravest threats to the security of this country”.

Thanks to the European Convention, the UK was prevented from expelling them to Libya as Gaddafi would have had them executed. But Britain’s draconian control order regime was brought into play and they were placed under house arrest without knowing the charges against them. The “key evidence” that was kept secret from them, Peirce thinks, would have “undoubtedly emanated from Libya itself”. In this way their capacity to organise opposition to Gaddafi was eliminated, here in the UK.

In 2007 Blair was back in a Libyan tent, this time to witness a £500 million agreement being struck with BP. With him, apparently, was Peter Sutherland the Chairman of BP. Sutherland was soon to become the Chairman of the LSE Council. It seems that it was on the same trip, on 29 May 2007, that Blair signed another agreement with Gaddafi on military and security matters. According to the Daily Mail which obtained a leaked copy:

It mentions ‘the conduct of joint exercises’, ‘training in operational planning processes, staff training, and command and control’, and the ‘acquisition of equipment and defence systems’. It spells out how the SAS would train Libyan special forces, which are now keeping Gaddafi in power, and called for ‘co-operation in the training of specialised military units, special forces and border security units.’ Other assistance included ‘exchanges of information on current and developing military concepts, principles and best practice’, as well as ‘training co-operation relating to software, communications security, technology and the function of equipment and systems’. The agreement also called for Britain to help Libya with ‘defence industrial, technological and equipment matters’, including ‘various military vehicles, ships and offshore patrol vessels and air defence systems’. It claimed that it was designed ‘to contribute to the strengthening of security and stability in their two countries and the enhancement of peace and security in the Mediterranean region’ [my emphasis].

When Peter Mandelson got back into government in 2008 to became Secretary of State for Business, Enterprise and Regulatory Reform he tried not to be outdone by his old master. As soon as he had brought our universities under his control in 2009 it is reported that he “signed a joint statement… saying that he hoped all Libyan Universities would have a British partner within 5 years”. (And when the LSE scandal broke and this was exposed he took to the Financial Times arguing, “The stigmatising of every business leader, academic, politician and public servant who has had anything to do with Libya in the last seven years has been taken to ridiculous lengths in some quarters”.)

This was the larger official context within which the LSE Council endorsed the decision take Gaddafi funds. The New Labour machine was working not just to legitimise Gaddafi’s Libya but to strengthen it internally as well as integrate as much of its revenue streams as possible into London. The Daily Mail ran a detailed story claiming other academics and advisers at the LSE were implicated. A different line of questioning seems to be necessary.

The Chairman

When an important “reputational” issue is taken to the level of any institution’s council or board, the Chairman’s role becomes crucial. It is his or her responsibility to ensure that the council members are presented with full arguments and are encouraged to grasp the  implications. Precisely because it is an issue of wider reputation, non-specialists with external experience should be drawn upon so as to protect the institution’s public standing, which they are in the best position to protect, while the eager heads of departments who understandably compete for particular interests are held in check by the larger wisdom.

In this case Peter Sutherland’s authoritative influence is likely to have played a determining role in guiding the LSE Council to its decision as to whether or not to take Gaddafi’s money. But he had become Chairman of Council in 2008 when he was still the non-executive chairman of BP (he left BP in June 2009, the LSE Council decision was finalised in October). Surely he had an interest in preventing the Saif donation from being turned down if this would risk the Gaddafi clan feeling humiliated?

Businessman often sit on the boards of other companies (Sutherland was the Non-Executive Chairman of Goldman Sachs Europe and had been on the board of RBS). Their cross-connections help companies to make money in mutually beneficial ways. But what may have seemed to Sutherland to be his raison d’être - assisting the LSE in obtaining Gaddafi money while helping to legitimise a regime that his other hat was doing business with - appears to many of us a huge conflict of interest. [He apparently declared one, see correction below]

Because, as Fred Halliday said, when his students from around the world would say to him that Britain also was corrupt just like the regimes he criticised, he would answer them, “But you can’t buy a PhD from the LSE”. His argument was that the LSE had a fundamental self-interest in refusing the Gaddafi money. Was the Council able to consider this in an objective manner purely from the long-term interests of the LSE itself? Or did it find itself embarrassed into having to agree to a relationship that the British government and one of the country's largest corporations wanted as part of their strategy of embracing the Gaddafi clan?

I hope that Lord Justice Woolf, who has been asked by the LSE Council to inquire into the whole affair, will not see his task as being how best to protect the institution that has appointed him but rather to confront the larger challenge: how can any major educational institution like the LSE  protect its reputation and independence in the age of globalisation?

This needs a very much larger discussion. What I am trying to argue is that the larger context permitted the debacle at the LSE. Yes, the role of individuals needs to be addressed to clear the air. But merely scapegoating them will preserve the underlying causes. These include manifestly reprehensible government policies originating in the opportunism of the Blair premiership which are easy to condemn. But also, there should have been much more effective resistance. Why wasn't there? In my view it calls for a strong, independent culture of public interest. The absence of this, for which there is a wider responsibility, was also a cause of what occurred.

We need our universities to have an explicit  belief in their own public values - especially because they are not 'ivory towers' and should indeed engage with the interests around them. What I mean by public values is that it is no longer viable for any major institution, especially one funded even partially by public money, to run itself as a club or clerisy in which its own private self-belief is sufficient for it to set its own rules of behaviour. Over the last decade two such historic, self-regarding institutions, the House of Commons and the Catholic Church, have both found themselves forced, very painfully, to account for their behaviour publicly.

As they expand in number, there is a new threat for the universities: corporate jealousy. How come these upstart institutions with campuses no bigger than a subsidiary are claiming scarce public prestige? Who do they think they are, claiming to know better and be able to judge the money makers?

When Peter Mandelson appointed John Browne the ex-Chief Executive of (yes) BP and by now a Lord to inquire into the funding of higher education in the UK he expected a report that would open the way to universities charging higher fees. But Browne himself got down to basics. For him the history of western civilisation was no barrier to a practical examination of the bottom line. In his Review he concludes that there is no “objective metric of quality” for higher education.

I discuss some of the far-reaching consequences of this appalling abdication in the forward to Fight Back! A Reader on the Winter of Protests. In the book's section on the universities, Alan Finlayson and Tony Curzon Price debate not just the marketisation of higher education that results but also the rise of corporately owned universities that will be able market themselves directly to schools, for which the government’s reforms open the way. Thus if things to go on like this BP could simply buy the LSE and save itself a lot of grief.

Perhaps not the LSE, I hear you say, its staff might object. But if a lesser university whose staff are poorly paid was made an offer of a buy-out that would give them all a large rise  (of course, they’d be better managed and would have to teach regular courses in the sandy campus)... what criteria or "metrics" would they use to say, “No, our PhDs are not for sale”? I hope Lord Woolf can help us arrive at an answer.


Correction: in the original I wrote that Peter Sutherland was still the Chairman of BP when the LSE Council made its final decision in October 2009, in fact his tenure at BP had ended in June. A clear, detailed summary of the LSE Libya Links can be found on Wikipedia. This reports that Sutherland declared a conflict of interest at the Council meeting he chaired. Rightly, because both BP's and the LSE's 'engagement' with Gaddafi's Libya had been ongoing. The video of David Held welcoming Saif to give the Miliband lecture is here.

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