Texas A&M’s outgoing Provost and Executive Vice President Karan Watson has been removed from her position after an internal audit found significant conflict of interest issues tied to business dealings her spouse had with the university, according to documents obtained by The Eagle.
The investigation is likely to trigger sweeping changes throughout A&M System universities and agencies by prohibiting spouses and close family members of senior administrators from doing business with the System.
Over the last seven years since Karan Watson took over as provost, Nancy Watson — owner of a conflict resolution company in Bryan-College Station — was paid $438,733 by the university for training services. The audit looked at the $9,838 she was paid by the provost’s office and the $105,767 from the Office for Diversity, which reports to the provost.
Though the inquiry found the arrangement violated the A&M System’s ethics policy and cited five areas in which the provost failed to comply with the code of conduct, it did not find any evidence that she pressured or tried to influence staff to hire her spouse, according to a six-page document from the auditor, which answers to the A&M System Board of Regents.
The action taken by President Michael K. Young was in response to a whistleblower’s complaint made in May, marking the third grievance accusing the Watsons of similar possible ethics violations connected to Nancy Watson’s business – the Center for Change and Conflict Resolution.
Watson, who announced her retirement last August and was given a farewell party at the close of the semester, had opted to stay on until her replacement arrived.
A month ago, Carol A. Fierke, dean of the Rackham Graduate School and vice provost for academic affairs in graduate studies at the University of Michigan, was hired as provost and was expected to take over in mid-October. However, Young said in an email to top administrators this morning that Fierke will start Sept. 1.
Douglas Palmer, professor of educational psychology in the College of Education and Human Development, will serve as interim provost until Fierke arrives.
Karan Watson, who was hired at A&M 34 years ago, will remain on faculty. She holds the position of regents professor in the departments of electrical and computer engineering, and computer science and engineering.
The role of provost is among the most high-profile of the university administration — described recently as “second in charge for the university” by Young. It serves as the chief academic officer with responsibilities including the management of the university’s academic mission, the planning, budgeting, supervising and reviewing educational programs, and acts as a point of contact for outside institutions including accreditation agencies, the Texas A&M University System Board of Regents, the Texas Higher Education Coordinating Board, the Texas Legislature and others.
In fiscal year 2011 — under then-President R. Bowen Loftin — and in the fall of 2014 — under interim President Mark Hussey — two similar complaints were filed. Both resulted in auditors suggesting the university ask for requests for proposals to draw in more vendors offering similar services from which the university could choose.
Nancy Watson’s business was selected from among two other vendors and awarded $20,000 per year for a five-year period. Following the second complaint, the university entered into an agreement with a total of six vendors, including the Center for Change and Conflict Resolution, for services set to expire January 2018. This replaced the previous agreement.
The Center for Change and Conflict Resolution is the only vendor of the six to be used by the university in the past three years.
Although auditors reported that employees interviewed throughout several departments — the report didn’t specify how many — said their selection of Nancy Watson’s business was “based on positive past experience” or recommendations, there still remained the “appearance of a conflict of interest.”
In addition to her role as vendor, Nancy Watson also serves on part-time staff in the Office of Diversity as director of climate enhancement initiatives and was appointed earlier this year to the part-time faculty position of clinical associate professor.
In the report, auditors said Nancy Watson’s staff position was of particular concern given that her university duties overlapped with the services provided by her company.
“She is in a position to encourage departments to obtain the type of training provided by her business, which creates a conflict with the proper discharge of her official duties,” auditors wrote in the report. “Serving as both a vendor and an employee in the same subject matter areas is ill-advised and creates an unavoidable conflict of interest.”
The auditors noted Nancy Watson’s staff position was approved by the president of the university, but that they could not find documentation immediately available that showed Watson’s faculty position was similarly cleared of nepotism concerns.
Concern was also expressed over the fact that a link to the Center for Change and Conflict Resolution’s website is posted on Nancy Watson’s official Texas A&M web page; auditors suggested its removal.
Both women told auditors Karan Watson made it a point to recuse herself from matters dealing with Nancy Watson or her business.
Auditors said in the report Karan Watson told them “that complaints generally occur after her relationship with Nancy is discussed at any time of public event.” A reception recognizing Watson’s years of service as provost was held April 28, during which Watson told auditors she had spoken about their relationship.
‘Perception of conflict’
Moving forward, the auditors recommended university officials should “determine if the services provided by Nancy should be provided by her as an employee or as a vendor,” as they believe it is “not appropriate for her to serve in both roles.”
As for Karan Watson, the auditors found she should have made a greater effort to “ensure the perception of a conflict of interest was mitigated.”
“Operating in part under the assumption that everyone knew about their relationship does not adequately address the conflict of interest created when someone in Karan’s position is married to a vendor to whom the university has paid a considerable amount of money,” auditors wrote in the report.
The auditor’s report states that they expect to see a policy presented to the A&M System Board of Regents expanding upon the 2015 Texas State law prohibiting state agencies from contracting with a business owned by the CEO of an institution or a member of their family. The proposal would be for the system to extend the prohibition to include senior administrators, preventing what unfolded under Watson from happening.
Watson announced last August that she intended to step down from her role as provost at the end of May 2017. In a university statement at the time, Young thanked Watson for her many years of remarkable service to the university and said she has been critical to the current era of “unprecedented excellence and opportunity for Texas A&M.”
Watson was appointed as A&M’s first female provost and executive vice president in March 2011 after serving in the interim role since July 2009 and as associate provost and dean of faculties between 2002 and 2008.
In addition to her responsibilities as provost, she served in numerous leadership roles over the years including as interim vice president and associate provost for diversity, associate dean for academic affairs in the College of Engineering and a member of the faculty senate.
The Texas Tech University graduate first joined the Texas A&M faculty in 1983 at the age of 26 as a member of the College of Engineering.