20 Mar Written specific recommendation on to proceed with the compliance case

You are the Chief Ethics and Compliance Officer at Mercury State University (“MSU”), a newly founded private University in the U.S. You receive the following email from your University President, Matthew Shapiro. The President went to law school but has never practiced law. He obviously understands all aspects of business operations.

Hello [insert your name]:

Our Board of Trustees has asked me to obtain an opinion from you on a couple of projects that we are initiating off campus. We are very excited about these initiatives, we stand to gain significant attention in the Latin American region from these projects and expect the projects to build our brand for academic excellence and premier research.  We intend on pursuing them, but apparently in an abundance of caution, the Board is asking that I get your opinion, not to exceed 1,250 words (my Board has a very short attention span!), as to any issues that you see.

The Research Project

As you may know, Maria Scott is one of our professors. Professor Scott is a social psychologist whose expertise is in the psychological effects of scarcity, abundance, and the behavioral changes of individuals when faced with limited or excessive resources. Professor Scott’s research has been conducted in conjunction with Dr. Alfredo Ramos, a private psychologist in Puravida, Costa Buena, a small country in Latin America. Dr. Ramos specializes in treating patients with anxiety and panic disorders, and agoraphobia. Dr. Ramos is also an adjunct professor at Universidad de Puravida (UdP), teaching just one class a semester. He earns an honorarium from UdP of $2,500 USD for that position, but his income is almost exclusively from his private practice.

Professors Scott and Ramos will conduct an experiment in which they will locate participants in their respective communities who will agree to live in a closed community for a one month period. In order to create this environment, a tent city will be created in their respective cities in a city park, where that park will be closed during the duration of the experiment. The rent for the park, to be paid to the City of Puravida, is $100,000 USD. We are told that in order to obtain the permit there, we must pay a fee of $3,500 USD. I’m also told that we will pay approximately $100-$500 to the city officials who customarily expect a tip to move the application process forward and to avoid significant red tape. Dr. Ramos advises that he will assist in the payment of the necessary fee and any required gratuity. In accordance with this, Accounting has advised that it will book the payment as $103,600 for rent and permit fees.

Participants will not be able to communicate with the outside world. Participants will be given currency that is recognized in the community for purchasing their day to day needs. They will also be eligible for a job that will then provide "income", paid in a recognized currency of the community. Over time, participants may "lose their jobs", "face a crisis", or have other "windfalls” or “crises” that occur, impacting their overall purchasing power and status within the community. Inevitably, some participants will randomly become "rich" and others "poor", all for the purpose of studying the interactions of the participants, the manner in which they treat each other, their generosity or stinginess, their willingness to share or horde, etc. The extent of “financial crisis” could impact the participants’ abilities to provide for even their most basic personal needs. Participants will be paid a stipend of $15,000 upon completing the study and will be advised in writing as to the purpose of the study. Ultimately, the professors intend to compare the findings in the U.S. and Costa Buena in the hopes of learning more about cultural impacts on human behavior relating to scarcity and abundance. The cultural comparisons could result in groundbreaking research and provide significant accolades and attention for both institutions. MSU will pay Dr. Ramos for his work, but at his direction, we will donate his honorarium of $20,000 to Caridad Puravida, a local charity that provides after school education programs for underprivileged children.

Study Abroad

At the same time, as you may know, MSU is also in the final stages of opening a branch and study abroad program in Puravida. In Costa Buena, the government had previously run all of the country’s university systems, but now allows private institutions to form. However, it has complete authority in authorizing the charter for the schools and controls the number of schools to be permitted. The government also sets accreditation standards, monitors school performance and financial viability and requires regular financial and academic reporting.

As part of this initiative, MSU has hired The Carlos Consultant Company (“CCC”) to assist in coordinating the rental of space, and the completion of the necessary government requirements and red tape, including obtaining licenses and permits which we still have not received. We’ve heard good things about CCC and are confident they can expedite the process. Our Marketing Department has also devised a promotion in which CCC will advertise about the opening of the MSU local branch. CCC will then coordinate an MSU backpack and T-shirt giveaway in the community for all who listen to a five minute pitch about the school. In addition, Marketing will work with CCC to conduct a raffle. All those who take part in the pitch will be eligible to win, and the winner of the raffle will receive a free semester at MSU for him/herself or any person the winner designates. In addition to a monthly fee, CCC will receive $1 for every participant it signs up for the pitch and raffle.

As far as payment for the semester abroad, our students will continue to pay MSU directly for the semester abroad just like they would at home. As I’m sure you know, most will pay the $30,000 semester tuition by electronic payments or check. A few will pay in monthly cash installments to our Finance Department, which we simply deposit into our bank account with no need to involve any foreign financial institutions or other paperwork.

Your Opinion

I know I’ve given you way too much information, much of which is irrelevant I’m sure. But as I said, my Board has asked that I check with you just to make sure you don’t see any compliance and/or ethics issues (the Board said to include ethics in my request to you but I don’t see any issues there). Can you provide an opinion which identifies each topic of concern by numbered paragraphs, states the problem and analyzes the issue, including any legal citations or rules if appropriate, and then makes a specific recommendation as to the identified issue as to whether you recommend going forward with that issue, absolutely not proceeding as to that issue (but you should only make this recommendation where absolutely necessary because we very much want to proceed with these projects), or going forward but with certain limitations or parameters that you provide and noting any risks we would be running. Needless to say, we are anxious to proceed on all fronts and believe none of this raises any real concerns. Once you give the go ahead, we will move full steam ahead. I look forward to your positive analysis.

Given my reporting obligations back to the Board, I’ll need your written opinion within 48 hours (sorry for the short notice!). Let’s also schedule a 10 minute Zoom meeting on Wednesday or Thursday just to make sure we’re both on the same page. Please use my Zoom Conf ID at 851-244-9760 to join. Thanks and see you soon.