President Gabel started a new outside role this week on the board of Securian Financial, which critics say is a conflict of interest.
MINNEAPOLIS — A number of critics, including former Minnesota Governor Arne Carlson, are demanding an investigation into University of Minnesota President Joan Gabel, who started a new outside role this week on the Board of Directors for Securian Financial.
Gabel told the university’s Board of Regents last month that the job pays approximately $130,000 per year. Through a “conflict management plan,” she agreed to recuse herself from any university decisions involving Securian, a St. Paul-based mutual holding company.
The Board of Regents approved the plan by a 9-3 vote last month.
“It’s really reflecting,” Board of Regents Vice Chair Janie Mayeron said at the meeting, “that there’s a wall around her, and her activities at Securian.”
However, Gabel’s decision to join the Securian board drew an immediate response from opposing regents like Darrin Rosha, who said the move creates a “conflict of interest which would interfere, I believe, with the regular employment to the president.” According to the school’s Institutional Conflict Review Panel, the university pays about $4.6 million per year to a Securian affiliate named Minnesota Life for employee life insurance. Furthermore, although Securian transferred the U’s retirement plans to Fidelity a few years ago, Securian still holds $1.3 billion in so-called “legacy” accounts with the school.
“As you look at our ability to pursue relationships with financial services companies, this creates a bit of a challenge,” Rosha said. “This is not a distant hypothetical… This is a company that has over a billion dollars in relationships with the university already and millions per year.”
Rosha, former Governor Carlson and U of M Corporate Law Professor Richard Painter sent a letter Dec. 30 to the Securities and Exchange Commission and the Minnesota Attorney General’s Office, demanding investigations into Gabel’s position on the Securian board.
“We, the undersigned, are concerned that this rushed decision appears to be what is known as a ‘pay for play’ arrangement,” they wrote, “or a case of self-dealing where parties gain an economic benefit that is in no way in the best interests of the employees who have some billions of dollars in retirement account funds in 401(a) defined contribution plans and have substantial financial interest in other similar financial offerings administered by Securian Financial Corporation.”
In an interview with KARE 11, Carlson called the arrangement between Gabel and Securian a “very, very serious conflict of interest.”
“The president of the University of Minnesota is a full-time job. She’s paid approximately a million dollars a year. That’s much, much more than enough — it’s 2.5 times the salary of the president of the United States. This idea that we can spend board time, and her time, talking about how she can increase her pay by working for somebody else, is way out of line,” Carlson said. “You expect people when they go into public service to have modest income, and to serve 100% the best interest of the public. When boards, and presidents get into behavior about how can I slip one through and make a little more money, that’s more than disturbing. And it does mean that her stay at the university should be put under consideration.”
Meanwhile, State Senator John Marty (DFL-Roseville), called for Gabel to resign from the Securian board.
“The conflict of interest of serving on a corporate board of a corporation that’s doing business dealings with the institution you represent, is just wrong,” Marty said. “I’m still stunned that the regents went along with it and hoping that she, and they, agree to back out of it.”
In a statement to KARE 11, Gabel noted that her board position at Securian “has been fully vetted for potential conflicts on multiple…
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