Iowa State leader, headed to Auburn, was dogged by conflicts

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Posted: Mar 23, 2017 4:49 PM
Iowa State leader, headed to Auburn, was dogged by conflicts

Iowa State University President Steven Leath is leaving behind a record of achievements that landed him the top job at Auburn University but a history of testing ethical boundaries that earned him criticism along the way.

Leath, 59, is known as a prolific fundraiser and charming academic who engages students and faculty. The Alabama land-grant university announced Leath's appointment as its next president Monday, touting his experience leading a similar school that emphasizes agriculture and his research career in North Carolina.

He will begin the job in July following a closed search that angered some Auburn constituents and prompted scrutiny of his 5 ½-year Iowa State tenure. During that time, he had a penchant for mixing personal and professional interests. Among the issues were his questionable use of university airplanes, a land deal criticized as a conflict of interest, and the hiring of well-connected people without searches. One state senator called it "the old boy network in full swing."

A fresh example of how the president's interests got tangled was his relationship with Belin McCormick, a prestigious Des Moines law firm that has done work for Iowa State.

The firm helped Leath form a personal limited liability corporation that he used to buy a piece of land in rural central Iowa for a retirement home, from a company owned by the president of Iowa State's governing board. Months later, Leath's administration hired the firm to represent ISU in a legal matter involving popular Lego art sculptures, a dispute that would normally be handled by state lawyers.

At the center of both matters is Belin partner Steve Zumbach, an Iowa State donor who is honorary co-chair of a $1.1 billion school fundraising campaign launched by Leath last year. He helped Leath organize the LLC and has billed Iowa State $585-per-hour in the Lego case.

Leath has often dismissed questions about his dealings as distractions and argues the big picture shows he's leaving Iowa State better off. He cited statistics showing he helped increase its enrollment to record levels, expanded the school's research park, and raised hundreds of millions of dollars. Student retention rates increased and debt declined.

But the university also made decisions that appeared to show favoritism, including hiring a former lawmaker who had given Leath free flight lessons.

"The process violated every requirement of equal opportunity," State Sen. Herman Quirmbach said. "The appearance was awful."

An enthusiastic pilot, Leath used university planes for personal training and to attend out-of-state medical appointments. He later paid back those costs. Leath previously reimbursed ISU for flights to his North Carolina home and for repairs to a plane he damaged during a hard landing while on vacation.

Auditors also found Leath didn't have required written permission to transport weapons on the planes during hunting trips with donors and business partners. A self-described archery nut, Leath occasionally took along a celebrity bowhunter.

Leath vowed to pay more attention to detail last year, calling himself a workaholic trying to do the right thing. He bristled at what he called unfair attacks on his integrity.

He defended his wooing of politicians, especially Republicans who controlled Iowa's executive branch and the university's board. "I'm in the relationship business, folks," he told students, defending his chummy relationship with Board of Regents President Bruce Rastetter, who's effectively his boss.

When Leath wanted to find a farm where he could retire, he turned to Rastetter's company, Summit Agriculture. Summit bought a 215-acre property at an auction for $1.14 million, sold about two-thirds of the land to Leath's newly-formed SLS Holdings LLC and kept the piece that Leath didn't want. Zumbach was the registered agent for the LLC.

Leath has said that he understands why some called the purchase a conflict, while insisting he paid fair market value and that his creation of the LLC wasn't intended to conceal his identity. He said that he wouldn't do it again the same way.

ISU later hired Belin and Zumbach to represent the university in a financial dispute involving large, nature-inspired sculptures made of thousands of Lego bricks that have been displayed at the university's public gardens.

Seeking to profit off the popular sculptures, the university started a business with Brooklyn artist Sean Kenney, who built traveling exhibits of such sculptures. The university markets them to gardens and zoos nationwide.

Former ISU employee Teresa McLaughlin filed a lawsuit alleging the university refused to pay marketing commissions required by her contract. Iowa State filed a counterclaim accusing McLaughlin of working for Kenney to market competing exhibits, which she denies. Kenney claims the university unfairly cut his fees but hasn't filed a lawsuit.

The university's usually represented at no cost by the attorney general's office. But invoices obtained by The Associated Press under the open records law show Leath's administration paid the Belin firm $27,000 before receiving formal state approval to hire outside counsel. They also show Zumbach was paid for 15.5 hours of work on case at $585 an hour, and five other Belin attorneys billed between $285 and $390 per hour.

The attorney general's office said Belin's hiring was justified due to its intellectual property expertise. University general counsel Michael Norton said Belin was picked because of "the quality of their work from prior matters they handled for the university."

Quirmbach praised Leath for hiring faculty and building up the campus, but said the series of issues have taken a toll. Leath's departure, he said, "might be mutually beneficial for both sides."

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AP reporter Barbara Rodriguez contributed.