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 levels, and received approval at each phase, and the University is fully protected from any potential conflicts."
"My service on the Securian board was publicly discussed and voted on by the Board of Regents, in a transparent manner, and was approved overwhelmingly by a majority of the Regents," Gabel said. "As you may know, it is a common and accepted practice for university presidents to serve on corporate and non-profit boards."
In her statement, Gabel also appeared to push back against allegations from Carlson, Rosha and Painter, who suggested in their letter that Securian previously approached Gabel about a board position "two years ago." They said that was "particularly alarming" because it was around the time the U of M's retirement plans shifted from Securian to Fidelity and "near the time" Securian signed a life insurance contract with the school.
"The timeline associated with the University's selection of Fidelity Investment is a matter of public record," Gabel said. "Fidelity, not Securian, was selected in October 2018 to manage the vast majority of the University's retirement accounts, prior to my tenure as President."
Securian Financial announced Gabel's election to the Board of Directors last month and called her a "strong addition." In a statement to KARE 11, the company said Gabel's "background and qualifications impress us."
"She is the leader of one of the largest and most important institutions in our home state. Previously, she held various leadership roles in the business schools at three universities—including serving as chair of Florida State University's Department of Risk Management/Insurance, the industry in which we do business," Securian spokesperson Jeff Bakken said. "We are proud of our long business relationship with the University of Minnesota, but this relationship was not a factor in Ms. Gabel's appointment to our board."
Despite the three critics who voted against her board position last month, Gabel also received support from several members of the Board of Regents, including chair Kendall Powell. He said at the December meeting that her new relationship with Securian could help, rather than hurt, the school's reputation.
"I think the experience will actually make her a better president," Powell said, "just from watching the executive function from another organization."
The Securities and Exchange Commission did not respond to requests Friday for comment related to calls for an investigation from Carlson, Painter and Rosha. A spokesperson for the Minnesota Attorney General's Office, however, said "we are evaluating the letter and are taking the authors' concerns seriously."
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