It's a scandal that bosses at one of Britain's most prestigious seats of learning may in hindsight conclude they should have seen coming.
Getting entangled in a financial relationship with a North African dictatorship implicated in, among other things, the 1988 Lockerbie bombing -- the worst terrorist atrocity on British soil -- and the shooting death of a female police officer outside its London embassy was always going to be a risky venture, regardless of claims the regime was mending its ways.
Now the embarrassment of the London School of Economics and Political Science (LSE) over its fiduciary links with Colonel Muammar Qaddafi has claimed the scalp of its top administrator. Sir Howard Davies resigned as director on March 3 after fresh revelations emerged the institution had struck a deal worth $3.5 million to train young Libyans to become part of the country's future elite.Saif's Alma Mater
The resignation of Davies, a former British government economic envoy to Libya, came as the university was already embroiled in controversy over its relationship with Qaddafi's son, Saif al-Islam, a former graduate of the LSE, whose rich array of distinguished old boys include the rock singer Mick Jagger (who attended the school but never graduated).
In an interview with the BBC, Davies said he was to blame for the blow to the LSE's standing. "I decided that I would not stay on because the reputation of the school is my responsibility," he said.
Davies: It was "poor advice" to accept Libya's money.
He added that he had been at fault in advising the LSE to accept Libyan money, which he said he now believes was "poor advice."
Davies, formerly the U.K.'s chief financial regulator and an ex-deputy chairman of the Bank of England, further admitted error in agreeing to become Britain's economic envoy to Libya, a position established as part of the international rehabilitation of the Qaddafi regime, which has now run aground amid general outrage over its brutal attempt to crush an ongoing uprising.
However, LSE's embarrassment is unlikely to end with the departure of its director as questions abound over how the school became intimately entwined with what has long been one of the world's most notorious dictatorships.Independent Inquiry
That fact has been tacitly acknowledged by the establishment of an independent inquiry into the relationship with Libya and Saif Qaddafi.
The inquiry, to be chaired by Lord Woolf, a former head of the judiciary in England and Wales, will examine a host of financial arrangements, including the agreement to accept a $2.4 million donation from the Qaddafi International Charity and Development Foundation in 2009.
It will also probe a payment of $50,000 to the LSE in return for advice Davies gave to Libya's sovereign wealth fund in 2007; the conclusion of a $3.5 million contract with Libya's Economic Development board for the LSE to train Libyan civil servants and professionals; and the acceptance of $37,000 from the Qaddafi charity to cover travel expenses of academic speakers to travel to London.
The inquiry will also focus on the LSE's relationship with Saif, which now threatens to become an enduring source of embarrassment. Central to that will be whether the 2008 doctoral thesis of the man once feted as the most respectable of the Qaddafi brood was, in fact, plagiarized and written by a ghostwriter.
The LSE has also been forced to publicly acknowledge an alleged assault by one of Saif's associates on a protester when he gave the Ralph Milliband Memorial Lecture at the school last May. 'Rivers Of Blood'
LSE doctoral student Saif warns Libyans of "rivers of blood."
Saif's role in trying to suppress Libya's ongoing unrest promises to undermine the reputation of some of the LSE's leading scholars. Particularly damaging was a recent speech in which he warned that there would be "rivers of blood" if protests continued against his father's regime.
"We'll fight until the last man, the last woman, the last bullet," he told Libyan television.
His comments contrasted with his image as a "reformer" cultivated through his LSE links and promoted by academics such as Professor David Held, a former academic adviser to Saif.
"I've come to know Saif as someone who looks to democracy, civil society, and deep liberal values," Held announced in introducing the younger Qaddafi at last year's memorial lecture.
Saif Qaddafi is not the first offspring of a foreign leader to have the benefit of an LSE education. The school is also the alma mater of Evgenia Tymoshenko, daughter of the former Ukrainian prime minister, Yulia Tymoshenko.