CEO Scandals Hit Early Childhood

12/02/2002

CEO Scandals Hit Early Childhood

"Gossip is just news running ahead of itself in a red satin dress."
–Liz Smith

CEO SCANDALS HIT EARLY CHILDHOOD

First there was Enron; then there was WorldCom; now we have the nursery school at the 92 Street Y in New York City.
According to the New York Times, "Private Preschool Admissions: Grease and the City" (November 16, 2002), Jack B. Grubman, the former star telecommunications analyst at Salomon Smith Barney, had pulled out all the stops to get his twins into preschool. He asked his boss, Sanford I. Weill, chief of Salomon's parent, Citigroup, to make a few calls to nursery school board members on behalf of his children. In addition, Citigroup pledged to give $1 million over five years to the 92nd Street Y, which runs the nursery school Mr. Grubman's twins ultimately attended. The gift, which is to underwrite lectures and other events at the Y, was announced in the summer of 2000, and the Grubman twins started school a few months later.
Several aspects of this arrangement are coming under scrutiny. First, it was consider most unusual that this donation came from the bank itself and not from the bank's foundation. Second, regulatory investigators are most interested in the fact that shortly after Weil made the calls and the investment, Mr. Grubman upgraded the rating for AT&T stock.

In a memo obtained by the New York Times, Grubman expressed the incredulity at the preschool application process in the city that is echoed by most other parents. "On another matter, as I alluded to you the other day, we are going through the ridiculous but necessary process of preschool applications in Manhattan," he wrote, after discussing his efforts to review his opinion of AT&T. "For someone who grew up in a household with a father making $8,000 a year and for someone who attended public schools, I do find this process a bit strange, but there are no bounds for what you do for your children. Given that it's statistically easier to get into the Harvard freshman class than it is to get into preschool at the 92nd Street Y (by the way, this is a correct statement), it comes down to `who you know,' " Mr. Grubman wrote.

The Times also noted, "The activities described in Mr. Grubman's memo are so widespread that some schools actually discourage them. The application packet from the Spence School, which has a kindergarten but no preschool, tells parents not to send letters of reference or ask friends to call. Arlene Gibson, the Spence headmistress, tells her counterparts at preschools in the city to warn applying parents that if they ignore that request, the school will use the references for fund-raising purposes and nothing else. The policy has not hurt Spence. It has one of the largest endowments among the independent schools in New York, thanks to multimillion-dollar gifts from such notables as Mayor Michael R. Bloomberg and Fiona Biggs Druckenmiller, the philanthropist who attended the school."

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