The fact that LSE professors (including former LSE director Sir Howard Davies) formally advised the Libyan government of Muammar Gaddafi and received thousands of pounds in research grants as compensation did not come as a big surprise to me.
Many academic institutions and individual scholars offer consulting services to governments around the world, sometimes even encouraged by their own governments. The controversy does not lie in these services per se, but rather in the disputed ethics of serving dictatorial and repressive regimes.