Stop Harvard's Next Bailout

Last Wednesday, the Wall Street Journal, the Associated Press and others reported that Harvard had helped Harken Energy create an Enron-style, “off the books,” partnership to hide $20 million of Harken’s debt while George W. Bush was on Harken’s board. Why were most of us Harvard students the last to know? Although the deal may have been technically in accordance with the accounting rules of the time—it is hard to know without more information—it certainly did not live up to the Harvard community’s ethical standards.

Unfortunately, this is far from the only instance in which Harvard’s decision-makers have acted unethically with no opportunity for community supervision. Just over six months ago, Herbert S. “Pug” Winokur resigned from the Harvard Corporation—the self-selecting secretive seven-member body with ultimate say over all of Harvard’s actions—because of his close ties to Enron. At the same time as he was chairing Enron’s finance committee as it suspended ethical standard after ethical standard, he was, ironically, also chairing Harvard’s Committee on Shareholder Responsibility. Sadly enough, Winokur could have kept chairing that committee for years longer if the Enron scandal had broken later or HarvardWatch, an independent group of students and alumni, had been less persistent about pointing out his close ties to Enron.

Robert G. Stone Jr. ‘45, another corporation member who also retired last year, seems to be equally embroiled in this mess. According to Scott Sperling who worked under Stone at Harvard Management Company, Stone was “the driving force” behind the Harken deal and Harvard’s other energy investments. Stone has a variety of ties to the Bushes including a father in law who invested in the elder George Bush’s oil drilling ventures in the 1940s and a brother who was the US envoy to Cyprus during the first Reagan-Bush Administration, and a pattern of contributions to both the Reagan-Bush and Bush-Quayle’s presidential campaign. Although it is understandable that Stone might want to bail out an old family friend like George W. Bush by helping Bush’s business hide its debts, by investing millions of dollars in it, and by buying his stock, there is no excuse for doing so with Harvard’s endowment money.

So, in the past few months, both Winokur and Stone have been replaced on the Harvard Corporation The other six met in secret and handpicked a new recruit to initiate into their club for each member they had lost—just as they have been doing for more than 350 years. We can hope the new corporation members will be more ethical than those they are replacing, but hope is a slim hook on which to hang the $17 billion that is left in the Harvard endowment. The key question for the Harvard community to consider now is how we can make sure the tremendous resources with which we have been endowed are never again used by insiders to help out their political friends.

The answers to this question are simple enough. First, the current Harvard administration needs to stop holding back any information it has on its relationship with Harken’s board of directors and partnerships so we can know exactly what went wrong. Second, any Harvard Corporation members or other administrators who are found, by an independent inquiry, to have acted in a manner that is inconsistent with Harvard’s standard of honesty and integrity in all dealings must be asked to step down, if they have not done so already. This includes Stone, who has remained on the board of directors of the Harvard Management Company even after he stepped down from the Harvard Corporation. No one who has betrayed the trust of the Harvard community can remain in a position of leadership. This will also set an example that will make future Harvard Corporation members think twice before committing a similar offense.

Most importantly, we need new avenues to hold Harvard’s decision-makers accountable for their ethical lapses and, hopefully, to prevent such lapses. It is time for the Harvard Corporation to open up its meetings and minute notes to the public. It is time for it to provide information about all of its dealings so that they can be examined and evaluated by those for whom the endowment was entrusted: Harvard’s academic community. Most of all, it is time for students, faculty and others affected by the Corporation’s decisions to have a voice in determining who serves on the Corporation. If Harvard is to uphold basic standards of ethics, if it is to teach students to be watchful and engaged citizens who care about the wrongs committed in their name, if it is to be a legitimate and trustworthy guardian of our $17 billion endowment, it can do no less.

Ariel Z. Weisbard ’02-’03, a Crimson editor, is a social studies concentrator in Dudley House.