Update: Princeton University, BAE Systems, Zimbabwe
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Two short items from a Friday meeting with Andrew Golden, president of Princeton University Investment Co. (PRINCO), and Cass Cliatt, Princeton’s spokeswoman, about University investments in Zimbabwe and British arms supplier BAE Systems revealed by WPRB last week.
The broad takeaway: while Princeton claims it no longer owns BAE bonds and that it has two cents worth of an 18-year-old holding in Zimbabwe, nothing prevents the University from making future investments in either. Further, Princeton can only offer speculation to account for the listing of Zimbabwe on a federally-filed, public tax form that requires disclosure of investments of $10,000 or greater in foreign countries. What has changed, however, is that investment records are no longer made public due to concerns over “economic cost”. The precise economic cost of having made investments public before 2002, when the current non-disclosure policy was implemented, remains unclear.
BAE Systems
While the money manager responsible for the acquisition of BAE bonds is no longer affiliated with Princeton, “the fact these changes occurred had nothing to do with BAE,” Golden told WPRB.
“There is nothing that prevents us from investing in defense contractors,” Golden said, adding that the manager who acquired the BAE bonds “thought it was a good economic investment.”
While PRINCO is charged with overseeing Princeton’s multi-billion dollar endowment and managing funds of several organizations associated with the University, including WPRB, individual investment decisions are made by external money managers. Any non-economic factor applied to investment decisions– what Golden termed a “social overlay”– must be imposed by the Trustees of Princeton University and not by PRINCO or individual money managers.
Zimbabwe
After a lengthy search, PRINCO could only locate a single, 18-year-old bond valued at around $.02, Golden told WPRB, adding he was “99 percent sure” it was the only investment.
Should PRINCO’s review prove accurate, why Zimbabwe was listed last year among countries where the University has investments in excess of $10,000 remains a mystery. During the Friday interview with WPRB, Golden suggested it was an “out and out mistake” while Cliatt speculated that Zimbabwe might have been listed because in situations where “there’s any confusion” the University adopts a “conservative approach” to its filings.
newsdirector @ December 10, 2008
More Context on Princeton’s Investment Policies
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I’m currently traveling, but I’ll be posting a short story very soon based on WPRB’s meeting last Friday with Andrew Golden, president of Princeton University Investment Co. (PRINCO), and Cass Cliatt, Princeton’s spokeswoman.
In the meantime, I wanted to point readers to an article that ran last Friday in Princeton’s campus newspaper, The Daily Princetonian, that provides a great deal of context on the comparative policies for ethical review of investments at Princeton, Harvard and Yale– something that becomes more interesting in light of our Friday interview with Golden, who told WPRB he felt Princeton’s system is “more democratic”.
From the Princetonian:
At Yale, an eight-person Advisory Committee on Investor Responsibility (ACIR) meets regularly to discuss ethical investment policies for the school’s endowment, said ACIR chair Jonathan Macey, a law professor and deputy dean of Yale Law School. The committee, composed of two students, alumni, faculty and staff members, makes recommendations to the Yale Corporation Committee on Investor Responsibility relating to matters ranging from “company investment in South Africa, to defense contracting, political lobbying and environmental safety,” according to the ACIR website.
Though some of the committee’s meetings are open to the Yale community and the ACIR values outside input, Yale evaluates the ethics of its holdings regardless of community interest, Macey said.
“It’s none of my business what goes on at Princeton, but either an investment policy is ethical or it isn’t,” Macey said. “The idea that it’s only a problem if it upsets a lot of people seems odd to me.”
“It doesn’t seem plausible,” he added. “It sounds like it’s a practical concern at Princeton, not an ethical one.”
Harvard, like Yale, has an Advisory Committee on Shareholder Responsibility composed of faculty, students and alumni that recommends ethical investing policies to the Harvard Corporation Committee on Shareholder Responsibility.
Princeton does not currently have a body specifically devoted to reviewing the ethics of its investment practices.
newsdirector @ December 10, 2008
Breaking: Princeton says it no longer holds BAE bonds
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By Sebastian Jones
WPRB News
Princeton University says it “no longer owns” bonds of BAE Systems, a controversial British arms supplier, that WPRB reported yesterday were purchased in 2001. This disclosure appears to represent a departure from the University’s stated policy of not discussing investment holdings.
In an e-mail sent to WPRB Wednesday evening, University spokeswoman Cass Cliatt wrote:
A case in point is your inquiry related to BAE. While we do not disclose specifics of our investment portfolio, I can confirm that your inquiry relates to a fixed-income account that was widely diversified, but since mid-2003, the University no longer owns those securities.
BAE Systems has been criticized for dealings with, among others, Suharto’s Indonesia and Robert Mugabe’s Zimbabwe and has been investigated on charges of alleged corruption on multiple occasions.
Additionally, details surrounding the foreign financial account or accounts held by the University in Zimbabwe, first revealed by WPRB on Tuesday, have yet to be disclosed.
In her Wednesday evening e-mail, Cliatt instead suggested that:
members of the campus community with interest in these issues typically would not need to know whether the University is invested in Zimbabwe today to know whether they feel the University should be invested in Zimbabwe. And looking at a list of investment holdings on a given day can’t tell you what we’re invested in today. It tells you only what we were invested in at the time the list was published.
Tomorrow afternoon, at the invitation of the University, WPRB is slated to sit down with Andrew Golden, the president of the Princeton University Investment Co. (PRINCO), to discuss how the University makes and monitors investments, why Princeton has stopped disclosing printouts of investments–as was a standard practice during the late 1990’s up until 2002–and why consideration of non-economic factors in investment appear only to be considered after concerns are raised by the campus community.
[Editor's Note: If you have questions you feel WPRB should ask Mr. Golden, send them along to tips@wprb.com before 1:30 PM tomorrow]
Our full program on Zimbabwe, and on Offshore Financial Centers (OFCs)– where companies, individuals and foundations can invest funds at very low tax rates, usually at the expense of their home nations’ tax revenues– aired this afternoon and will be posted online tomorrow evening. Roughly one third of Princeton’s declared foreign financial accounts, as of June 2007, are situated in OFCs.
newsdirector @ December 5, 2008
Update: Specifics on University Investment Policy
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University Spokeswoman Cass Cliatt wrote WPRB this morning, pointing us towards a 1997 report (which she had previously mentioned in comments for our first story on Zimbabwe investments) titled Guidelines for Resources Committee Consideration of Investment-Driven “Social Responsibility” Issues.
The report states that:
For the most part the Trustees have delegated the responsibility for selecting specific investments to outside money management professionals. These professionals are provided with a detailed investment policy statement that describes our basic investment goal of maximizing the total long-term return on the endowment consistent with acceptable levels of risk. Quite deliberately they have not been asked to take into account any non-economic social, political, or moral guidelines other than those few South Africa-related limits explicitly approved by the Board of Trustees. The Trustees expect that, in carrying out this assignment, the investment managers will vote on all shareholder resolutions in a manner consistent with the overall investment objective of maximizing the total long-term return on those investments, rather than seeking to achieve some separate social objective. Full Story…
newsdirector @ December 3, 2008
Princeton invested in arms supplier with Zimbabwe ties
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By Sebastian Jones
WPRB News
In 2001 Princeton University purchased bonds in British arms supplier BAE Systems, essentially giving a $1.5 million dollar loan to a company whose dealings with regimes like Robert Mugabe’s Zimbabwe have come under repeated scrutiny from investigators, journalists and activists, WPRB has learned.
An excerpt of a 2002 printout of Princeton University's investments that reveals holdings in British arms supplier BAE Systems.
In Zimbabwe, BAE has been tied to alleged efforts by arms dealer James Bredenkamp to supply the government with military equipment, potentially in violation of sanctions. Just days ago Bredenkamp, who The Guardian claims “acted as BAE’s agent in southern Africa”, had his assets frozen by the United States Treasury Department for his close relationship with Robert Mugabe’s regime.
For years BAE supplied military equipment to Zimbabwe, a relationship that began in the 1980’s when the Zimbabwean Air Force acquired 12 fighter planes from British Aerospace, BAE’s predecessor.
In 2000, the British government imposed an arms embargo against Zimbabwe, yet replacement parts for BAE-manufactured planes arrived as late as 2001, in apparent violation of sanctions, according to a UN report. Those components were allegedly supplied by Bredenkamp, who received £20,000,000 between 2003 and 2005 from BAE, The Financial Times reported this July. The payment served as “the first detailed evidence of a financial relationship” between Bredenkamp and the company. Both have both repeatedly denied violating sanctions. Full Story…
newsdirector @ December 3, 2008
WPRB Exclusive: Princeton University Invested in Zimbabwe
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By Sebastian Jones
WPRB News
As the United States and members of the European Union condemned the Zimbabwean government and considered strengthening sanctions, Princeton University chose to invest in Robert Mugabe’s troubled African nation, according to tax filings obtained by WPRB.
A portion of Princeton's tax records covering foreign assets, obtained by WPRB. The previous two filings, spanning July 2004 to June 2006, show no investment in Zimbabwe.
The investment, placed between July 2006 and June 2007, was made despite Zimbabwe’s highly publicized political and economic upheaval and disreputable human rights record. Questions as to the size, nature and current state of the investment remain unanswered at this time.
Princeton spokeswoman Cass Cliatt told WPRB in an e-mail this evening that “as a matter of policy, the University does not disclose the specifics of its investment portfolio or its return drivers.”
“The University in 1997 adopted guidelines for socially responsible investment under which action is taken after “considerable, thoughtful and sustained” campus interest and widespread consensus that action should be taken. The first step in that process is for the issue to be raised by a segment of the campus community and to my knowledge, the process has not been initiated,” Cliatt wrote.
What internal standards, if any, Princeton employs in selecting and vetting investments in corporate stock or foreign assets were not addressed by Cliatt.
Mugabe’s rule has drawn harsh international criticism ever since a violent policy of land redistribution plunged Zimbabwe into severe food shortages and economic crisis in 2002.
In 2005, the United States government called Zimbabwe an “outpost of tyranny” on par with Burma and Iran, the Zimbabwean government implemented an urban “clean-up” plan that the United Nations estimates left 700,000 people homeless and, by year’s end, the UN’s humanitarian chief had concluded the country was “in meltdown”. Conditions in 2006 and 2007 worsened with inflation reaching all-time highs and widespread imprisonment of union leaders and political activists (several of whom alleged they were tortured while in state custody).
This summer Time reported that, in the run up to Zimbabwe’s June elections, Mugabe’s “brutality before the vote resulted in the deaths of about 100 Zimbabweans, the detention of some 2,000, injury to 10,000 and the displacement of more than 200,000.” Just last week, The Guardian reported that the country was on the “brink of collapse”.
Stay with WPRB as we prepare additional reporting on the subject to be aired this Thursday on 103.3 FM and on the web at www.wprb.com at 5PM. Among our guests will be Andrew Meldrum, who wrote for The Guardian and The Economist about Zimbabwe for 23 years until he was kicked out of the country in 2003.
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Update- Read WPRB’s report from Wednesday on Princeton’s investments in Zimbabwe-tied British arms supplier BAE Systems here..
newsdirector @ December 2, 2008
Full Dispatch line-up on China
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Here’s the full line-up from our recent program on China policy:
Princeton University and China
Sebastian Jones reports on the ties that bind Princeton University and China– and the potential conflicts of interest that come with them.
E. Perry Link
Professor E. Perry Link, a distinguished scholar of East Asian and China Studies who, until recently, was based at Princeton University and currently teaches at UC Riverside, joins Sebastian Jones for an interview about the challenges academics and universities face in balancing relations with China. Link also touches upon the recent Summer Olympics and tells the story of how he was blacklisted by the Chinese government, preventing him from entering the country.
Part One:
Part Two:
Part Three:
Ken Silverstein
Ken Silverstein, The Washington Editor of Harper’s Magazine, joins Sebastian Jones for a discussion of how China policy is shaped in Washington by foreign policy consultants whose actions raise serious ethical questions.
Part One:
Part Two:
Anne Marie Slaughter
Dean of Princeton University’s Woodrow Wilson School, Anne Marie Slaughter, sits down with Ashley Schoettle to share insights from her stint in China while on sabbatical and her thoughts on the current state of and future possibilities for China.
Part One:
Web-exclusive:
Slaughter and Silverstein on the Olympics– Web Exclusive
In a WPRB web-exclusive, Ken Silverstein of Harper’s Magazine and Princeton University Woodrow Wilson School Dean Anne Marie Slaughter share their differing views on the recent Olympic games in China.
newsdirector @ November 29, 2008
WPRB Reports: Princeton and China
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Sebastian Jones reports on the ties that bind Princeton University and China– and the potential conflicts of interest that come with them.
newsdirector @ November 20, 2008
Web-Only: Silverstein and Slaughter on the Olympics
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In a WPRB web-exclusive, Ken Silverstein of Harper’s Magazine and Princeton University Woodrow Wilson School Dean Anne Marie Slaughter share their differing views on the recent Olympic games in China.
newsdirector @ November 20, 2008
Anne Marie Slaughter
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Dean of Princeton University’s Woodrow Wilson School, Anne Marie Slaughter, sits down with Ashley Schoettle to share insights from her stint in China while on sabbatical and her thoughts on the current state of and future possibilities for China.
Part One:
Web-exclusive:
newsdirector @ November 20, 2008