A report released by Tellus Institute today finds that the Harvard Management Company is “among the word offenders in transparency,” citing its failure “to identify by name the board members involved in related party transactions with the university.”
The report notes,
Harvard University fails to disclose a widely reported business relationship between Harvard Management Company (HMC), the university’s endowment manager, and an investment firm affiliated with an HMC board member.
The body of the report goes on to explain:
Harvard University, including its affiliated investment management company Harvard Management Company (“HMC”), joins Boston University among the worst offenders in transparency for similarly failing to identify by name the board members involved in related party transactions with the university. The university does not disclose potential conflicts related to the management of its $32 billion endowment on the university’s primary tax filings, under the official name of “President and Fellows of Harvard University,” but rather on an entirely separate filing by HMC, the entity responsible for managing the endowment and other assets.
Yet even HMC’s IRS Form 990 failed to identify by name interested persons sitting on HMC’s board. Instead HMC reported SunGard Data Systems, which provided more than $1.5 million in “technical services” to the university, as the name of the interested person, noting only that “DIRECTOR IS CHAIRMAN OF THE BOARD.” Although the university does not identify the director by name, the reference is to HMC director Glenn Hutchins, co-founder and co-chief executive of the private equity firm Silver Lake, who also serves as Chairman of the Board of SunGard Data Systems. Hutchins sits on SunGard’s board in that capacity because SunGard is a portfolio company owned by his firm Silver Lake. Despite this undisclosed private-equity ownership stake, the university makes no effort to explain the nature of this relationship.
Even more problematic than this ambiguous language in HMC’s Form 990, however, is HMC’s failure to disclose the potential conflict of interest resulting from the university’s widely reported investments with Greylock Partners, where HMC director William W. Helman serves as a partner. Harvard has reportedly been invested in Greylock venture capital funds since the 1970s, and Helman is a long-standing member of HMC’s board. Helman is no stranger to these sorts of conflicts; he is also among the numerous trustees of Dartmouth College affiliated with firms managing multi-million-dollar sums for that college’s endowment. Harvard’s failure to list such a potential conflict of interest in its federal filings raises questions about what other business transactions involving Harvard officers and trustees and HMC directors have been similarly omitted. Without more robust disclosure requirements related to college investments, the public is unable to assess whether additional appearances of conflicts exist among trustees affiliated with financial services firms.
As for Harvard’s state filings, they provide even less information than what is found on the IRS Form 990. The Harvard Management Company’s Forms PC outline, in general terms, several business transactions with related parties but, unlike the federal IRS filings, HMC’s reports to the Massachusetts Attorney General fail to provide the values of any of the transactions or the names of interested persons. In addition, rather than providing the information requested on compensation to related parties… Harvard simply refers the reader to a series of tables found separately in HMC’s IRS Form 990. The opaque character of Harvard’s disclosures, with multiple university-affiliated entities making separate reports, creates obstacles to transparency that the university only magnifies by providing incomplete information on reported related party transactions.