As sometime SAC Capital veteran Noah Freeman lectured Harvard back when he was an undergraduate, a fundamental problem with international business is that it places profit before ethics. Mr. Freeman is awaiting sentencing on insider trading charges. But this story is not about him.
Word began to reach my ears last week about Harvard's forestry investment in Romania. Forests sound like a good, clean business; renewable, green, and all that jazz. But it turns out that if you want to buy low and sell high, you may wind up buying opportunistically. And all opportunities are not what they seem. Bloomberg reports,
An investment agent who represented Harvard University faces charges in Romania that he took more than $1 million in bribes to induce the school to buy forest land at inflated prices.
Dragos Lipan Secu arranged with unnamed sellers to artificially boost prices that Scolopax, a Harvard-owned company, paid for timberland between 2007 and 2009, anti-corruption prosecutors said in a statement Jan. 21, the day after Lipan Secu was arrested.
Lipan Secu collected bribes valued at 4.45 million lei ($1.3 million), as well as a 2007 trip to the Canary Islands and a Chrysler Sebring car, prosecutors said. He was also charged with money laundering, and his wife, Mariana, was arrested for complicity. The two are being held in preventive custody in Bihor county and are facing more than 10 years in jail.Harvard is at two removes from the scandal (a consultant or contractor bought for a company Harvard owns), but, of course, Harvard is in the headline: Harvard Overpaid for Timber as Romanian Agent Held for Bribery. Dealbreaker is not satisfied with that, and rephrases some of the salacious details in its lede: Harvard Investment Agent Didn’t Want To Overstep His Bounds Re: Asking For A Slightly Flashier Bribe Than US News & World Report’s #19 On 2010 Affordable Midsize Cars List. The Bloomberg story points off to the Romanian press. Somehow Dealbreaker reconstructs, I imagine with a degree of literary license, the conversation between Mr. Secu and the folks who were bribing him.
“If I’m gonna do this for you I want a Cadillac. With the seat warmers.”
“You’ll get a Chrysler Sebring and you’ll like it.”
“Bull shit! Bull shit!”If you read Romanian, I'd love to know how much detail is there in the news accounts or court documents.
In other business news, the dean of the Harvard Business School issued a curious apology for HBS's past treatment of women. The problem with this sort of thing is that there would be no end of apologies for what are recognized in retrospect as past institutional sins. I guess I should seek an apology from the University of Michigan Medical School because someone there, having given my mother the opportunity to be one of the few women in the class, told her that she couldn't be a neurologist and had to settle for being a psychiatrist.
Seems to me Nohria might have done better to announce the changes he was making without trumpeting the apology so much. The changes are doubtless all to the good for today's students, both men and women -- why create the impression that you are doing them largely to make up for something your predecessors did wrong years ago? Anyway, if HBS starts paying reparations for its past mistreatment of women, I hope someone will let me know. Both my daughters went there.
Added January 31, 2014: The Crimson has a story about the Romanian timber investment. It links off to other reporting.