David McClintick - How Harvard Lost Russia

How Harvard Lost Russia

David McClintick

Anne Williamson

Table of Contents

How Harvard Lost Russia

How Harvard Deep-Sixed Its Russian Scandal

Harvard Mafia, Andrei Shleifer and the Economic Rape of Russia

Chronicles of Harvard University Russian Economic Team Scam and Deep Corruption of Academic Economics

Introduction

Academic Mafiosi as a Social Class

Academic Mafiosi as Byproduct and Simultaneously Enablers of Neoliberalism

Economic rape of post USSR economic space was by design not by accident

Larry Summers was not only defender but also the handler of Andrei Shleifer

Opium for the masses: Neoclassical economics role under neoliberalism as equivalent of the role of Catholic Church under feudalism

MI6 role in economic rape of Russia, Ukraine and other post Soviet republics

Would Harvard Ever Help Russia

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Janine Wedel the Whislte Blower

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The Open Letter to Bill Clinton

A New Wave of Russophobia?

Privatization of Russian Industry

Anatoli Chubais

Yeltsins Privatization Program

First Phase of Privatization in Russia

Russian Privatization Auctions

Politics and the Second Phase of Russias Privatization

Privatization and Yeltsin's 1996 Reelection

Rigged Auctions of Russian Privatization

Oligarchs

How the Oligarchs Obtained Their Assets

How the Oligarchs Got Very Rich

Yeltsin and the Oligarchs

Loans for Shares Deals Between Yeltsin and the Oligarchs

Failure of Privatization in Russia

How Clinton & Company & The Bankers Plundered Russia

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Double Effect

A Look Back: Anne Williamson and the Rape of Russia

Testimony of Anne Williamson

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How Harvard Lost Russia

David McClintick

January 13, 2006

https://www.institutionalinvestor.com/article/b150npp3q49x7w/how-harvard-lost-russia

The best and brightest of America's premier university came to Moscow in the 1990s to teach Russians how to be capitalists. This is the inside story of how their efforts led to scandal and disgrace.

Since being named president of Harvard University in 2001, former U.S. Treasury secretary Lawrence Summers has sparked a series of controversies that have grabbed headlines. Summers incurred the wrath of African-Americans when he belittled the work of controversial religion professor Cornel West (who left for Princeton University); last year he infuriated faculty and students alike when he seemed to disparage the innate scientific abilities of women at a Massachusetts economic conference, igniting a national uproar that nearly cost him his job; last fall brought the departure of Jack Meyer, the head of Harvard Management Co., which oversees the school's endowment but had inflamed some in the community because of the multimillion-dollar salaries it pays some of its managers.

Then, in quiet contrast, there is the case of economics professor Andrei Shleifer, who in the mid-1990s led a Harvard advisory program in Russia that collapsed in disgrace. In August, after years of litigation, Harvard, Shleifer and others agreed to pay at least $31 million to settle a lawsuit brought by the U.S. government. Harvard had been charged with breach of contract, Shleifer and an associate, Jonathan Hay, with conspiracy to defraud the U.S. government.

Shleifer remains a faculty member in good standing. Colleagues say that is because he is a close longtime friend and collaborator of Summers.

In the following pages investigative journalist David McClintick, a Harvard alumnus, chronicles Shleifer's role in the university's Russia Project and how his friendship with Summers has protected him from the consequences of that debacle inside America's premier academic institution.

Abbreviations

AEW - AEW Capital Management (Boston)

AID - The State Department's Agency for International Development

CSFB - Credit Suisse First Boston was the investment banking division of Credit Suisse Group, prior to 2006. It was active in investment banking, capital markets and financial services.

FRSD - First Russian Specialized Depository

HIID - Harvard Institute for International Development

RSEC - Russian Securities and Exchange Commission

USAID United States Agency for International Development

Off duty and in swimsuits, the mentor and his protg strolled the beach at Truro. For years, with their families, they had summered together along this stretch of Massachusetts' famed Cape Cod. Close personally and professionally, the two friends confided in each other the most private matters of family and finance. The topic of the day was the former Soviet Union.

"You've got to be careful," the mentor, Lawrence Summers, warned his protg, Andrei Shleifer. "There's a lot of corruption in Russia."

It was late August 1996, and Summers, 42, was deputy secretary of the U.S. Treasury. Shleifer, 35, was a rising star in the Harvard University economics department, just as Summers had been 15 years earlier when he had first taken Shleifer under his wing.

Summers' warning rose out of their pivotal roles in a revolution of global consequence -- the attempt to bring the Russian economy out from the ruins of communism into the promise of Western-style capitalism. Summers, as Treasury's second-in-command, was the architect of U.S. efforts to help Russia. Shleifer's involvement was more intimate. Traveling frequently to Moscow, he was directing key elements of the reform effort under the banner of the renowned Harvard Institute for International Development.

Working on contract for the U.S., HIID advised the Russian government on privatizing its economy and creating capital markets and the laws and institutions to regulate them. Shleifer did not report formally to Summers but rather to the State Department's Agency for International Development, or AID, the spearhead of the U.S.'s foreign aid program.

Personal affection as much as official concern prompted Summers' admonition. He had come to know that Shleifer and his wife, Nancy Zimmerman, a noted hedge fund manager, had been investing in Russia. Though he didn't know specifics, he understood just enough to worry that the couple might run afoul of myriad conflict-of-interest regulations that barred American advisers from investing in the countries they were assisting.

Summers did not restrict his warnings to Shleifer.

"There might be a scandal, and you could become embroiled," Summers told Zimmerman. "You should make sure you're clear with everybody. People might want to make Andrei a problem some day. The world's a shitty place."

Summers' warnings proved at once prophetic and ineffectual. Even as Shleifer and his wife strove to reassure their friend, they were maneuvering to make an investment in Russia's first authorized mutual fund company. Within eight months their private Russian dealings, together with those of close associates and relatives, would explode in scandal -- bringing dishonor to them, Harvard University and the U.S. government. The Department of Justice would deploy the Federal Bureau of Investigation and the U.S. Attorney's Office in Boston to launch a criminal investigation that would uncover evidence of fraud and money laundering, as well as the cavalier use of U.S. government funds to support everything from tennis lessons to vacation boondoggles for Harvard employees and their spouses, girlfriends and Russian pals. It would, in the end, be an extraordinary display of an overweening "best and brightest" arrogance toward the laws and rules that the Harvard people were supposed to live by.