Shleifer Stripped of Endowed Title

Move likely punishment for renowned economist's dealings in Russia

Andrei Shleifer ’82, the prominent Harvard economist who found himself at the center of a rare ethics investigation for his alleged role in defrauding the U.S. government, appears to have been stripped of his endowed title as the Jones Professor of Economics, according to an updated listing in the Harvard directory.

Beginning on Friday, Shleifer was identified only as a “Professor of Economics” at Harvard, though his personal website remained unchanged. Previously, he had occupied the more prestigious, endowed chair as the Whipple VanNess Jones professor. It was unclear whether the demotion would correspond with a cut in salary.

The Crimson first reported the news of the conclusion of a months-long investigation of Shleifer on Thursday. The professor's title change was first reported on the Boston Globe's website Friday evening.

“I was a Professor of Economics last week, and I am a Professor of Economics this week,” Shleifer told the Globe Friday.

The ethics inquiry had centered on allegations that the economist violated Harvard conflict-of-interest rules by making private investments in the Russian economy while advising a federally funded and Harvard-run aid program in the country.

A federal judge found Shleifer liable for conspiring to defraud the U.S. government in 2004, and Harvard last year paid $26.5 million to settle the case, while Shleifer, who has denied wrongdoing, paid $2 million.

Interim Dean of the Faculty Jeremy R. Knowles, responding to charges that he mismanaged the Shleifer case by not consulting with the seven-member Committee on Professional Conduct (CPC) and a three-member investigating subcommittee before reaching a decision, told The Crimson on Wednesday that “appropriate action” had been taken in the case. He would not indicate whether that action included punishment.

Friday’s revelation appeared to indicate that Knowles had chosen to penalize Shleifer’s professional rank in the economics department, where he is considered one of its star professors.

Several CPC members were disturbed by Knowles’ silence on the case and in recent weeks, some had questioned the fairness of the proceedings, two individuals close to the committee told The Crimson.

Gary Feldman, a physics professor who sits on the CPC, said Friday afternoon that it might be appropriate for Knowles to release a public statement detailing the action he took against Shleifer and the nature of the report that was submitted by the three-member investigating subcommittee.

“It might be in Harvard’s interest to have a more forthcoming statement than the dean has provided,” he said, adding that he was not aware of any CPC members who had been notified of Knowles’ action or the findings of the subcommittee.

Though Knowles is not technically required to notify the committee or the public of his action, some CPC members and the professors on the investigating subcommittee believe it is his obligation to do so, the sources said.

Shleifer’s case had involved questions of whether Shleifer was bound by conflict-of-interest rules while he was advising the Harvard program in Russia, according to Feldman. Shleifer had maintained that he was not subject to the conflict-of-interest rules.

“I suppose it would be helpful to know what conclusion the investigating subcommittee came to on those issues,” Feldman said.

Feldman, speaking before the news of the stripped professorship had broken, said that a change in Shleifer’s title would likely have little significance.

“Endowed chairs are mainly a marketing tool the University uses to get money,” he said.

Shleifer’s former title honored Whipple Jones, the founder of the Aspen Highlands Skiing Corporation in Colorado who gave Harvard stock that was sold for $18.3 million in 1994.

Feldman said that any financial penalty imposed by the University would be negligible, given that Shleifer has already paid $2 million to settle the federal lawsuit brought against him.

Nancy L. Rosenblum, the chairwoman of the government department and a CPC member, said she was unsure whether it would be appropriate to release the case's details to the CPC or to the public. She said she could not reach a conclusion because she was not privy to the report’s contents or Knowles’ decision.

“Whether Harvard would be better off with sunshine disinfectant in this case is impossible to say,” she wrote in an e-mail. “Unlike general policy matters, there are good reasons to protect individuals—in this case Prof Schleifer [sic], the subcommittee, and the Deans—from public dissection after the fact.”

Several of Shleifer’s colleagues in the economics department declined to comment on whether the professor had been punished. But Claudia Goldin, the Lee professor of economics, wrote in an e-mail Thursday that Shleifer had appeared “quite content."

“Prof. Shleifer does not appear to have been whipped, beaten, tortured, or starved,” she wrote in an e-mail. “I see no evidence of punishment.”

--Staff writer Javier C. Hernandez can be reached at jhernand@fas.harvard.edu.