The Romanian Ministry of Justice has accused Dragos Lipan Secu of accepting bribes and laundering money while he was employed as a contractor for Scolopax, a Harvard-owned timber company in Romania.
According to a statement issued by the Romanian Anti-Corruption Department on Jan. 21, Secu allegedly conspired with timber sellers to purchase timberland on behalf of Scolopax for artificially high prices. In return, he received a series of bribes from the sellers, including 4.45 million lei, or $1.3 million, a trip to the Canary Islands in 2007, and a Chrysler Sebring car.
Secu’s wife has also been arrested for complicity, according to the statement. Bloomberg News reported that the couple could face a sentence of more than 10 years in prison.
Scolopax is wholly owned by Phemus Corporation, a subsidiary of the Harvard Management Company that invests on its behalf. According to University tax filings, Scolopax had assets of over $126 million in 2011. Phemus Corporation’s assets totaled more than $4.2 billion in 2012, the last year for which information is publicly available.
University spokesperson Kevin Galvin said that Secu’s relationship with Scolopax and the University ended in December 2012. The alleged transactions occurred between 2007 and 2009.
“This matter pertains to actions of an outside contractor who is no longer associated with Harvard Management Company,” Galvin wrote in an emailed statement. “We are aware of the allegations and gathering further information.”
Sam F. Wohns ’14, a member of the Responsible Investment at Harvard Coalition, said that the allegations demonstrate the need for Harvard to more vigilantly monitor its investments and subsidiaries.
“I think that this is a clear example where Harvard’s inadequate oversight of its investments has led to not only connection to illegal business activity but has also hurt our bottom line,” Wohns said. “It’s a great illustration of what’s at stake when Harvard fails to adequately ensure that its companies are operating according to the law and upholding Harvard values.”
Other Harvard-owned natural resource companies have come under scrutiny in the past few months. In October, a California-based think tank, the Oakland Institute, and Responsible Investment issued a report alleging that Harvard’s timberland holdings in Argentina have caused environmental damage.
Harvard began investing in timber in 1997, according to a Bloomberg News article. As of 2012, about 10 percent of Harvard’s portfolio was invested in natural resources—including timberland—in countries like Brazil and Romania.
Returns on Harvard’s endowment in 2013 trailed the national average, according to a recent study by the National Association of College and University Business Officers and Commonfund Institute. HMC’s investments in natural resources saw total returns of 5.1 percent, falling short of its own internally set benchmark goal of 7.6 percent. Of all the asset classes detailed in the the University’s fiscal year 2013 financial report, natural resources fell short of the benchmark by the largest margin.
—Staff writer Christine Y. Cahill can be reached at email@example.com. Follow her on Twitter @cycahill16.
Unethical EndowmentHarvard needs to seriously investigate and address the allegations raised in Responsible Investment’s report, and needs to do so in a transparent and public way.
Group Protests Alleged Environmental Damage
Harvard Puts Romanian Timberland Associated with Bribery Case Up for SaleThe documents advertising the sale were posted in Romanian provinces two days after Dragos Lipan Secu, a former contractor for a University subsidiary, was arrested on charges of bribery and money laundering.
Harvard’s Timber EmpireHarvard could continue to cut corners, sacrificing native forests, subsistence farmers’ land, and ecological well-being in its efforts to turn a profit. Or, it could use its timberland assets to push forward a sustainable model for global forestry. I hope Harvard takes seriously its “commitment to sustainable investment” and that its “distinctive responsibilities to society” lead it to responsible ownership.
Harvard Today: April 14, 2014