After The Crimson printed this letter, the Faculty Council discussed the operation of the Harvard Management Company--and President Neil L. Rudenstine addressed the full Faculty of Arts and Sciences on the issue. The letter originally ran on November 30.
I believe that our interest in the long-range welfare of Harvard more than justifies constructive criticism whose ultimate purpose is nothing less than to express in a truly practical way our loyalty to Harvard rather than to any or its administrators. Those who criticize constructively also serve, perhaps even in a more effective way than those on the University's payroll.
The two Harvard governance bodies--The President and Fellows and the Board of Overseers--are reduced to the position of a mere rubber stamp of the administration, the only source of their information. Yet each member of these two governing bodies is liable for dereliction of fiduciary duty and gross negligence. They risk losing at least $1 million a day for Harvard.
The administration's loose talk about the long-range merely serves to obfuscate real issues. It attempts to hide inexcusable blunders of the last five to six years by "averaging" them with previous more acceptable performances. This is nothing less than a cheap statistical game, unworthy of any analytical mind and contrary to common sense. Scant attention over the last ten years resulted in its level being perhaps $2.2 billion below where it should be now. Reasonable people may differ as to the exact figures, but not as to their magnitude.
The temptation of an easy option of launching periodic capital campaigns is ultimately as self-defeating as it is illusory. For example, the equivalent of the $359 million campaign just a few years ago had already been totally wasted and wiped out through mismanagement in the last few years and the equivalent of two other such campaigns added to this waste of Harvard's endowment. This is a vicious cycle and it must be broken. The most conservative estimate of Harvard's losses due to mismanagement of $1 billion during the last six years or so omits the consequential and cumulative subsequent losses.
There is one particular part of the Harvard Management Company which would require special attention-the handling of the $1.25 billion risk capital or private placement portfolio. Other factors besides sheer professional incompetence and fiscal negligence may be responsible for monumental losses. The managers operate behind a veil of secrecy under the fallacious pretext of losing competitive financial advantage. This argument is nothing less than an insult to Harvard's financial intelligence.
It may well be that full disclosures of their investments will reveal the real reasons for their original secrecy, especially when the lists of their owners, stockholders and partners are scrutinized for other connections. Uncannily such secrecy of operations cannot help but invite comparisons with recent national scandals of S&Ls.
Before the President must first stop the bleeding on the financial side. Immediately thereafter, if not simultaneously, he must perform a radical operation to remove the already advanced cancer on the body of Harvard--not with a scalpel, but with an ax. Being ethically clean and preserving his impeccable personal integrity may be necessary, but no longer a sufficient condition for the Harvard presidency. Rudenstine needs the guts to ask penetrating questions of his top administrators and demand their full disclosure of their personal financial status and possible conflict of interest with respect to their positions.