A Difference of Nomenclature

After more than three years of federal investigations, the U.S. government is suing Professor of Economics Andrei Schleifer '82 and Jonathan Hay, a former legal advisor, for seeking personal gain from their positions in a consulting project helping Russia in the transition from Communism to a market economy. The suit alleges that Schleifer and Hay, along with their wives, both financial professionals operating in the Russian capital market, profited from conflict-of-interest investments. They are also charged with using U.S. Agency for International Development (USAID) funds for their own private operations. More importantly, the suit implicates Harvard University, alleging that it failed to supervise and report known wrongdoings. Schleifer and Hay were working through the Harvard Institute for International Development (HIID), which received $40 million in grants from the USAID for this project.

So far, it is unclear if, as the suit alleges, Harvard deliberately neglected to supervise Schleifer and Hay's work in the Russian capital markets. But the suit underscores the need to reexamine institutions that, while indirectly under the University's auspices, have a distinctly non-academic purpose. In particular, such institutions tend to drain resources that could otherwise be directed toward Harvard's core educational function.

Before it was disbanded, HIID had 20 overseas offices, 25 more international programs headquartered in Cambridge and an annual budget of over $34 million. But research done by HIID staff was never passed directly to graduate or undergraduate students. When a faculty review committee ruled last winter that HIID should be dissolved, it rightly based part of its decision on the idea that HIID's purpose was incompatible with Harvard's central mission of teaching and research.

What is troubling, however, is that all of HIID's resources and international development activities have been shifted toward the newly formed Center for International Development (CID). To an outside observer, this step seems like the tactic of some Nepali hotels that change their names on a regular basis to avoid taxation. Even though CID now has a different, more Cambridge-focused mission--as opposed to HIID, CID does not have any permanent overseas offices--it is in many ways a clone of its scandal-plagued predecessor. CID has adopted many similar projects and employs a large percentage of HIID's former employees. CID's director is HIID's former director. The organization is housed in the same building at the Kennedy School of Government. And its main conference room is still named after HIID's well-respected founding director.

CID has a more localized presence, and therefore might contribute more directly to the educational experience of Harvard's students. Still, we wonder how much good such organizations do for us in the first place.