Seven months ago, as Muammar el-Qaddafi moved to crush the first stirrings of democratic protest in Libya, the London School of Economics came under intense pressure to give back a $495,000 gift tied to the now-dead leader’s son, Seif al-Islam. The prestigious school’s director, Sir Howard Davies, stepped down in disgrace, apologizing for “an error in judgment.”
But a far larger donation from the Libyan government to American University in Washington, D.C. went largely unnoticed, as have multi-million dollar gifts to American and other universities from officials in Bahrain. That country has killed 42 pro-democracy protesters and arrested more than 1,600, about 500 of which still detained?,? in its own brutal crackdown so far this year. Saudi Arabia, which sent military forces to battle protestors in Bahrain and elsewhere, has also donated millions of dollars to American universities, including Harvard, M.I.T., Georgetown and others.
The donations, which U.S. institutions of higher education are required to report to the government, show that universities regularly accept gifts from leaders that brook no opposition and their family members, ignoring questions of corruption and human rights violations. Rather, universities appear largely unconcerned by the provenance of the money they accept.
In a year when citizens are braving bullets to demand greater accountability of their leaders, the donations raise new questions about the role of American universities that accept foreign money. Should universities, like banks, be obligated to insure their donations do not represent the proceeds of corruption? Does accepting money from regimes that deny their citizens basic rights lend legitimacy to tyrants?
According to the Department of Education’s latest foreign gifts report, released in April, universities in the United States have accepted large contributions from government officials in several countries where citizens have taken to the streets to protest rampant corruption and government impunity, including Libya, Saudi Arabia, Egypt and Bahrain. Some of the donations are as recent as the past year, like a $1,746,230 gift from Libya and a $500,000 gift from Bahrain, given to American University in Washington, DC. Others are from the past decade?:? Lawrence Technological University in Southfield, Michigan, received a $3 million gift in 2008 from Sheikh Khalifa bin Salman al-Khalifa, Bahrain’s prime minister?.?
To be sure, none of the named private donors to U.S. universities have been convicted of corruption or other crimes in their own countries. However, university officials have at times refused to identify donors by name. And while the contributions they accepted from governments predated the Arab Spring, colleges and universities that accepted gifts from regimes that cracked down on pro-democracy protesters have made no effort to distance themselves from the governments involved.
With no clear legal obligation, universities appear to have adopted a “see no evil, hear no evil” stance regarding the sources of donations from abroad.
American University’s School of International Service, for example, named an atrium after the crown prince of Bahrain, Salman bin Hamed al-Khalifa, following his $3 million donation in 2008. But Louis Goodman, the school’s dean, told Al Jazeera that he knew little about the crown prince, whom he said he had never met.
Though he runs a school of international affairs, Goodman struck a determinedly disinterested note when asked about the monarchy’s actions in silencing calls for democracy. In cracking down on pro-democracy demonstrators last spring, Bahraini officials arrested doctors who treated wounded protestors, tortured detainees, and withheld medical treatment, according to human rights organizations like Doctors Without Borders and Human Rights Watch.
“What his role is and what he can do and can’t do I have no idea,” said Goodman. The crown prince, an alumnus of American University, Class of ’92, is still considered a moderate by many, though his invitation to the wedding of Britain’s Prince William this year provoked fierce criticism from human rights groups in Britain and Bahrain. The crown prince’s eldest son, Sheikh Isa bin Salman al-Khalifa, attended the university while the atrium was named after his father.
Lawrence Tech also received a $3 million gift courtesy of Bahrain, this one from the crown prince’s great uncle, Prince Khalifa bin Salman al-Khalifa , in 2008. The prime minister holds a world record of the longest standing person in that position — he was appointed in 1971, the year Bahrain gained its independence.
In 2008, Bahraini education officials visited Lawrence Tech to establish a “cooperative relationship,” as the institution put it in a press release. In return, Lawrence Tech sent its president, Lewis N. Walker, Provost Maria Vaz, and several other faculty membes to visit Bahrain. In June that year, the prime minister received an honorary doctorate in the humanities from Lawrence Tech. Three weeks later, he donated $3 million of his personal fortune to the university.
Officials at Lawrence Tech, too, appeared unfazed by the developments in Bahrain.
Bruce Annett, the university’s executive director for marketing and public affairs, initially said that he was “not aware” that Lawrence Tech received such a large gift from Bahrain’s prime minister, even though university officials reported the gift to the Department of Education, and had initially touted the donation in an official press release.
After 100Reporters supplied Annett with evidence of the university’s own public disclosures, Annett said the university “has no plans to return the gift, used to improve laboratories and facilities for our growing programs in the life sciences.” He wrote in an email: “Bahrain was and is seen as one of the most progressive nations in the Middle East and its citizens have some of the highest rates of literacy. The U.S. had full diplomatic relations and our Fifth Fleet had, and I understand still has, a port there.”
Should universities, like banks, be obligated to insure their donations do not represent the proceeds of corruption?
Annett stressed that the university utilized the best information available to it in 2008, but added that the Bahraini government’s crackdown had not shaken Lawrence Tech’s faith in its generous donor. “We are hopeful that any differences in the country can be peacefully resolved for the benefit and advancement of all of Bahrain’s citizens. And, we hope that some will choose to join the students from some 43 other nations who today are pursuing their college educations at Lawrence Tech,” he said.
During the unrest in Bahrain this year, the country’s prime minister became a symbol of what protestors called pervasive high-level corruption. Demonstrators held up giant posters of one dinar, equivalent to about $3. One dinar: that was the amount the prime minister paid for land on which country’s gleaming new financial center was built.
“These donations are coming from individuals who are well connected with the state, and corruption is a big issue in Bahrain, not so much for the crown prince but for the prime minister,” said Joe Stork, deputy director at Human Rights Watch.
In its annual Corruption Perceptions Index, the Berlin-based not-for-profit Transparency International ranks Bahrian 48 of the 180 countries surveyed. Stork explained that the budget of the royal court is not publicly reported. “It’s like the National Security Agency budget in the US,” he said. “It’s just a black hole, completely off limits, especially in the case of the prime minister.”
The country’s actions, Stork argued, should prompt universities to think hard before pocketing a check. “The country in question is suppressing democratic protesters and has a bad human rights record,” he said. “It ought to raise issues, even though there’s nothing illegal with these donations.”
Public reporting requirements notwithstanding, other colleges and universities do their utmost to keep their donors to themselves, essentially telling the public, “Trust us.”
The University of Chicago accepted over $1.8 million from an undisclosed source in Egypt in 2009 and 2010. While the institution denied 100 Reporters’ request to name the source of funds and their use citing privacy reasons, Steven Kloehn, a spokesperson, said the university does vet the sources, purposes and circumstances of large gifts.
The school’s process includes “staff research and direct contact with the donor, several levels of supervisory and senior management scrutiny, and review by a trustee committee,” Kloehn wrote in an e-mail. “This process applies to both domestic and international gifts, and is intended to make sure that the gift is consistent with our values and mission, and that it will not present complications or unintended consequences for either the university or the donor.”
Unlike financial institutions, universities are not required to do due diligence to prevent the laundering of illegally gained or corrupt money when accepting gifts. Under the Bank Secrecy and Money Laundering Act of 2002, banks must ascertain the identity of the nominal and beneficial owner and the source of funds for foreign accounts. Furthermore, when accepting funds from a senior foreign political figure or an immediate family member, who are considered more susceptible to corruption, banks are required to “conduct enhanced scrutiny” in order to detect and report any suspicious transactions that involve proceeds of foreign corruption.
The Higher Education Act requires institutions that accept federal money to publicly disclose foreign donations when the sum of all gifts exceeds $250,000 annually. Institutions are allowed to bundle together contracts (such consulting services) with foreign governments into one aggregate sum.
Experts in due diligence say the London School of Economics debacle should serve as a cautionary tale for American Universities.
Rae Goldsmith, vice president of advancement resources at the Council for Advancement and Support of Education (CASE), a professional association, said the question was coming up more frequently since the Arab Spring. “In the UK, the [London School of Economics] returning a gift from Libya started a swell of questions about gifts. It’s not unlike late 1970s and 1980s educational investments in South Africa.”
Lauren Pickett, an expert on money laundering at Regulatory Fundamentals Group, a consulting firm, and a former senior vice president at Citibank, says universities should follow the same practices as banks when accepting gifts from foreign political figures. She notes fundraising accounts are considered high-risk since the Patriot Act and new due diligence standards were adopted.
Pickett said that initially, the Patriot Act required all financial institutions to adopt measures to prevent money laundering, But enforcement proved cumbersome. So Congress differed the implementation for many industries, relaxing them for universities.
There are precedents to a university refusing a gift from a controversial donor : in 2004, following student protest, Harvard University returned a $2.5 million gift from Sheikh Zayed bin Sultan al- Nahyan, ruler of the United Arab Emirates at the time, whose Zayed Center for Coordination and Follow-up was accused of organizing lectures and publications deeming the Holocaust a Zionist plot and blaming the US army for the September 11 attacks. Ironically, the funds were earmarked for the Harvard Divinity School. Similarly, at the London School of Economics, it was the student union that led criticism of the Qaddafi Foundation’s gift.
Following the debacle at the London School of Economics, the Council for the Advancement and Support of Education published a statement of ethics calling on university fundraisers to police themselves: The council recommended institutions conduct due diligence on donors, and create guidelines and mechanisms to vet donations, But the proposal may also represent a bid to deflate pressure for government oversight.
“If universities accept donations that are ultimately dirty money, they could get in trouble,” said Pickett, citing a risk to the institution’s reputation. “Money talks, but you should care where it’s coming from.”
jh
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