Paying for a World Class Affiliation: Reputation laundering in universities

Why are the super wealthy – including those who have made their money under global kleptocracies – so keen to donate to academia?  

For some, the motivations may be purely altruistic and the outcomes of no personal benefit. But for the politically exposed, the picture is more complex.

In our report Paying for a World Class Affiliation: Reputation Laundering in the University Sector of Open Societies, written with our colleagues Alexander Cooley and Tom Mayne, and published by the National Endowment for Democracy on 25 May 2021, we argue that increasing reliance on donations from the super wealthy raises serious questions of transparency and accountability for universities, which currently govern donations in a manner that is often inconsistent and secretive.  

In the US, from 2013-2019 we saw a quadrupling of the value of publicly reported donations to around $4 Billion, and estimated near-tripling in UK and Irish universities from 2009-2019 to £1.3 Billion per annum, but there is no systematic data on the country of origin of donations.

Individual donations to academic programmes can be used to launder the reputation of individuals facing corruption allegations. Reputation laundering occurs when wealthy individuals make philanthropic donations to universities in rule-of-law settings to boost their international reputation and offset reported controversies or malfeasance.

For example, Dimitri Firtash’s £6 Million donation to Ukrainian Studies at Cambridge was used to help defend his reputation in an English court in 2011. A later £1.95 million donation to Cambridge was frozen.

Invitations to speak and naming rights are also used in the UK to launder reputations.  In 2013, Nigeria’s Minister for Petroleum, Diezani Alison-Madueke, spoke at the University of Oxford, praising the Nigerian government and maintaining that it “actively sought out the perpetrators of [corrupt] actions”. Less than two years later, it emerged that she could have supervised the looting of over $6 billion from Nigeria’s public resources during her tenure. 

In order to study this phenomenon, we conducted a short survey of the US Top 20 and the 24 UK Russell Group universities, as well as 13 interviews with the gift assessment officers of these universities. We also did an analysis of published cases, pulling together the many scattered examples from the last decade.

While the issue of reputation laundering at universities ? has only recently begun to be taken seriously in the US, in the UK it rose up the agenda ten years ago. Managerial oversight of due diligence was supposedly transformed by the Woolf report that followed the Saif Qaddafi scandal at LSE in 2011.  It found that LSE had conducted minimal due diligence on a gift made after the award of a doctoral degree to the son of the late President, based on a dissertation suspected of plagiarism.

Our research found that many UK institutions are still lacking in their vetting. Only seven out of seventeen Russell Group universities we assessed have independent gifts committees and publish the guidance they use to assess donations, and instead senior leaders and managers approve donations.. The University of Exeter, for example, has an ad hoc system of senior management approval and guidelines which are only available internally. 

Table 1. Gift acceptance procedures at UK Russell Group Universities: overview of the transparency of ethical guidelines and oversight

Name of University	Ethical guidelines	Highest level decision-making body
Durham University	Public	Senior management approval system
Imperial College London	Internal Only	Senior management approval system
King’s College London	Public	Dedicated independent gifts committee
London School of Economics and Political Science (LSE)	Public	Dedicated independent gifts committee
Newcastle University	Upon Request	Senior management approval system
University of Birmingham	Public	Senior management approval system
University of Bristol	Public	Dedicated independent gifts committee
University of Cambridge	Public	Dedicated independent gifts committee
University of Edinburgh	Public	Senior management approval system
University of Exeter	Internal Only	Ad hoc senior management approval
University of Liverpool	Upon Request	Dedicated independent gifts committee*
University of Nottingham	Public	Senior management approval system
University of Oxford	Upon Request	Dedicated independent gifts committee
University of Sheffield	Internal Only	Dedicated independent gifts committee*
University of Southampton	Public	Dedicated independent gifts committee*
University of Warwick	Internal Only	Dedicated independent gifts committee
University of York	Public	Dedicated independent gifts committee

 

Source: Cooley, Prelec, Heathershaw and Mayne, 2021 (fieldwork: summer 2020-spring 2021).

Note(*): Liverpool, Sheffield and Southampton all have or are in the process of establishing dedicated independent gift committees, however, we do not have sufficient information on their composition to ascertain their independence from senior management and inclusivity to academic staff and students.

Moreover, when universities consider the history and origins of the individual benefactors’ wealth, it is in relation to the “reputational risk” to their institution.  But such criteria are unclear and are deployed in a context where transparency around donations is lacking.

Scrutiny procedures differ greatly amongst institutions. Current events and media stories have a big influence on vetting. The 13 interviewees admitted very few donations being turned down, ranging from 0 to 4, with some claiming that this was because suspicious donors were not allowed to proceed (pp.19-20).

In the US, universities are legally required to report data on donations over $250,000 but this responsibility is routinely neglected. Wee know that the Chinese education ministry provided $158 Million to 100 colleges and universities for Confucius Institutes but nearly 70% of those receiving donations over $250,000 had failed to disclose this information (p.16)

In the UK, there is no such requirement.. UK university gift officers admit that vetting is difficult for overseas donors. One admitted: “This is a disadvantage and an advantage, because [in the case of adverse publicity repercussions] we can say that we honestly didn’t know” (p.19)

ilful ignorance and an absence of transparency are no longer defences for universities. The draft model code of conduct of the UK’s Academic Freedom and Internationalisation Working Group demands that universities make all Memoranda of Understanding (MOUs) public, and that they not enter into non-disclosure agreements with donors and partners (p.19)

Students are also becoming more active in both the UK and US, raising the issues of transparency and potential complicity with authoritarian regimes in hard-hitting articles in their institutions’ student newspapers (e.g. at the Universities of Exeter, Harvard, and Pennsylvania).

What can be done to regulate this competitive market for donations? Our report recommends the creation of a comprehensive and searchable public list of all donations (foreign and domestic) over a modest threshold ($15,000/£10,000), including the identity of the donor, the amount, and the major stipulations.

Universities should also make the ethical guidelines, policies and principles for assessing donations public – and refuse to enter into Non-Disclosure Agreements in all but the most exceptional circumstances. Universities are public institutions whose funding should not be a matter of privacy or secrecy.