The last great financial scandal of the 1990s wrapped up in court last week when Harvard University agreed to pay the US government $26.5 million to settle charges that its star economics professor Andrei Shliefer had sought to gain a personal fortune while leading Harvard's government-sponsored mission to Moscow.
The settlement put an end to eight years of legal wrangling. US Attorney Michael Sullivan said in a statement, "The defendants were entrusted with the important task of assisting in the creation of a post-Communist Russian open-market economy and instead took the opportunity to enrich themselves."
Shleifer and his wife, hedge fund operator Nancy Zimmerman, will pay $2 million and $1.5 million respectively, according to the settlement (the latter sum having been previously announced). Shleifer's deputy, Jonathan Hay, will pay as much as $2 million over ten years, if he can earn it as a lawyer in London.
Altogether, it adds up to around $31 million, or most of the roughly $40 million that the government paid Harvard to provide disinterested advice to the Russian government.
One would think that the meting out of punishment would attract the news media. The story has a lot of intrigue. However as Warsh points out:
The Harvard case is a major story in Russia, where privatization of state-owned assets to the oligarchs is regarded as something less than a complete success. But the Financial Times last week ignored the settlement, The New York Times and Washington Post ran Associated Press accounts, and The Boston Globe buried the story at the bottom of its metro page. Such is the power of money to obscure. Only The Wall Street Journal gave the story any ink -- the redoubtable Carla Anne Robbins has followed it from the beginning.Read the entire column.
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