More on the Harvard Lawsuit
I have more information on the basis for the potential alumni class-action lawsuit against members of the Harvard Corporation for their handling of the Andrei Shleifer matter.
First: What is the reason for the potential lawsuit?
The potential litigants believe that Harvard President Lawrence Summers and Corporation member Robert Rubin chose to defend professor Andrei Shleifer from federal prosecution for fraud not because they believed Shleifer innocent, but for just the opposite reason. The potential litigants believe that, if Harvard did not defend Shleifer in court, Andrei Shleifer was prepared to testify that Summer and Rubin knew of his illegal investments when Summers and Rubin were running the Treasury Department.
Let me repeat that: The potential litigants believe that, if Harvard did not defend him in court,
Andrei Shleifer was prepared to testify that Lawrence Summers and Bob Rubin knew of his investments in Russia—investments that violated both federal and Harvard conflict-of-interest guidelines—when they were at the Treasury Department.
It follows from this argument that, when Summers and Rubin advocated defending the matter in court rather than accepting a settlement offer from the federal government, they were merely trying to protect their own reputations.In my previous blog on the subject, a poster raised the subject of how an alumni group would have standing from which to sue the Corporation.
I'm still a little vague on this, but it could be argued that Harvard's founding documents—articles of incorporation and acts of the Massachusetts colonial and commonwealth governments—provide specific grounds on which the alumni group has standing to sue.
In any case, if Summers and Rubin were using Harvard's money to cover their own asses, there is certainly precedent for donors to sue the directors of a charitable institution for recovery of misused funds.
And the money at stake is substantial: the difference between Harvard's ultimate costs—estimated to be around $44 million—and what Harvard could probably have settled the case for before it joined Shleifer's defense, an amount believed to be in the low seven figures. We're talking conservatively a $35 million difference.
And there's another question at stake: Whether in choosing to defend Shleifer without consulting the Harvard Board of Overseers, the members of the Harvard Corporation illegally violated Harvard's founding documents. Those documents stipulate that the Corporation can take no decision of import without explicit ratification by the Board of Overseers at the BOO's next meeting.
Has the Corporation illegally usurped the powers of the Board of Overseers? That's certainly a question a potential lawsuit would want to investigate....
