Why hasn’t Larry Summers taken any action against his friend Andrei Shleifer, despite the fact that Shleifer has admitted to conspiring to defraud the federal government, cost Harvard tens of millions of dollars, and brought shame and scandal upon the university?

Well, what if—and bear with me here for a moment, as I speculate—what if Shleifer had something on Summers that, if it were publicly known, would topple the Harvard president? And the disclosure, or non-disclosure, of this information were in some way linked to a satisfactory resolution of Shleifer’s awkward situation?

Might that explain why Larry Summers has not only refused to take action against his fellow economist, but has repeatedly intervened on Shleifer’s behalf?

It might.

What could such potent information be?

Perhaps it could be that Summers knew that Shleifer was investing in Russia in violation of Harvard and federal ethics rules. And did nothing about it.

I emphasize that this is just speculation on my part, an attempt to explain a sequence of events that seems otherwise inexplicable; I have no insider information, no secret facts. There are other possibilities: friendship. A belief by Summers that Shleifer did nothing wrong. Who knows?

But this scenario does make a certain sense…and David McClintick hinted as much in his excellent piece for Institutional Investor, “How Harvard Lost Russia“….

I quote, and add italics:

“Off duty and in swimsuits, the mentor [Summers] and his protégé [Shleifer] strolled the beach at Truro. For years, with their families, they had summered together along this stretch of Massachusetts’ famed Cape Cod. Close personally and professionally, the two friends confided in each other the most private matters of family and finance. The topic of the day was the former Soviet Union.

“You’ve got to be careful,” the mentor, Lawrence Summers, warned his protégé, Andrei Shleifer. “There’s a lot of corruption in Russia….”

This quote does not appear to have come from Summers, but from Shleifer or perhaps his wife, Nancy Zimmerman. Could it be construed as a shot across the bow?

We could say more….

The plot does thicken, doesn’t it?