U. held investment in Pakistan
Mbugua declined to comment on the specific uses or the location of the account.
“As a general policy, we do not comment on the specifics of our portfolio, which include a range of accounts that include investments in international and domestic securities, fixed income accounts and hedge strategies,” he said.
This revelation is the latest in a series of controversies over the past five years regarding the University’s investments. In March, the University announced it would stop investing in the embattled hospitality firm HEI, following three years of controversy and activism on campus after the company was accused of workers’ rights violations. The University said it did not make the financial decision based on those allegations. In 2008, the University acknowledged that it had investments in Zimbabwe and had purchased bonds with a defense contractor that allegedly provided arms to the Zimbabwean government, which has been accused of rampant human rights abuses.
PRINCO President Andrew Golden could not be reached for comment on the Pakistan investment. A representative of Golden’s office referred comment to Mbugua. Daniel Richlin and Daniel Sherman, two tax accountants in the Office of the Treasurer who are normally responsible for the handling of the IRS Form 990, both declined to comment. Richlin referred comment to the Office of Communication, and Sherman cited University policy.
Mbugua said that currently the account has zero value and “has been for quite some time.”
The governments of Pakistan and the United States have had a contentious relationship over the past decade as Americans have criticized Pakistan’s handling of suspected terrorist groups. The relationship was severely strained as recently as May 2011, when the Obama administration staged a high-profile mission that killed the terrorist leader Osama bin Laden in a city within two hour’s drive of the nation’s capital.
Mbugua stressed that the use of the account was very limited in the context of the University’s financial holdings. He noted that based on the $13 billion size of the endowment in 2009, the $86,000 in Pakistan was smaller than 1/1,000th of a percentage point of the total size.
In the most recent report of the University treasurer, the University held a total of $94,794,000 in accounts and accrued interest receivable in 2010-11. As a nonprofit institution, the University is required to file detailed reports about its financial holdings and its subsidiary investments in a Form 990 filing with the IRS.
“Even though this was not a direct account of the University, IRS regulations require us to report certain types of these indirect accounts on our own filings,” Mbugua noted.
The 2009 filing comes only two years after a University filing listed that as late as June 2007, Princeton held accounts within Zimbabwe. In 2008, WPRB reported that the University held financial accounts in the country, which had become highly publicized for its political turmoil and poor human rights record.
Through an external manager, the University had held a bond worth 2,000 Zimbabwe dollars, currently worth approximately $5.36 in American currency. Golden explained to the ‘Prince’ in December 2008 that the bond “was created in a chain of events that involved a former student trying to pay back a student loan.”
Subsequent reports that month eventually revealed that the University had also purchased bonds in 2001 worth about $1.5 million dollars from British military contractor BAE Systems, which had been accused of continuing transactions with Zimbabwe despite United Nations trade sanctions.
By 2003, the University no longer held the BAE bonds or a relationship with the external investor who originally made the investment.
A USG referendum passed last week with 71.4 percent of the vote to create an oversight committee to encourage the University’s endowment to be invested in “socially responsible ways,” according to the text of the referendum. The referendum was supported by the Princeton Coalition for Endowment Responsibility.
Yongmin Cho ’14, the sponsor of the bill, expressed surprise that the University had investments in Pakistan.
“I would want to know more details about what the account would be used for and what it was funding,” he said. “I wouldn’t jump into any hasty conclusions, but I would hope that we’re using it responsibly.”
According to Yale and Harvard’s Form 990 filings with the IRS, both schools also have financial holdings in Pakistan, among other countries.
In 1972, both Harvard and Yale created committees to oversee responsible investments in the endowment. Harvard has an Advisory Committee on Shareholder Responsibility in place that recommends ethical investing policies to the Harvard Corporation Committee on Shareholder Responsibility. The 12-member committee is comprised of faculty, students and alumni.
That same year, Yale created an Advisory Committee on Investor Responsibility that recommends socially responsible investment policy to the corporation. Two students, two alumni, two faculty and two staff members comprise the committee.
As of December 2008, the University does not have a committee that routinely reviews the ethics of its investments.
In addition to Pakistan, Princeton also has holdings in American Samoa, Australia, Belgium, Bangladesh, Brazil, Canada, Estonia, France, Germany, Iceland, India, Israel, Japan, Luxembourg, Mauritius, Mexico, Netherlands, Norway, Romania, Singapore, South Africa, South Korea, Sweden, Switzerland, Thailand, Turkey, the United Kingdom and the U.S. Virgin Islands.