By C.B. Stearns, Princetonian Mortgage Broker
Following significant endowment losses in 2008, the University will be investing in a joint venture with Somali pirates, Princeton University Investment Company (PRINCO) president Andrew Golden said in an interview Friday.
“This joint venture represents a lucrative opportunity for the University in these tough economic times,” Golden said, noting that every asset class in PRINCO’s portfolio has fallen in value.
“Stocks, bonds, real estate — everything is crashing,” Golden noted. “Pirates, we believe, will be immune from the recession. As long as international shipping doesn’t disappear, there will be something to hijack.”
The University will be providing $451.4 million to a band of Somali pirates to pay for weapons, training and other miscellaneous supplies. Additionally, the University will offer a freshman seminar next semester in which students will take part in a spring break trip to study the pirates’ operations and business model. The seminar will be titled “International Trade on the High Seas” and will be taught by Nobel Prize-winning economist Paul Krugman.
In return, the pirates have guaranteed the University 45 percent of all ransom profits, as well as a guarantee to reimburse any unexpected medical expenses for students who take part in the spring break trip. The University will have the option to acquire an additional 25 percent in the pirate band over the next five years.
Piracy is currently one of few businesses in Somalia that makes money for its citizens, according to the Associated Press. Somalia’s coastline is located in one of the world’s busiest shipping routes, linking the Mediterranean to the Indian Ocean. Pirates hijacked a Saudi oil supertanker last month, receiving roughly $3 million in ransom, though five members of the band drowned when making off with the loot. Likewise, Somali pirates are currently holding a Ukrainian ship, the Faina, which is loaded with military tanks.
“I am proud of Andy [Golden] for his creativity in making investment decisions,” President Tilghman said in an interview Tuesday. “He continuously has the University’s best financial interests at heart.”
Tilghman noted in a letter sent to the campus community that the endowment has lost at least 11 percent of its value in the four months since the end of the fiscal year on June 30, 2008. The University will plan for a 25 percent decrease by the end of the current fiscal year in June, she said in the letter.
“These are historic financial times, and that calls for drastic and unusual investments,” Tilghman explained in an interview.
The University seems unfazed by what some have called the “questionable ethics” of the investment.
Golden explained that the University performs no regular ethical review of its investments and instead focuses only on maximizing financial returns.
“Fundamentally, the instructions we give to our investment managers is that they should invest with the goal of maximizing return over the long-term,” University Vice President and Secretary Bob Durkee ’69 said. “A strong presumption is that the University as an institution will not take a position or play an active role with respect to external issues of a political, social or moral character.”
Students should not really care about the ethics of the University’s investments, University spokeswoman Cass Cliatt ’96 said.
“Members of the campus community with interest in these issues typically would not need to know whether the University is invested in a Somali pirate band today to know whether they feel the University should be invested in such an organization,” Cliatt said. “If a group of people have a question or concern about something taking place in the world, that belief would exist regardless of whether the University is invested there.”
Golden agreed that interest in ethical investment practices should not stem from knowledge of how the University invests its money, but instead from a broader interest in the world at large. Examining a list of University holdings for the purpose of raising ethical questions would be “the tail wagging the dog,” he said.
“Why would you focus first on those companies we’re invested in as opposed to looking out and thinking ‘what do I care most about in the world?’ ” he explained. “I care more about the engagement of the entire community in social issues, in ways that go far beyond the investment portfolio, especially because the investment portfolio may be a particularly cost-ineffective way of making change.”
Students who have more of a conscience than the University are encouraged to call 609-258-6666 to voice their concerns.
This article is part of The Daily Princetonian's annual joke issue. Don't believe everything you read on the internet.
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