You had to be there
To the editors:
I was the first president and chief executive officer of the Russian-American Enterprise Fund from 1994 to 1996, a government agency set up under the same legislation created by the first president Bush that funded the Harvard Institute for International Development in Russia.
I doubt if any of your readers will wade through David McClintick’s gossipy, sensationalized criticism of his alma mater, an important government program and a time in history that only someone living in Russia in the early 1990s could possibly understand. Mr. McClintick may be a reputable investigative reporter, but what happened in the Harvard Project as he describes it (“How Harvard Lost Russia,” December 2005/January 2006) gives one the impression that this was the scandal of the century and had a deep and abiding effect on Russia’s ability to turn to a market economy. I believe nothing is further from the truth, and looking at Russia, I assume it is self-evident that a market economy, good or bad, flourishes today.
During my tenure at the Russian-American Enterprise Fund, I got to know many of the people mentioned in Mr. McClintick’s article, particularly Anatoly Chubais, Yegor Gaidar, Jonathan Hay and Dmitri Vasiliev. In the two years I lived there, I believe I began to understand the Russia of the post-Gorbachev years and got to know most of the key players, from president Yeltsin on down.
Mr. McClintick’s lengthy article, detailing with fact and innuendo what appears to him a monstrous scandal of ineptitude and double-dealing, I believe is wrong. I believe that there were overzealous individuals desirous of esteem from colleagues who put their money, and family money, where they were working and didn’t obey the reporting rules. It was embarrassing to Harvard, and the university correctly paid for their errors. Their motive, however, is totally misunderstood by Mr. McClintick.
I am particularly disturbed by the disservice done to Dmitri Vasiliev, a man who, in my opinion, was a distinguished public servant who really understood the issues presented in regulating the securities markets.
The constant comments about all the people being paid with cash reflected Mr. McClintick’s ignorance of Russia at that time. In 1994 it was illegal to use American currency to buy things. Checks did not exist, and the way people bought and sold anything, from a bottle of wine to gasoline for their car, was with cash. Trying to build a business in that climate was next to impossible, but the attempt of the Americans to deal with this required aggressive, committed people like the staff of the Harvard Project to step “out of the box.” Yes, there were requirements to not buy Russian securities or invest in Russian companies personally. Not many Americans did, but those who did invest were more naive than calculating.
So little is made in Mr. McClintick’s article about the creation, through the work of Anatoly Chubais, Yegor Gaidar and Dmitri Vasiliev, of the “voucher” program, which some today may criticize but was in my opinion the single most important program in Russian economic history. Mr. McClintick’s 26-page diatribe should have been 23 pages about the voucher system and a footnote about the issues he raises.
A. Robert Towbin
Managing director, Stephens
New York, New York
Harvard weighs in
Your recent article “How Harvard Lost Russia” fails to make clear that from the outset of his presidency at Harvard, Lawrence Summers was recused from any university deliberations or decisions relating to the litigation between Harvard and the United States government. President Summers also has been recused from institutional processes and judgments regarding whether, when or how Harvard should review the conduct of employees involved in the Harvard Institute for International Development project. More generally, in situations involving members of the Faculty of Arts and Sciences, such decisions belong in the first instance to the Faculty through its established procedures. Given issues of confidentiality, the Faculty of Arts and Sciences ordinarily does not comment on specific personnel matters.
Robert Iuliano
Vice president and general counsel
Harvard University
Cambridge, Massachusetts
David McClintick responds:
Mr. Towbin states that it was “a time in history that only someone living in Russia in the early 1990s could possibly understand.” Does he believe that only people who lived in Paris in 1789 could understand and comment on the French Revolution?
Mr. Iuliano errs in his central assertion and blurs other important issues. He says the article fails to make clear Summers’ recusal. In fact, it states the recusal three times. Iuliano is less specific on the terms of the recusal and when it was effective.
Summers was appointed president of Harvard on March 11, 2001. He was an active president-designate, involving himself in university affairs well before his formal investiture. The university told me that he “recused himself from the disposition of the HIID case” on June 18, 2001. It is unclear why the recusal was delayed more than three months -- until 12 days before he took office formally on July 1, 2001.
In Summers’ sworn deposition (which Iuliano attended), Summers acknowledges that he discussed the Shleifer scandal with Shleifer “prior to my removing myself from the case, not long after I took up the position at Harvard” and that he asked Faculty of Arts and Sciences dean Jeremy Knowles to protect Shleifer. Summers testified that he did not recall whether he spoke with Knowles before or after the recusal was effective but indicated he did not feel the terms of the recusal barred the conversation. Iuliano does not address the Knowles contact.
Correction
In “How Harvard Lost Russia” (December 2005/January 2006), the name of a U.S. Agency for International Development special agent was misspelled. The name should have been Phillip Rodokanakis. Rodokanakis is a certified fraud examiner and a managing director of U.S. Data Forensics, a private company in Bethesda, Maryland.
