An Expert on Corruption

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A professor at GMU Janine Wedel has written a lot about the alleged corruption case involving Andrei Shleifer, himself considered a world’s leading authority on corruption. Here is her article in the Boston Globe written in March- the following two paragraphs were cut from the original piece.

"The system is virtually incapable of dealing with such players' infractions and lack of transparency in a timely fashion. It is not for lack of inquiries. A series of governmental and business investigations into the handling of U.S. assistance for Russian economic reforms entrusted to Harvard began as early as 1996. That year the Government Accountability Office published a report calling USAID's oversight over Harvard's Russia project "lax." (GAO staff entrusted to me a copy of their original draft report, which is even more critical.) The following year the Justice Department embarked on its investigation. Yet another case charging Harvard University, Shleifer, and another Harvard principal with fraud was brought by The Forum Financial Group, a Portland, Maine-based mutual funds firm working in Russia. That case was settled out of court in 2002. Only recently has Harvard opened an investigation.

While these probes were in process, Shleifer's star, like that of many such players, was steadily rising, not falling. Remarkably, Shleifer has continued to testify before congressional committees and publish articles in reputable journals as an expert on corruption, work with a World Bank anti-corruption unit, and write for Foreign Affairs on the supposed success of Russian "reforms"--without disclosing his role in crafting them. He was awarded the American Economic Association's prestigious John Bates Clark Medal in 1999. And, of course, he remains a tenured full professor at Harvard."

David Warsh’s latest column also talks about the issue;

"Why worry about it if the government didn't have enough evidence to charge him with a crime?

Certainly it is true that criminal and civil law represent different perspectives on conduct. Only the government can charge a crime. The accused is guilty if convicted. The logic of the code, its very language, is that of misdeed, punishment and rehabilitation.

Civil law, on the other hand, governs relationships among private individuals and delineates their rights and obligations. Disputes over torts and contracts ordinarily lead to some kind of compensation for the aggrieved party. There is a sense that such disagreements are an inevitable part of doing business. In most cases, there is not much shame.

And while government pursued a criminal investigation for a time -- a grand jury was empanelled and heard a good deal of testimony -- nothing came of it in the end. Thus Shleifer and Harvard are not said to have been convicted of anything, or to be guilty, or even to have done anything illegal. Instead they are described as having been found to have committed various frauds and breached their contract, respectively….

A 31-year-old Russian expatriate -- deemed a leading authority on corruption, no less! -- who immediately begins semi-publicly flouting American law and communist sensibility to line his own pocket, and who, after he is caught, persuades the great Harvard University to maintain his innocence. Does this sound like material for a Frank Capra movie or a John Adams opera?

The Shleifer problem is symptomatic of confusion over a distinction that goes much deeper than that between the civil and criminal law -- between the ethical systems that govern the private and the public realms. The locus classicus here, at least in Western civilization, is to be found in Plato, I suppose. …"

For Comment; What do you think is the moral of the story? I wonder what Mankiw thinks about the whole issue.

1 Comment

I want a copy of the COMPLAINT filed in Forum Financial Group vs. President and Fellows of Harvard College, et al. It is a public record
Federal or State Court in Portland, Maine?
How can I get a copy? Address of Clerk of court? Other?
Thank you,
Jud Levin


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This page contains a single entry by Paul published on June 4, 2006 11:23 PM.

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