The magazine also alleged unusually highsalaries and generous stock options for Harkendirectors in year when the company performedpoorly.
Eisenson, who is on the company's compensationcommittee, denied the charges.
"Their cash compensation is actually quite low,relative to the industry," Eisenson said, addingthat the earrings of Harken's executives arelargely determined on an incentive basis and thatexecutives are not allowed any unusually liberalstock options.
Harken has also come under scrutiny for itsalleged indirect ties to the Bank of Credit andCommerce International (BCCI), formerly one of theworld's largest banks. BCCI is currently involvedin growing scandal that includes allegations oflaundering drug money.
According to the Wall Street Journal Harken"has dealt with a number of individuals who, inturn, have had dealing of their own withprincipals of BCCI."
Faulkner denied any link.
"It's absolutely untrue and totally withoutfoundation," the Harken CEO said.
Harvard Management Company President Jack R.Meyer--while denying any truth to the allegationof Harken's connection to BCCI--said such a link,even if verified, would not necessarily mean thatAeneas would immediately divest itself of itsholdings in the company .
"Surely if we found out that there was aconnection and if we found out that there was aconnection and if we found out that things weredone that should not have [been], of course itwould have [an] enormous influence on us," Meyersaid.
"But you have to understand that in a privateplacement market, or in a stock that has liquidityas limited as this, even if all those things weretrue, we could not tomorrow sell our position. Itwould take a while," he said.
While Avenue and Harken are two investmentsthat have not to date performed well for Aeneas,Meyer, Sperling and Eisenson point to aninvestment in Texas-based Team Bank as a model ofsuccess for the Aeneas Group.
Aeneas purchased a large chunk of TeamBank--then called Texas AmericanBankshares--between 1988 and 1922 for $27 million,after the company had filed for protection withthe Federal Deposit Insurance Corporation.
Now, four year later, Aeneas has madearrangements to sell its investment to Ohio-basedBanc One Corporation in a deal worth nearly threetimes the initial purchase price. Aeneas will netan estimated $46 million in the deal.
"It's very satisfying rate of return,obviously, and it's not unique in being aninvestment that's come to a successful maturitythis year," Eisenson said. "It is the kind ofinvestment we like to make ."
Eisenson added that four or five other Aeneasinvestments this year have netted the companyreturns in the area of two to 10 times theirinitial cost.
Still, charges of financial mismanagement andeven misconduct continue to plague Aeneas' two topmoney managers.
Sperling and Eisenson, for their part blamedmany of the charges on individuals who may bedisgruntled former employees or otherwise have anaxe to grind with HMC.
"We have fired people, we have been inorganization where we have been on boards ofcompanies that people have been fired [from], andthere are a lot o people out there who don't likethat," Sperling said. "there is always going to bepercentage [of people] who...may take some shots."
But one source close to the management companysaid that the criticisms of Sperling's andEisenson's management should be taken seriously.
"As people entrusted with the management of auniversity's endowment, their jobs is doublyimportant," the sources said. "To sustain aHarvard or any university is a specialundertaking, and it's disturbing to see peoplemisusing their authority in that system."