Internal Politics
Yesterday’s hearing represents the parties’ first protracted engagement in front of the judge since Woodlock considered Harvard’s motion to dismiss the case in 2001.
Work accelerated on the case last fall with the beginning of the pre-trial discovery. Fifty-four witnesses were deposed over 97 days.
Last spring the University also entered into settlement talks with the U.S. attorney’s office. A previous attempt at mediation had failed, but according to insiders this latest round of settlement talks were more advanced. But these talks also fell through.
This summer the transcripts of the depositions were publicly released, including those sworn by University President Lawrence H. Summers, the director of Harvard’s endowment investment company and HIID’s former Director Jeffrey D. Sachs ’76. With their release came revelations about internal University politics.
Summers is a close friend of Shleifer’s—Shleifer played host when Summers visited Harvard during the University’s presidential search two years ago.
Shleifer’s lawyers tried to establish that, as treasury secretary, Summers had seen no problems with Shleifer’s investments, while the government asked him about warnings he had given Shleifer to carefully check conflict-of-interest policies.
Lawyers from both sides questioned Summers at length about a beachside walk he had with Shleifer at Summers’ house in Truro, Mass.
Summers also testified that after being named Harvard president, he had a discussion about Shleifer with then-Dean of Faculty Jeremy R. Knowles.
Summers said he emphasized the need to retain Shleifer, come what may.
“I expressed to Dean Knowles at some point that I was concerned to make sure that Professor Shleifer remained at Harvard,” Summers testified. “I felt that he made a great contribution to the economics department and that I knew there was a lot swirling. [I] expressed the hope that Dean Knowles would be attentive to that.”
Summers added that he knew there was a perception within the economics department “that Andrei was in some way or another being screwed.”
In an August interview with The Crimson, Summers said he didn’t see anything wrong with his conversations with Knowles.
“I’m not sure what question is raised by my passing on judgments of colleagues in the economics department about the importance of members of the Faculty to the department,” Summers said.
Summers has legally recused himself from the case and questions regarding Shleifer within the University.
Former University President Derek C. Bok has replaced him in dealings related to the HIID case as an informal advisor to the Harvard Corporation. A former Dean of Harvard Law School, Bok is also providing advice on overarching legal strategy.
—Staff writer David H. Gellis can be reached at gellis@fas.harvard.edu