“There’s no doubt the debt removal was a good thing for Harken, but we didn’t set up HAP to inflate the stock price,” he says.

Selling Out

Despite its efforts to strengthen the company, HMC decided to sell most of its Harken shares in 1993 to Cabot Oil and Gas Corporation after the stock prices began to increase.

HarvardWatch considers this sale evidence of the unethical nature of HAP.

“The reason Harvard was able to sell high seems to be because of a bubble in Harken’s share price generated by the partnership,” Mackinnon says.

Meyer maintains that the stock price rise was generated by the rising oil prices, and that it is normal for HMC to sell stock after the price rises.

“[The investment] wasn’t going as well as we wanted it to go, and we thought Cabot could do better with it,” Meyer says.

In total, Harvard invested about $50 million in Harken and made a small profit off the investment, he says.

Meyer explains HMC’s investment decision as poor timing, since oil prices did not begin to rise significantly until the mid-1990s.

“Our basic strategy was fine,” Meyer says. “But it was a decade too early.”

—Staff writer Alexander J. Blenkinsopp contributed to the reporting of this story.

—Staff writer Jenifer L. Steinhardt can be reached at steinhar@fas.harvard.edu.