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Full Disclosure 9/11/2014

September 11th, 2014

 

I’d like to start this column with a small request. My purpose is not to stir up controversy, but to inspire real and meaningful dialogue about an important issue that affects us as JCU students and the community at large.

 

Last Thursday, Sept. 4, Bloomberg News published a story about certain universities and public retirement systems that had invested in a large private equity fund, the Vector VI LLLP Fund. The fund’s purpose is to raise large amounts of capital and to invest in and rejuvenate struggling technology companies.

 

Vector raised $1.2 billion in 2007 from investors such as The Harvard Management Company (which manages the $30 billion Harvard University Endowment, according to its website), the Massachusetts Institute of Technology and the California Public Employees Retirement Systems, among many others.

 

In 2012, with nearly half of that cash remaining unspent, Vector was pressured to invest quickly. According to Bloomberg, they chose to buy into Cane Bay Partners, a company that operates numerous online pay day lending sites. Since its operations are based in Belize and the Cayman Islands, Cane Bay Partners, through its websites, was able to ignore U.S. consumer protection laws and other regulations that specifically outlaw predatory lending practices and set maximum allowable interest rates.

 

In 2013, Cane Bay Partners was sued in a class action lawsuit, along with Montel Williams (who is a paid representative of MoneyMutual, another online payday lender) and Bank of America, for its participation in the pay day loan industry. The lawsuit contends that these entities violated strict laws regarding pay day loans and illegally exploited people who had nowhere else to turn for emergency cash, charging as much as 30  percent every two weeks, and as much as 525  percent for an eight-month loan.

 

Its fairly standard practice for large universities and pension funds to invest in a private equity fund as a way of reducing management costs, and to get the best return on their investment. It is no different than contracting GCA to clean our campus buildings, or Aramark to run our dining hall.

 

The implications of this situation are, I believe, straightforward. The purpose of this column is not to create controversy, but to ask a sincere and genuine question of the JCU administration. Who manages the JCU endowment? Who manages the Carroll Fund? Does the JCU administration have any control over what those entities choose to invest in?

 

The JCU administration has chosen to not divulge this information. The only information that is readily available comes from the annual report, which states that the JCU endowment realized a 16.3 percent return for the 2012 fiscal year (ended May 31, 2013).

 

According to Vanguard, average portfolios are posting returns of around ten percent. This statistic begs us to ask the question: what kinds of companies is our administration investing in, on our behalf, that are leading to these kinds of gains? Coal or other mining interests? Oil and gas companies? Or military contractors such as KBR or Fluor Corp.? More importantly, are the decisions that are made about the JCU endowment in line with the Jesuit philosophy, and with the mission of JCU?

 

I’ll leave you to reach your own conclusions, and encourage you to contact the JCU administration and ask them to compile and disclose this information.