Duke University’s endowment holdings invest in a future well beyond Duke’s campus.
The Duke endowment’s relationship to DUMAC, LLC—Duke’s privately run but institutionally directed investment wing—directly drives investment policy. Students, alumni, faculty and staff are represented in name and literal capital by the policy dictated to DUMAC and onto its subsidiary corporations.
The pooled investments DUMAC and its subsidiaries make on behalf of the University, the Duke Endowment and clients’ charitable remainder trusts must become entirely transparent. Due to the Supreme Court case, Citizens United v. Federal Election Commission, money is legally recognized as speech; ergo, our University has been speaking a lot and, most likely, in an embarrassingly less-than-ethical capacity. Only with transparency can DUMAC be expected to avoid the pitfalls of financially lucrative, but ethically unacceptable investments.
This fall, HEI Workers Rising—a nationwide student-Labor campaign—has brought workers’ voices onto those college campuses with known endowment funding of HEI. Focusing on hotel and resort commercial properties, HEI runs three funds founded in 2004, 2006 and 2008 with investment from eight, seven and an undisclosed number of “the country’s most prestigious university endowments.” Due to student activism, Brown University announced that it will not reinvest in HEI until the university is confident that HEI respects workers’ rights. University of Pennsylvania has stated publicly that it had no current plans to make future investments in HEI-sponsored funds. Recently, Yale—a principal investor of at least $119 million—announced that it will not re-invest in HEI.
While university investments have done very well, HEI workers have suffered greatly. One janitor spoke of the present “sweatshop mentality” at his HEI-operated hotel, but was hopeful that if the spotlight was bright enough, HEI might begin to treat its workers as “human beings, not machines.” Divestment efforts are currently underway at Harvard, Princeton and Notre Dame—other principle investors. Duke must immediately make an explicit refusal to invest in HEI and its current Labor stances.It is also very likely that Duke’s endowment invests in mountaintop removal coal, hydro-fracking natural gas, conflict zone minerals (currently there is a petition circulating to end this particular investment strategy), sweatshop organizations and oppressive state industrial complexes including, but not limited to, the United States. With the last fiscal year’s endowment return of 24.5 percent—in this economy, no less—who knows what DUMAC is investing in. Don’t get me wrong—I understand it’s currently all about the capital procurement. But if we want money at any cost, invest in a drug cartel—assuming we have not indirectly done so. It is past time that Duke makes clear what it stands for. What types of corporations are we a billboard for?
DUMAC pools its capital investments, but Duke—being the principal investor—calls the shots. We must identify the partitions in this pooled investment strategy to understand exactly where DUMAC’s money might come from:
The legally recognized University endowment provides the much-talked-about $5.7 billion.
Next, Duke Health’s “reserves”—also a non-profit holding—contain several subsidiaries, including an interesting fund titled “The Durham Casualty Company,” currently located in Bermuda, that at least partially represents Duke’s medical malpractice insurance.
DUMAC also manages faculty and staff pension funds, including retirement deductions and employee contributions.
DUMAC primarily focuses its investments into other hedge funds. It does this directly and through companies founded by DUMAC to act in its interest. A few of these were reported by Ed Rickards in The Herald Sun in 2010: the Gothic Corporation and Gothic London which, in turn, run Blackwell Corporation and Gretmar Corporation. Further, incorporated holdings are located in Johannesburg, London and India, while some stateside are as near as real estate investor DCE Lucky Strike. Yes; this sounds like the logic of shell corporations to me too, but we seem to be displacing risk—financial and public relations—rather than capital.
In 2006, Connel Fullenkamp praised DUMAC’s ability to remove funding from the hedge fund Amaranth, months before its collapse; Fullenkamp explained, “It’s a lot about having relationships and connections to know people in the industry and to be privy to information that is just not really known”—perhaps a poor choice of words.
Duke’s capital holdings should support our educational and health systems, not the other way around. Duke must invest in an environmentally sustainable future with companies that respect human and workers’ rights. DUMAC and subsidiary invested hedge funds must be equally transparent and in line with the University’s ethical standards. Invest in Durham directly and through local credit unions focusing on social groups.
Full transparency; call it a confession—painful but necessary. Doubtless, there are embarrassing investments. What use is a carbon neutral pledge with investment in tar-sand oil, fracking and Appalachian coal? To provide a living wage to employees while investing in anti-worker corporations betrays our greed and true Labor stance.
Duke must terminate conflict investments—in all forms—immediately and, beyond an ethically acceptable investment system, we might just construct a socially active one that we are unashamed to bring to light.
Josh Brewer is a Trinity senior. This is his final column of the semester.
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