Harvard invested heavily in Harken
By Beth Healy and Michael Kranish, Globe Staff, 10/30/2002
It was a moment of deep embarrassment in 1991 when Harvard University's prestigious endowment fund admitted it had just experienced its worst loss ever. Jack Meyer, Harvard Management Co. president, said at the time he hoped the fund would never again take such a big hit, a $200 million write-down.
Back then there was relatively little focus on one major reason for the loss: Harvard Management's large and ill-timed bet on little-known Harken Energy Co., whose board included George W. Bush, then the son of the US president and now the president himself. Even as losses mounted, Harvard Management bailed out the troubled company, first by splitting up Harken and then by sheltering Harken's liabilities in a partnership.
Indeed, even as Bush was dumping the bulk of his Harken holdings - about $848,000 in stock sold to a buyer whose name has never been disclosed - Harvard Management plowed millions more into the firm.
Several former Harvard Management officials said in interviews that they wanted to pull out of the Harken deal, but they said one man in particular - Harvard Management executive and Harken director Michael Eisenson - resolutely insisted he could turn around the investment by pumping more money into it.
Interviews and reviews of documents by the Globe showed that Harvard's stake in Harken-related investments was, in the end, nearly two-thirds larger than the university has ever previously acknowledged, about $50 million. The Texas-based energy company was, in 1990, the seventh-largest stock holding in Harvard's portfolio, bigger even than the university's stake in Exxon Corp. In all, Harvard Management risked 1 percent of the university's endowment in the small, struggling company, a surprisingly large bet by any measure, but particularly given Harken's dismal prospects.
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