Dartmouth Board Faces N.H. Scrutiny: Attorney General's Office to Review Conflict Claims

Published in print on May 31, 2012

By Maggie Cassidy, Valley News Staff Writer

Hanover -- The New Hampshire Attorney General's Office said yesterday it is reviewing allegations of conflicts of interest among Dartmouth College board members after an anonymous letter claimed that trustees were enriching themselves through management of a portion of the schools $3.4 billion endowment in their own firms and running afoul of the colleges nonprofit status.

The Attorney General Office's Charitable Trusts Unit contacted Dartmouth about the review last week after it received the letter in February, said Anthony Blenkinsop, director of the unit.

The five-page letter, claimed to have been written by a group of former and current faculty, staff and employees at the college, was published on the blog Dartblog last week.

The letter highlights conflicts raised by a series of Valley News stories beginning in 2010 that examined, among other things, how Dartmouth has not publicly disclosed fees paid to college trustees whose firms manage investments on behalf of the college.

In all, the letter accused 10 Dartmouth alumni of profiting from sky-high fees related to investing some of the colleges endowment with their firms, including Lone Pine Capital, run by Dartmouths Board of Trustees Chairman Stephen Mandel, and Apollo Global Management, run by former trustee Leon Black, a 1973 alumnus whose family name will be on the new visual arts center.

(The board of trustees and investment committee) have simultaneously directed the colleges $3 billion endowment to themselves, their firms, and their friends, the letter said. They have furthered their own self-interest at the expense of the college and the Upper Valley.

Dartmouths stake in funds run by firms where current and former members of its board of trustees and its related investment committee were owners or managers was about $224 million at the end of June 2009, according to public filings and nonpublic information reviewed by the Valley News. That was about 8 percent of the total value of the colleges endowment at the time.

About $110 million, or nearly half of the stake in investment vehicles tied to Dartmouth insiders, was invested in funds affiliated with Lone Pine Capital, a firm controlled by billionaire Stephen F. Mandel Jr., who is now chairman of the Board of Trustees, Dartmouths top governing body.

A spokesman for the college vigorously denied the letters accusations yesterday, calling them categorically untrue. We have reviewed the letter to the Attorney General and we find it to be inaccurate, misleading and irresponsible, said College spokesman Justin Anderson. The letter implies that there is something fundamentally improper with Dartmouth investing with companies and funds managed by a trustee, and that is categorically untrue.

These investments are explicitly legal and entirely proper, and meet or exceed all of the provisions under the law governing their transactions.

Anderson also denied claims made in the letter that Dartmouth trustees would recycle the large fees they made off endowment investments into donations to the college in exchange for naming privileges on campus buildings.

Investment decisions are completely unrelated to donations to Dartmouth and vice versa, Anderson said in an email. (T)he Investment Office and Investment Committee select managers based on their strategy, expertise, and performance history, and the specific asset allocation needs of the endowment, not based on their status as alumni or Trustee of Dartmouth.

This is not the first time the Attorney Generals office has looked into allegations that Dartmouth failed to comply with state laws in its handling of investments into funds owned or managed by college trustees or investment committee members.

Following a meeting with college officials last year, Blenkinsop wrote a letter to the college dated July 26, 2011, insisting the school publicly disclose fees paid to Dartmouth trustees whose firms manage investments on behalf of the college when it would make its annual financial filings.

Anderson said yesterday that determining the process in which to report those benefits was an ongoing conversation. Blenkinsop said he received a letter from the college in April basically taking the position that they were unable to disclose certain amounts of benefits regarding the management fees of individual trustees in whose firms the colleges endowment is invested because of the nature of some of those hedge funds.

But Blenkinsop said he responded by instructing Dartmouth that to the extent theyre not able to quantify specific fees, the college should nonetheless inform his office that certain trustees are receiving benefits. Dartmouths filing date is May 15, he said; he was unable to say yesterday whether officials had complied with his request.

In an email late yesterday afternoon, Anderson said that Dartmouth has recently reached an agreement with the Charitable Trusts Unit concerning the disclosure of management fee information for investments with firms affiliated with trustees.

The CTU has acknowledged that Dartmouth is not required to report the pecuniary benefit received by a trustee affiliated with a firm with which Dartmouth invests for any year in which the amount cannot be quantified due to the structure of the investment organization or investment vehicle, he said.

As in the past, Dartmouth will continue to follow all requirements of state law ... and will also continue to follow its due diligence process, which exceeds the requirement of state law and assures that each investment decision is made on an arms-length basis, Anderson said.

In regard to the latest allegations, Blenkinsop said his office is not calling it an investigation at this point. Once he receives a response from Dartmouth officials, he said, his office will make a further review before deciding whether to continue.

Well have in essence the two sides to the story, and then go from there, he said.

The authors of the letter have remained anonymous to his office, he said. They had provided an email address to the Attorney Generals office and indicated they would contact that office again at a later date, but have yet to do so, Blenkinsop said.

His office had not written to the email address, he said.

Anderson said the college intends to make an official response to the attorney general sometime this summer. Given the length and breadth of the letter, they understand that it could take some time for us to compose a response, he said.

Correspondent Rick Jurgens contributed to this report.

Maggie Cassidy can be reached at 603-727-3220 or mcassidy@vnews.com.


Dartmouth's Conflicted Guardians?; College, Leaders Profit From Investments

Thursday, January 24, 2013

Published in print on October 31, 2010    Editors note: In 2010 and 2011, the VALLEY NEWS explored the financial relationships between the Dartmouth trustees and the college's endowment. Links to follow-up stories are at the end of this story.    By Rick Jurgens, Special to the Valley News    Hanover — The 2008 global financial crisis hit Dartmouth College …