From Russia with Money - Harvard Medical School Accepts $200 Million from Russian Emigre with Ties to Russian Oligarchs and Putin, and Who Is Under Investigation for US Election Meddling

On Health Care Renewal we have frequently written about individual and institutional conflicts of interest.  The landmark but often ignored 2009 report by the Institute of Medicine on Conflicts of Interest in Medical Education, Research and Practice defined institutional conflicts of interest as arising when

an institution's own financial interests or those of its senior officials pose risks of undue influence on decisions involving the institution's primary interests.

We have written about institutional COIs affecting academic medical institutions, medical societies and patient advocacy organizations.  Typically, the COIs arise from industry (that is, usually pharmaceutical, biotechnology medical device, and sometimes health insurance corporate funding) that might be seen as influencing the institution's decisions about medical care, health care policy, teaching and/or research.  For example, most recently we wrote about systematic research on institutional conflicts of interests affecting patient advocacy organizations, and on organizations writing clinical practice guidelines. 

But now things are different.

We present a big case of what looks like an entirely new, and very troubling variation on an institutional conflict of interest.

A "Transformative" Gift to Harvard Medical School

On November 8, 2018, Felice Freyer, writing in the Boston Globe, documented a huge new gift to Harvard Medical School.

Harvard Medical School has received a $200 million donation — the largest in its history — to support research into fundamental questions about human illness and health.

The pledge, from the Blavatnik Family Foundation, will enable the school to hire researchers, add to its advanced technology, and a build an 'incubator' in the Longwood area to help bring research findings to market.

The gift is so large that Harvard will rename many of the school's components after Blavatnik.

Harvard Medical School is keeping its name for now. But a large portion of the school will be renamed. The 10 academic departments in science and social science — as distinguished from the affiliated hospitals where postgraduate training takes place — will be called the Blavatnik Institute at Harvard Medical School.

Per the Harvard's in-house publication, the Gazette,

Announcing the donation, Harvard President Larry Bacow described it as an 'unprecedented act of generosity and support,' and thanked Blavatnik for his faith that HMS — and the region’s broader life sciences community — can make dreams of dramatic progress in human health become reality.

'It’s one thing to dream for oneself, for one’s family and friends, even for one’s community. It’s another thing to dream for all people, to dream for a future in which more lives are improved and saved through the creation and application of knowledge through science,' Bacow said.

HMS Dean George Q. Daley called the donation 'a transformative opportunity' for the School and said it will enable a new generation of scholars and scientists to emulate those who made key discoveries in every area from organ transplants to polio vaccines to gene therapy.

The Gazette described the donor, Len Blavatnik, thus

The foundation is led by Blavatnik, who graduated from Harvard Business School (HBS) with an M.B.A. in 1989, founded Access Industries, and became one of Britain’s wealthiest men.

What could possibly go wrong?

The Russian Connection

Actually, while he may currently operate out of Britain, Blavatnik came from Russia.  Per the Globe,

Blavatnik made his fortune in aluminum, oil, and gas after the fall of the Soviet Union and in 2011 bought the Warner Music Group. His philanthropy has sometimes raised eyebrows because of his alleged connections to Russian oligarchs.

His connections to these (other) oligarchs should raise some eyebrows, and concerns. 

The Access-Alfa Renova Consortium, Alleged Russian Sponsored Harassment of BP, and FSB Active Measures

Blavatnik's recent generous donations to Oxford sparked protests, and provided documentation of some relevant issues. Per the Globe

When Oxford University in England named a school of government after Blavatnik in 2015, some 20 critics wrote to chide the school for 'selling its reputation and prestige to [Russian President Vladimir] Putin’s associates,'

Their letter, published in the Guardian in 2015, stated that Blavatnik belongs

to a consortium of Russian billionaires called Access-Alfa-Renova (AAR). The consortium has long been accused of being behind a campaign of state-sponsored harassment against BP. In 2008-09 dozens of British and other western managers were forced out of Russia. As part of this campaign, Vladimir Putin’s FSB intelligence agency fabricated a case against two Oxford graduates. According to evidence from its jailed owner Sergei Bobylyov, Alfa-Bank oligarchs also raided a retail company called Sunrise.

The spy case and the attack on Sunrise involved the participation of Russian officials who are listed as gross human rights violators by the US Treasury in line with the Sergei Magnitsky Rule of Law Accountability Act of 2012.

These corporate abuses took place in Russia with active official support. There was a backdrop of state-sponsored propaganda. Russian state media broadcast libellous assertions against western and Russian citizens. AAR went on to make billions from a highly controversial deal with Rosneft.

The letter writers asserted

Oxford University apparently failed to investigate these facts, AAR’s track record from the beginning, and its close ties with the Kremlin.

A 2015 Guardian article described the background of the letter's signatories, including

Pavel Litvinov, one of eight people who in 1968 protested on Red Square against Moscow’s invasion of Czechoslovakia. He was exiled for five years to Siberia. Another is Vladimir Bukovsky, jailed by the KGB. Bukovsky, who lives in Cambridge, exposed the Kremlin’s use of psychiatric treatment against dissidents.

Others include former Oxford academics and graduates, members of Russia’s democratic opposition and human rights activists. One is Vladimir Milov, a colleague and friend of Boris Nemtsov, the opposition leader shot dead in February outside the Kremlin. The letter was organised by Ilya Zaslavskiy, a TNK-BP employee and Oxford graduate who ran Moscow’s Oxford alumni association.

In 2008 Putin’s FSB spy agency arrested Zaslavskiy and his brother Alexander in Moscow and accused them of being 'western agents'. Russian state TV claimed the FSB had exposed a major spy ring. The case against them was 'fabricated', the letter says.

Despite their credentials suggesting that the letter writers knew whereof they spoke, Oxford apparently has not done any further investigation.   However, per the Globe again, 

Last year, after Blavatnik donated $1 million to Donald Trump’s inauguration committee, an Oxford professor quit in protest, the Guardian reported.

In fact, according to contemporaneous (2017) coverage in the Guardian, Professor Bo Rothstein

a specialist on corruption, called the donation 'incomprehensible and irresponsible' in his resignation letter.

The academic subsequently told the Guardian he had received hundreds of messages of support about his decision, adding: 'I’m not going to be the Blavatnik chair of government and public policy because I’m not going to give legitimacy and credibility to this person. $1m is a sizeable amount of money. In my book by donating to the inauguration of Donald Trump you are supporting Donald Trump.'

The 2017 Guardian article expanded on the allegations made by the 2015 letter writers

Access began making investments in Russia after the fall of communism as the energy and aluminium groups of the former Soviet Union were broken up. Eventually Blavatnik combined assets with Viktor Vekselberg and Mikhail Fridman to form AAR. Their partnership with BP ended in acrimony.

In 2008, Bob Dudley, then the chief executive of TNK-BP and now the boss of BP, left Moscow after what the British company described as an 'orchestrated campaign of harassment'. Armed police also raised TNK-BPs office and more than 100 BP managers had to leave Russia after the authorities refused to renew their visas.

US diplomats alleged that at least one individual in AAR, German Khan, was involved in a state-sponsored campaign against BP to try to force them out of Russia. However, AAR and lawyers for Blavatnik have denied any involvement, including that of Khan, in a plot against BP.

In the end, both BP and AAR were bought out of the venture by state-backed Russian energy company Rosneft. The $55bn (£42bn) deal in 2013 handed the oligarchs, including Blavatnik, $28bn. It was signed off at a meeting with Putin.

The cash from the sale of TNK-BP pushed him to the top spot of the Sunday Times rich list in 2015. By this stage Access had already diversified beyond Russia and the energy sector.

However, note that the 2017 Guardian article's addendum included

Sir Leonard Blavatnik’s lawyers have informed the Guardian that the term 'oligarch' in his view does not apply to him. [But] The Guardian editor-in-chief disagrees.

So to recap, Blavatnik made a lot of money from aluminum, gas and oil in Russia after the collapse of the USSR.  He banded together with other very rich Russians in a consortium, AAR, that was accused by multiple people of dirty tricks meant to drive the UK oil firm BP from the Russian market.  There were allegations that this trickery involved Russian state agencies, and was likely to have been condoned by Putin.  The people behind AAR eventually netted a lot of money from the resulting buyout of their firms and of BP, a deal that apparently did involve Putin. 

Blavatnik's Changing Pattern of Political Contributions Raise Question about Foreign Influence on the US Election

While giving a lot of money to various educational and cultural institutions, Blavatnik was giving modest amounts of money to politicians. 

However, his pattern of political giving apparently changed greatly upon Trump's advent on the scene.  A May, 2018, Dallas News op-ed article by Professor Ruth May of the University of Dallas on Russian oligarchs' affinity for Trump's campaign stated,

Data from the Federal Election Commission show that Blavatnik's campaign contributions dating back to 2009-10 were fairly balanced across party lines and relatively modest for a billionaire. During that season he contributed $53,400. His contributions increased to $135,552 in 2011-12 and to $273,600 in 2013-14, still bipartisan.

In 2015-16, everything changed. Blavatnik's political contributions soared and made a hard right turn as he pumped $6.35 million into GOP political action committees, with millions of dollars going to top Republican leaders including Sens. Mitch McConnell, Marco Rubio and Lindsey Graham.

In 2017, donations continued, with $41,000 going to both Republican and Democrat candidates, along with $1 million to McConnell's Senate Leadership Fund.

A Vice News article April 2018, provided more detail,

according to the Wall Street Journal, Blavatnik gave $12,700 in April 2017 to a Republican National Committee fund that was used to help pay for the team of private attorneys representing Trump in the probe of Russian interference in the 2016 election. He’d given the RNC legal fund $100,000 in 2016, the Journal said.

The problem is that, as stated by Represenative Adam Schiff (D-CA), likely now incoming chair of the House Intelligence Committee,

'Unless the contributions were directed by a foreigner, they would be legal, but could still be of interest to investigators examining allegations of Russian influence on the 2016 campaign. Obviously, if there were those that had associations with the Kremlin that were contributing, that would be of keen concern.'

Under federal law, foreigner nationals are barred from contributing directly or indirectly to political campaigns in local, state and federal elections.

Note that according to an April, 2018, Mother Jones article, the 

the question of possible illegal foreign donations from Russia is also under scrutiny by the FBI and the Federal Election Commission. 

Apparently because of these allegations that Blavatnik was helping to channel Russian money to influence the 2016 election, per the Globe

Although no wrongdoing has been alleged, ABC News reported in the spring that special counsel Robert Mueller is looking into Blavatnik’s donation to the inauguration as part of an inquiry into foreign financial support for Trump.

So to recap, Blavatnik became a dual UK-US citizen, and for quite a while made political donations in a style similar to that of many rich businesspeople at the time, giving amounts to both parties, presumably to enhance access whoever was in power.  However, when Trump became a presidential candidate, Blavatnik began making much bigger donations, and only to Republicans and Trump-related causes.  Then he gave a million dollars to Trump's inagural.  Given the known scheme  by Russia to meddle in the US election to benefit Trump (see the 2018 Senate committee report as discussed here), this raised suspicions that Blavatnik, was helping to also influence the election on Russia's behalf. 

Blavatnik's Sanctioned Associates

Moreover, perhaps Mueller is also interested in Blavatnik's ties to other Putin-linked oligarchs.  A profile in Forbes from October, 2018, stated

Blavatnik still retains a few Russian assets. He and Vekselberg, along with [Oleg] Deripaska, are key investors in Rusal, one of the world’s largest aluminum producers.

Note that

His former business partners are now facing U.S. sanctions. They include Viktor Vekselberg (net worth: $13.1 billion) and Oleg Deripaska (net worth: $3.3 billion), two of seven Russian oligarchs that the U.S. Treasury and State departments identified in the April sanctions. Allegations made against the sanctioned oligarchs include interference with the 2016 presidential elections and financially profiting from a Russian government that engages in 'destabilizing activities.'

To recap, Blavatnik has ongoing business relationships with other oligarchs who have been sanctioned for meddling in the 2016 US election.


Blavatnik's Former Lobbyists Spin Through the Revolving Door into the Trump Administration

Furthermore, the April, 2018, Vice News article documented apparent ongoing ties between Blavatnik operators and the Trump administration.

Two senior Trump administration officials were once registered as lobbyists for an investment company controlled by a Soviet-born industrialist who made billions doing business with newly sanctioned Russian oligarchs.

Makan Delrahim is now the assistant attorney general for the Antitrust Division in the Department of Justice, after rising from his original appointment as deputy White House counsel and deputy assistant to the president. David Bernhardt is the No. 2 official in Trump’s Department of the Interior.

Both men registered as lobbyists in 2011 and 2012 for Access Industries, a holding company controlled by billionaire Leonard Blavatnik, according to public filings reviewed by VICE News. And though they are far from the only D.C. lobbyists to get plum jobs in the Trump administration, the connection to Blavatnik, long in business with billionaire associates of Russian President Vladimir Putin, reveals yet another link between Russia and senior Trump officials.

The article noted,

As of the fourth quarter of 2017, the lobbying firm that Delrahim and Bernhardt worked for was still on Access Industries’ payroll, according to public records. Bernhardt told the Senate during his confirmation hearing that despite filing the paperwork, he never actually did any lobbying for Blavatnik’s firm.

Delrahim, may have been in a particularly fraught position,

Both wound up on the Trump transition team. One, Makan Delrahim is now the assistant attorney general for the Antitrust Division in the Department of Justice, after rising from his original appointment as deputy White House counsel and deputy assistant to the president. David Bernhardt is the No. 2 official in Trump’s Department of the Interior.

The problem is while

Neither Delharim nor Bernhardt, who registered to lobby for Blavatnik and Access Industries in the past, currently has a job with direct oversight of issues related to the Russian economy or the Russia probe.... Delharim might have been involved when he was in the White House counsel's office, a position he left in September for the DOJ.

Richard Painter, former White House ethics lawyer under President George W. Bush, said that in his view, Delrahim would have needed to recuse himself from any work at the White House involving the investigation into Russia’s role in the 2016 election due to his previous work for Access Industries.

'I think that if I were in the White House Counsel’s Office, I’d say, ‘This guy needs to stay away from the entire Russia thing,'' Painter told VICE News.

To recap, former lobbyists for Blavatnik's firm served on the Trump transition team, and then were appointed to responsible federal offices, suggesting at the least, conflicts of interest.


Harvard Officials See No Evil

Nonetheless, Harvard officials had nothing but praise for Len Blavatnik, their generous donor.  Per the Globe,

[Lawrence S] Bacow, Harvard’s president, stood by the donor, calling him a 'distinguished alumnus' and 'somebody that we know very well.'

'We’re very comfortable with who Len is,' Bacow said. 'Len is well-known to the medical community here at Harvard and has been very supportive of science at Harvard and elsewhere. . . . He’s also somebody who is intensely curious, who believes in the power of science to improve the human condition, and he also believes in backing really talented young scientists.'

Were they totally unaware of all the accusations against, suspicions of, and likely investigations of their very wealthy donor?  Or did they just not want to look this very generous gift horse in the mouth? 

Not With a Bang,...

As noted above, there were vigorous protests of Blavatnik's much smaller gift to Oxford in 2015, and then in 2017 after Blavatnik's million dollar gift to the Trump inaugural was announced.  Yet so far, there has been little media discussion, and no protest of Blavatnik's "transformative" gift to Harvard, and the naming of a good chunk of the Harvard Medical School in his honor.

Blavatnik's story seems to be anechoic so far.  It has gotten little public coverage.  A Bloomberg article and a tiny AP story made no mention of Russia, oligarchs, Putin, etc.  Not surprisingly, coverage by Harvard's public relations did not bother either, (see the Harvard Gazette as above, and Harvard Magazine.) The only media coverage beyond the Boston Globe that said anything about the questionable aspects of Blavatnik's background was by the Harvard Crimson and WBUR.   


Summary and Discussion

Len Blavatnik  has been accused of acting in association with other Russian oligarchs, and with the Putin regime's FSB to use unethical means to push UK oil interests out of Russia.  Blavatnik has been accused of helping Russia to influence the 2016 US elections.  Some of Blavatnik's business associates have already been sanctioned by the US government for election meddling and profiting from "destabilizing activities."  And Special Counsel Mueller and other federal authorities are apparently in the midst of investigating Mr Blavatnik.


So Blavatnik's huge gift to Harvard Medical School seems likely to generate a new version of an institutional conflict of interest.  Consider a typical insitutional COI: a medical school getting a big donation from a pharmaceutical corporate foundation.  The concern in that case might be that the people running the school would be unduly inclined to support research that might boost the company's products, or support teaching that would again favor its products, or favor pharmaceutical therapy over other approaches.  Perhaps the students and professionals at that school might feel they are supposed to help hype the company's products, or avoid criticizing them.  All that would be highly concerning.

However, in the current case the issue is not how the school, its officials, its faculty, its health professionals and/or its students would favor Mr Blavatnik's corporate products and avoid criticizing them.  It is that they all are being pushed to cozy up to an oligarch, and thus might be pushed to favor the authoritarian government to which Mr Blavatnik appears tied, its anti-democratic practices, its corruption, and its apparent attempts to meddle in US elections, undermine US democracy, and support a particular candidate who may be beholden to it.

The protesters at Oxford in 2015 wrote

We insist that the university should stop selling its reputation and prestige to Putin’s associates.

Now Harvard University and its medical school appear to be "selling its reputation and prestige to Putin's associates."  This endangers Harvard, and the rest of us. Yet no on at Harvard appears to be protesting.  The silence is deafening.

Medical Malpractice Insurer CRICO Challenges "EMR Complacency" - Or Do They?

In my Feb. 28, 2014 post "Malpractice Claims Analysis Confirms Risks in EHRs" (http://hcrenewal.blogspot.com/2014/02/patient-safety-quality-healthcare.html) I pointed out that the annual medical malpractice claims related to health IT received by the insurer for the Harvard medical community, one of the world's best users of health IT, might represent a significant percentage of the annual med mal claims in the state of Massachusetts.  Many involved serious injury.

I also pointed out that the claims themselves represent only a small fraction of total incidents of med mal-related harms (including due to IT), due to the economic realities of med malpractice litigation.

In the press release reproduced below, CRICO writes of poor integration and "design deficiencies" - bad health IT - and that "there has been no apparent leader in this field making a concerted effort to design the next generation of EMRs with the physician in mind", and that they hear "significant frustration from physicians related to their experience with EMRs." 

However, CRICO does not write of the reasons why these issues are as prevalent as they are.

Their claim appears to be, in essence, that these problems will be solved through dialog and "conversation" - in other words, appeals to corporate altruism.

Why this industry receives special accommodation even from those who have to pay for their mistakes is beyond me:

CRICO Challenges EMR Complacency 
http://www.rmf.harvard.edu/EMR 
February 6, 2013

In a recently released video, CRICO offers a vision of how EMRs of the future might improve health care safety for both patient and physician. 

Press Release:  Cambridge, MA — CRICO, the patient safety and medical professional liability company serving the Harvard medical community, has produced a video that puts forth a future vision of how Electronic Medical Records (EMRs) might be embedded into the physician workflow in a manner that would improve health care delivery. CRICO has based the dramatization on real malpractice cases. Through combined analysis of how harm can come to patients from flawed encounters with providers, and conversations with medical and technological visionaries across the country, the video integrates various scenarios into an idealized patient/physician encounter. 

Hearing significant frustration from physicians related to their experience with EMRs, CRICO was inspired to envision a way in which they might be better integrated into  the clinical workflow. This would allow the EMR to offer some relief to physicians and nurses who face seemingly insurmountable challenges of time and data management.

Luke Sato, MD, chief medical officer and senior vice president for CRICO said, “The impetus behind this video was to facilitate a dialogue among health care professionals—physicians, IT, hospital administrators—about why we aren’t making better progress in the development of EMRs.  Through analysis of medical malpractice claims, we have line of sight to design deficiencies in the EMR that contribute to claims. The best technological design is one that is integrated seamlessly into one’s workflow. The current EMR is passive—the physician has to actively look for data instead of the technology anticipating what the physician needs to act on.”

Opinions within the health care industry are diverse about EMRs but there has been no apparent leader in this field making a concerted effort to design the next generation of EMRs with the physician in mind. In addition to a need for standards across systems, the manual data entry of today’s EMRs adds to the burden of already time-pressed physicians.

The film was created as a collaborative effort between CRICO’s Luke Sato, MD and David Ting, MD, associate medical director for information systems at Massachusetts General Physicians Organization, who acted as an expert resource for script development and video production. Ting said, “The actual purpose of the video is to ask whether we might intelligently prioritize today’s choices to move our institutions toward improved patient care and improve provider and practice work-life experience.”

While most of the technology that is used in this dramatization is available today, other elements are further out. CRICO’s future vision, as depicted in the video, is meant as a launching pad to begin the conversation about how new technologies can provide a way to enable EMRs to enhance, streamline, and make safer the patient-physician encounter.

Dr. Ting has encouraged his colleagues at MGH to view the video and share their feedback. The physician reaction has elicited a variety of reactions and diverse feedback ranging from “cool, efficient, saves time, and improves outcomes” to “I don’t want voices interfering with my patient interactions.”  The video is available for viewing on the CRICO website, www.rmf.harvard.edu/EMR. 

ABOUT CRICO

For more than 30 years, CRICO has been the patient safety and medical professional liability company owned by and serving the Harvard medical community.

CRICO is an internationally renowned leader in evidence-based risk management, proudly serving more than 12,000 physicians (including residents and fellows), 22 hospitals, and nearly 209 other health care organizations.

They see the problems but do not engage the human reasons for the problems, including generic leadership, conflicts of interest, incompetence, territoriality, profit motive, and the other ills that we write of till our faces turn blue at Healthcare Renewal.

In other words, their "challenge to EHR complacency" is about as powerful as our challenges have been to Vladimir Putin regarding Crimea and Ukraine.

Perhaps when the payouts become even more severe, insurers will think it a good idea to stop 'making nice' with an intrusive and unregulated industry that has invaded clinical affairs like a bull in a china shop.

Can we please, pretty please dialog for a bit about your breaking the dishes?

-- SS

Khadafy's Academic Mercenaries' Health Care Connections

We just discussed Henry Kissinger as an early example of the intellectual mercenary, and recent striking examples of academic mercenaries,particularly the Harvard University-derived Monitor Group's academically disguised public relations work for Libyan tyrant Moammar Khadafy.

We concluded that academic mercenaries help foster the corporate culture in which health care is now immersed.  However, it also appears they may have direct influence on health care. 

Monitor Group Leadership

Consider for example the main figure in the Monitor Group - Khadafy scandal.  According to a Boston Globe article, Michael Porter developed the Monitor-Khadafy connection:

Monitor’s work in Libya began when Michael Porter, a Harvard Business School professor who is among the country’s top theorists on management strategies, received a call from Saif Khadafy around 2001, according to Porter. Saif, a Western-leaning doctoral student who US officials hoped would become the next leader of Libya, asked for his expertise to help change Libya’s battered, Soviet-style economy.

(Saif, of course, later sided with his father in brutally putting down anti-government protesters.)

According to his official Harvard biography, Michael Porter also has a big interest in health care:

Since 2001, Professor Porter has devoted considerable attention to competition in the health care system, with a focus on improving health care delivery. His work with Professor Elizabeth Teisberg, including the book Redefining Health Care: Creating Value-Based Competition on Results (Harvard Business School Press, 2006), is influencing thinking and practice not only in the United States but numerous other countries.

In fact, the New England Journal of Medicine published his four-page commentary on "value-based" health care reform in 2009 [Porter ME. A strategy for health care reform - toward a value-based system. N Engl J Med 2009; 361: 109-112. Link here.]

The journal required that he disclose financial relationships with other health care organizations, including

receiving lecture fees from the American Surgical Association, the American Medical Group Association, the World Health Care Congress, Hoag Hospital, and the Children's Hospital of Philadelphia, receiving director's fees from Thermo Fisher Scientific, and having an equity interest in Thermo Fisher Scientific, Genzyme, Zoll Medical, Merck, and Pfizer.

The Boston Globe article identified two more Monitor leaders who helped develop the Libyan connection:

Porter brought in Monitor, a firm he had helped found, along with other associates including former Harvard professors Mark Fuller, who is now the firm’s chairman, and Joseph Fuller, who works at Monitor and also collaborates on research with some Harvard professors.

Mark Fuller, the current CEO of the Monitor Group, who wrote to the Libyan government proposing to counter its "deficit of positive public relations" as described by Mother Jones, per the New Profit Inc web-site is:

a Member of Harvard University's Major Gifts Steering Committee, a Member of the [Harvard] Board of Overseers' Committee on University Resources,...

Joseph Fuller was an unsuccesful candidate for the Harvard Board of Overseers in 2010. His biography for that candidacy also stated:

He and his wife, Ruthanne Schwartz Fuller, MBA ’83, served on the HBS Board of Dean’s Advisors and Joe on the Harvard College Fund and the FAS Undergraduate Education Planning Committee.

So of the three Monitor Group leaders who developed the stealth public relations campaign for Khadafy, the leader who set up the relationship with Libya has a professed interest in health care, published on health policy in a prominent journal, and has financial ties to multiple health care organizations. The two others have leadership roles within their own university which are likely to affect its medical and health care spheres

Monitor's Hired Academics

Furthermore, of the seven outside academics the Monitor Group paid to help promote the Khadafy regime per the Mother Jones article, three had health care connections. 

Richard Perle is on the board of directors of New Health Sciences Inc, a biotechnology company.

In 2008, Francis Fukuyama was elected a member of the Board of Trustees of the Rand Corporation, which does substantial health care research.

Benjamin Barber's own biography claims he has been on the National Advisory Board of American Health Decision Inc since 1992.

Summary

As we noted before, severe problems with the leadership and governance of health care seem not to be only due to specific deficiencies within health care, but may also be influenced by larger societal problems.  The leadership of many organizations seems to have been given over to self-serving opportunists with no fixed values or loyalties. David Halberstam described Henry Kissinger as a prototype of these "wildly ambitious agents of opportunity," also as:

the free agent—the professional political player who brilliantly manipulated the press, played both sides of issues, and put his own agenda ahead of all others.

We discussed examples of such free agents who cloaked themselves in the mantles of two formerly prestigious academic institutions, Columbia and Harvard Universities. Both universities have medical schools, teaching hospitals, and considerable influence within medicine and health care. So it seems likely that the free agency of faculty outside of medicine and health care could influence how things are done within medicine and health care. Furthermore, we have demonstrated that many free agents whose focus may not primarily be on health care and medicine may have wide-ranging activities including some that directly affect medicine and health care.

The pervasive nature of free agents, or agents of opportunity within academia, government, and the rest of society shows why it has been so hard to challenge the threats to core values created by conflicts of interest in medicine and health care. The conflicted already hold much of the power within the larger society in which medicine and health care operate. They are unlikely to favor restrictions on their brother and sister free agents within the medical and health care sector.

So our effort to address concentration and abuse of power in health care, and promote accountability, integrity, honesty, and ethics in health care leadership and governance must necessarily take into account these issues in society at large. The bad news is that the problems are much bigger than we first imagined. The good news is that we have potential allies facing similar problems throughout the world.

But it is now really clear that to truly reform health care, we must improve the accountability, integrity, honesty and ethics of not only health care leadership and governance, but of all organizational leadership and governance. That should keep us busy for a while.

Henry Kissinger, Iceland's Promoter, Khadafy's Apologists, and the Rise of the Academic Mercenary

In which we discuss how medical academic mercenaries (like the key opinion leaders paid to promote drugs and devices cloaked in their academic and professional credentials) now appear to be just part of a larger problem.
Henry Kissinger

Almost 17 years ago, an article by David Halberstam in Vanity Fair(1) should have warned us of the rise of the academic and intellectual mercenary.  However, back in those go-go years of the new gilded age, most of us were not listening. 

Halberstam focused on Henry Kissinger, once a protege of New York Governor and then US Vice President Nelson Rockefeller, who became the infamous President Nixon's National Security Advisor, then Secretary of State:

Kissinger’s capacity to be all things to all campaigns—an overt Rockefeller man, a semi-overt Humphrey man, and a covert Nixon man—reflects the emergence of the rootless operator in the modern superstate. Kissinger was the first—though there were others to follow—of the wildly ambitious agents of opportunity set loose in the wilds of Washington and other capitals. They are interchangeable men, singular in their ambitions, unhampered by traditional loyalties or affiliations. They are men so cool and detached in their geopolitical views that they sometimes seem to be part of a new international elite, readily transferable to the governments of allies and adversaries alike.

Two recent dramatic stories show how prevalent academic mercenaries, another breed of "rootless operators," or "wildly ambitious agents of opportunity," have become.

Promoting Iceland: Columbia Professors' "Inside Job"

The Academy Award winning documentary film, "Inside Job," suggested that one cause of the Great Recession was the wrong-headed deregulation of the financial industry deceptively promoted by academics who failed to disclose they were being paid by those who stood to benefit from deregulation.  (See our post here.)

Reconsideration of the roles of two of the academics cited in the film who are faculty at Columbia University shed more light on how public policy was influenced by academics hired to do public relations. The Columbia Spectator just published a three- part series on the local controversy with global implications.

At least a few Columbia faculty realized that it did not look good for their colleagues to do public relations while pretending they were delivering disinterested academic opinions:

[Columbia Economics Department Chair Michael] Riordan added that it is important that Columbia protect its reputation and the public’s trust in its professors’ expert opinions.

'What does the university stand for but if not for the quality of the ideas that come out of that university?' he asked. (2)

Also,

Teachers College professor Kathleen O’Connell ... called the film 'appalling' and said that 'the Columbia professors were even more appalling.' She said she was especially surprised considering Hubbard and Mishkin have both had high-ranking government jobs—Hubbard was at one time a top economic adviser to former President George W. Bush, and Mishkin was a governor of the Federal Reserve.

'I was shocked at the lack of ethics that they displayed. They are in really powerful positions—they have been in powerful positions in the Federal Reserve and the President’s economic advisors,' O’Connell said.(3)

However, there was much resistance to change. Just as we have seen in arguments about conflicts of interest affecting medical faculty, there were those who denied that being paid to consult could affect any faculty member's thinking about the source of the payment:

But some, including Business School professor and University Senator Frank Lichtenberg, oppose the disclosure of consulting to the University. Lichtenberg said that many factors besides money can influence professors’ academic opinions.

'There are lots of other sources of bias and non-neutrality in academia anyway,' Lichtenberg said. 'People often have predispositions for or against different hypotheses, and unfortunately, those sometimes prevail.'

Some professors question whether paid consulting positions influence researchers at all. Business School professor Bruce Greenwald said that the economists featured in 'Inside Job' have 'long espoused and long promoted' pro-market ideas and would have made the same arguments regardless of financial ties.(4)

So we have economists denying the effect of economic incentives?

Beyond that, there were arguments that public disclosure of conflicts of interest would violate faculty members' privacy.

But full public disclosure is not likely to gain much traction in the debate over a University-wide policy. Steele said that it is not necessary to publicly release disclosures made privately to University officials.

'I don’t think that the public needs to have access to forms that people fill out and all the materials that go into that,' [Provost Paul] Steele said. 'That would be onerous at least, and there might be other objections … that you are invading people’s sense of privacy and freedom.'(2)

I suppose that would have made some sense if the faculty member had not made any public pronouncements that could have been influenced by the undisclosed conflicts. However, the contention in "Inside Job" was that conflicted academic economists publicly advocated on behalf of their undisclosed clients. For example,

In 2006, the Iceland Chamber of Commerce paid Columbia Business School professor Frederic Mishkin $134,858 to co-author a report on Iceland’s economy and banking systems. In the report, titled 'Financial Stability in Iceland,' Mishkin painted a bright picture of the country’s economic future, but he did not disclose who was paying him to write it.

'Although Iceland’s economy does have imbalances that will eventually be reversed, financial fragility is not high and the likelihood of a financial meltdown is very low,' Mishkin wrote.

Two years later, Iceland’s economy collapsed. Its major banks failed, its currency lost much of its value, and thousands of its citizens lost their jobs. The New York Times wrote at the time that, to Icelanders, 'the collapse came so fast it seemed unreal, impossible.'(2)

Harvard Professors' Paid Apologia for Moammar Khadafy

Praising Iceland's economy was one thing. Praising brutal Libyan leader Moammar Khadafy as democratic was another.

In March, 2011, Mother Jones disclosed(5) how a consulting group run by Harvard professors was hired in part to burnish the image of Moammar Khadafy, who since has ordered brutal attacks on protesters within his country.

In February 2007 Harvard professor Joseph Nye Jr., who developed the concept of "soft power,' visited Libya and sipped tea for three hours with Muammar Qad'afi. Months later, he penned an elegant description of the chat for The New Republic, reporting that Qaddafi had been interested in discussing 'direct democracy.' Nye noted that 'there is no doubt that' the Libyan autocrat 'acts differently on the world stage today than he did in decades past. And the fact that he took so much time to discuss ideas—including soft power—with a visiting professor suggests that he is actively seeking a new strategy.' The article struck a hopeful tone: that there was a new Qaddafi. It also noted that Nye had gone to Libya 'at the invitation of the Monitor Group, a consulting company that is helping Libya open itself to the global economy.'

Nye did not disclose all. He had actually traveled to Tripoli as a paid consultant of the Monitor Group (a relationship he disclosed in an email to Mother Jones), and the firm was working under a $3 million-per-year contract with Libya. Monitor, a Boston-based consulting firm with ties to the Harvard Business School, had been retained, according to internal documents obtained by a Libyan dissident group, not to promote economic development, but 'to enhance the profile of Libya and Muammar Qadhafi.' So The New Republic published an article sympathetic to Qaddafi that had been written by a prominent American intellectual paid by a firm that was being compensated by Libya to burnish the dictator's image.

Monitor also sponsored trips to Libya for scholars from other universities who also later wrote positively about Khadafy's and his reign over Libya, presumably after they had received their large consulting fees.

The Boston Globe reported(6) in more detail about a proposal by Monitor to write a laudatory book about Khadafy:

It reads like Libyan government propaganda, extolling the importance of Moammar Khadafy, his theories on democracy, and his 'core ideas on individual freedom.'


But the 22-page proposal for a book on Khadafy was written by Monitor Group, a Cambridge-based consultant firm founded by Harvard professors. The management consulting firm received $250,000 a month from the Libyan government from 2006 to 2008 for a wide range of services, including writing the book proposal, bringing prominent academics to Libya to meet Khadafy 'to enhance international appreciation of Libya' and trying to generate positive news coverage of the country.

As further documented in the Globe article, it was very clear that Monitor was paid not just to provide consultation, but to do public relations work on behalf of the Khadafy regime.

Yet an article in the Nation(7) made it clear that the prominent academics it hired did not disclose who paid them, or the purposes of those payments:

Joseph Nye of Harvard’s Kennedy School wrote in The New Republic in 2007 that Muammar Qaddafi was interested in discussing 'direct democracy.'

Anthony Giddens of the London School of Economics wrote in the Guardian the same year that Libya under Qaddafi could become 'the Norway of North Africa.'

Benjamin Barber of Rutgers University wrote in the Washington Post, also in 2007, that Libya under Qaddafi could become 'the first Arab state to transition peacefully and without overt Western intervention to a stable, non-autocratic government.

Great minds think alike? Actually, no: all were being paid by Libyan money, under a $3 million per year contract with a consulting group which promised to 'enhance the profile of Libya and Muammar Quadhafi' in Britain and the US.

One more thing: none of them said in The New Republic, the Guardian, or the Washington Post that they were being paid by Libyan money.

So here again we have the elements of what Wendell Potter (see this post) called the "third party strategy." A public relations company hires outside "experts" with veneers of academic or professional credibility to promote the interests of its clients, without disclosing that the "experts" have become paid flacks. Again, this is bad enough when it is done on behalf of health policies favorable to commercial insurance companies. It is worse when it is done on behalf of brutal dictators.

More recently, the Globe discovered(8) that the Monitor Group negotiated with the head of the Libyan intelligence service who had been implicated in various violent acts,

He is Moammar Khadafy’s brother-in-law and his most trusted aide, convicted in absentia for the 1989 bombing of a French airliner and implicated in the 1996 massacre of 1,200 Libyan political prisoners.

But in 2006, Abdullah Al Sanusi was also the man who arranged the services of a noted Cambridge consulting firm in a very different project: revamping Libya’s reputation on the world stage.

Sanusi, a longtime head of Libya’s intelligence services, oversaw initial negotiations with the Monitor Group, which was vying for a contract with Libya to bring prominent Americans to speak to Khadafy as part of an effort to improve ties and nudge the pariah country toward reforms.

'We believe that your commitment to creating a program of mutual education and relationship building with the Unit ed States remains of critical importance at this turning point in Libyan history. We remain privileged to be trusted with this work,' Monitor’s chief executive, Mark Fuller, and project director, Rajeev Singh-Molares, wrote to Sanusi in 2006.

However, so far, Harvard leadership has if anything been more defensive about its faculty members' stealth public relations work for a brutal dictator than was Columbia's leadership about its faculty member's stealth public relations work for Iceland. As reported(9) again by the Boston Globe,

A prominent Harvard professor and former university administrator urged Harvard President Drew Faust during a faculty meeting yesterday to express 'shame'’ on behalf of the university at the disclosure of financial ties between a senior academic and Libyan dictator Moammar Khadafy.

Saying nothing would send the wrong message to students, giving them the impression that personal financial gain could come at the expense of ethical conduct, said Harry Lewis, a computer science professor who formerly served as undergraduate dean.

'Shouldn’t Harvard acknowledge its embarrassment, and might you remind us that when we parlay our status as Harvard professors for personal profit, we can hurt both the university and all of its members?' Lewis asked Faust at the monthly gathering of the arts and sciences faculty.

Faculty meetings are closed to outside media, but Lewis provided the Globe a written transcript of his statement, which he sent to Faust several days ago.

Faust — who, according to Lewis, told him she did not want to be 'scold in chief' — said she supports the wide discretion of faculty members to pursue the directions of academic inquiry and outside engagements they choose.

How low once proud institutions have fallen was demonstrated by a Harvard President who could not bring herself to "scold" faculty who were paid to provide public relations for a brutal dictator while hiding behind their Harvard titles.  Her action was not just "a weak standard for an institution of global leadership,"(10) but failed to erase "a distinctive odor, one that emanates from the corruption of academic reputation."(11)

Summary

Since before we first started this blog, we wondered somewhat despairingly how medicine, and particularly academic medicine, had become so badly lead.  Since the global economic collapse/ Great Recession it belatedly became clear that health care has just been swept along by the waves that drove larger social, economic and political institutions.  In particular, when we wondered how conflicts of interest had become so pervasive in medicine, we did not realize how pervasive conflicts of interest and corruption had become throughout the world.  The fact that leaders of previously revered educational institutions like Columbia and Harvard still cannot bring themselves even to admit the need to disclose conflicts, much less "scold" people for selling out to brutal tyrants indicates how deep the rot has gone.

Fixing the great problems of health care will require fixing the greater problems of society at large.  We must learn to discredit, not honor the "wildly ambitious agents of opportunity" that have been sent out to dominate the new gilded age.   


References


1.  Halberstam D. The new establishment: the decline and fall of the Eastern Empire. Vanity Fair, October, 1994. Link here.
2. Poliak S. 'Inside Job' prompts new look at conflict of interest policy. Columbia Spectator, April 13, 2011. Link here.
3. Poliak S. After documentary, B-school rethinking ethics. Columbia Spectator, April 15, 2011. Link here.
4. Poliak S, Roth S. 'Inside Job' sparks three separate reviews of disclosure policy. Columbia Spectator, April 14, 2011. Link here.
5. Corn D, Mahanta S. From Libya with love. Mother Jones, March 3, 2011. Link here.
6. Stockman F. Local consultants aided Khadafy. Boston Globe, March 4, 2011. Link here.
7. Wiener J. Professors paid by Qaddafi: providing 'positive public relations.' The Nation, March 5, 2011. Link here.
8. Stockman F. Top Khadafy aide helped craft deal with local firm. Boston Globe, March 30, 2011. Link here.
9. Jan T. Harvard leader confronted on professor's ties to Libya. Boston Globe, April 6, 2011. Link here.
10. Anonymous. Yes, Harvard chief should scold profs who worked for Khadafys.  Boston Globe, April 11, 2011.  Link here.
11.  Barrett PM. The professors and Qaddafi's extreme makeover.  Bloomberg BusinessWeek, April 6, 2011.  Link here.

IMPEACHMENT: IT’S ABOUT THE INSTITUTION, NOT THE PERSON

IMPEACHMENT: IT’S ABOUT THE INSTITUTION, NOT THE PERSON

The impeachment trial of Judge G. Thomas Porteous of Louisiana this week was a lesson in civic ethics. The lessons of the Porteous trial apply to academic medical centers, professional medical societies, medical journals, and granting agencies like NIH.

The Porteous trial is a straightforward case of bribes, kickbacks and corruption involving a Federal judge. The most enlightening arguments came from prosecutor Rep. Adam Schiff, D-California, laying out the case for impeachment in the Senate. He gave a lucid presentation of the logic and the historical origins of the impeachment process. The key points are these: impeachment serves to protect the dignity, honor, and credibility of the office more than to punish the wayward office holder; and impeachment is a constitutionally sanctioned way to clean the Augean stables without necessarily having to prove criminal liability. It is sufficient to demonstrate that the bad actors have brought disgrace on their offices.

What this means for us in medicine is that legalistic charges and defenses are not the right way to go in exposing and ejecting bad actors from our field. In the highly publicized cases of ethical compromise over the past few years, our group disapproval, when there was any at all, generally has run on two parallel tracks. The first is legalistic, and it favors the bad actors, who flaunt their constitutional protections with the taunt, prove it. The second ground of disapproval is esthetic, based on the tackiness of the bad actors’ behaviors – regardless of technical legalities, what they do is an affront and an insult to professional standards and mores. When we look at how recent incidents in medicine actually played out, however, we see a disconnect. The bad actors have narrowed the debate to the first ground of disapproval, while forcing the second off limits. In this strategy, they have received conscious or unconscious assistance from the professional establishment. The focus has been on legal technicalities involving the bad actors rather on preserving the dignity and credibility of high offices in academic medicine.

For instance, when Charles Nemeroff was exposed by Senator Grassley for conflict of interest in his NIH grants, he came up with the contrived legalistic defense that his unreported payments from GlaxoSmithKline were for ‘CME-like’ presentations, and thus somehow exempt from disclosure. Nemeroff’s obfuscations finally collapsed of their own weight and Emory University took decisive action against him, even though they had sufficient evidence dating back at least 4-5 years. In the end, Emory had to go through the wringer to discipline Nemeroff, and the institution suffered grave damage to its reputation for a number of years as the price of delay.

For instance, when Thomas Insel, the Director of NIMH, assured Pascal Goldschmidt, Dean of the School of Medicine at the University of Miami, that Nemeroff was absolutely in good standing for applying for new NIH grants if he left Emory for Miami, despite a 2-year ban at Emory, he hewed to the letter of the law while disregarding its spirit in order to help his friend. Moreover, when Insel appointed Nemeroff to two new NIH Research Review Committees, he established beyond any doubt that he was intent on trying to help Nemeroff get back into circulation, and that he failed to grasp the gravity of the dishonor that Nemeroff inflicted on the field. This obtuseness on Insel’s part damaged the credibility and reputation of NIMH. To his credit, NIH director Francis Collins finally ‘got it’ and forced a review of the NIH ethics rules that had been entrusted to Insel.

For instance, when Pascal Goldschmidt, Dean of the School of Medicine at the University of Miami, claimed he had done due diligence in his recruitment of Nemeroff as chair of his psychiatry department in 2009, he focused on the legalistic aspects of Emory’s review of Nemeroff, while failing to understand the degree of negative publicity associated with Nemeroff’s name. He ended up hiring someone who is an object of ridicule, and he in turn is ridiculed by association.

For instance, when Stanford University learned of Alan Schatzberg’s boundary violations vis a vis his NIH-funded projects and his personal corporation, they first pushed back on legalistic technical grounds. Only later did the Stanford administration get the message by removing Schatzberg from his Principal Investigator role with NIH grants, and eventually appointing a new chair of psychiatry. Meanwhile, the public image of Stanford suffered.

For instance, when the American Psychiatric Association was warned that Alan Schatzberg was a problematic candidate for election as President of the association on account of his history of ethical compromise, they went ahead anyway and they have since had opportunity to regret that decision. Here again, the professional society appears to have lost sight of the ethical forest for the legal trees. The credibility and reputation of the APA have suffered because of the taint associated with Schatzberg’s presidency.

For instance, when the New York Times recently exposed the ghostwriting associated with the 1999 textbook of Charles Nemeroff and Alan Schatzberg, the so-called authors responded with typical legalistic defenses. They and the University of Miami and the American Psychiatric Association Press (the publisher) again lost sight of the ethical forest for the legal trees. This stereotyped, public relations driven response ignores the visceral and esthetic distaste most observers felt on learning about the collusion between the ‘authors,’ the professional writing company and the sponsoring pharmaceutical corporation. Even the defense that it occurred a long time ago fails. In the Porteous trial, the prosecution established that dishonorable events in an officer’s past are grounds for impeachment, whether or not they also occurred during the person’s time in office.

For instance, when Harvard Medical School planned a new CME program on psychopharmacology in mid-2011, they engaged a number of compromised academic speakers, including Nemeroff and Schatzberg. What the hell was Harvard thinking? I told the Course Director, Carl Salzman, that this amounts to pandering. He replied defensively that Nemeroff and Schatzberg are well regarded speakers and that he would ensure that they gave unbiased presentations. That’s not the point. The point is that they have done serious damage to our field, and for Harvard Medical School to give them top billing amounts to denial of the elephant in the living room. It’s collusion in service of their public rehabilitation. I told Dr. Salzman that his logic amounts to compartmentalized thinking. I might have added that Adolf Hitler gave a lot of great speeches that received rave reviews and that compartmentalized thinking was widespread in the nation of Germany between 1928 and 1945. Meanwhile, Harvard Medical School gets a black eye through its association with these compromised individuals. So do the other speakers who will be on the panel. Who needs this kind of taint? Dr. Salzman can defend Nemeroff and Schatzberg all he wants on specious legalistic grounds, but who cares? Harvard Medical School could use some moral clarity.

So, we come back to the impeachment trial of Judge Porteous. Impeachment protects the institution. When sleazebags get into positions of authority and trust they need to be dumped, and our professional and academic institutions need to have enough spine to dump them. At the very least, we don’t need to tolerate institutions like Harvard Medical School pandering to compromised academic bad actors. For shame.

What a Conflicted Web We Weave: Academic Economists, Finance, the Global Economic Meltdown, and the Impending Health Care Collapse

We have been writing about conflicts of interest in health care now for a long time.  We started with a focus on academic physicians'  and leaders' financial ties to pharmaceutical/ biotechnology/ device companies, then went on to the intense conflicts generated by academic medical and other health care non-profit leader who also sit on boards of directors of for profit health care corporations, and to conflicts affecting various kinds of respected not-for-profit health care organizations, like medical societies and patient advocacy groups.

Meanwhile, we uncovered the curious dominance of the boards of some health care organizations by leaders in the finance world, including some of the leaders of the failed companies that brought us the "great recession."  This did seem like a leadership problem for health care, in terms of the dominance of health care leadership by the elite of another industry that did not exactly seem to share the values we physicians swear to uphold.  However, it did not seem to be a conflict of interest problem, until now.

The Chronicle of Higher Education just published an article by the director of a soon to be released documentary on conflicts of interest and academics, but this time academic economics.

Charles Ferguson, the author, used as an example the Larry Summers, the former President of Harvard University (and hence leader of the Harvard Medical School, School of Public Health, and Harvard's teaching hospitals).  We had commented here about Summers' poor fit for the role of an academic medical leader, and here and here about the dominance of Harvard leadership by leaders of (sometimes failed) financial institutions.  Ferguson summarized (bad pun, sorry) the problem thus:

Summers is unquestionably brilliant, as all who have dealt with him, including myself, quickly realize. And yet rarely has one individual embodied so much of what is wrong with economics, with academe, and indeed with the American economy.

The problem is essentially one of huge conflicts of interest:

the revolving door is now a three-way intersection. Summers's career is the result of an extraordinary and underappreciated scandal in American society: the convergence of academic economics, Wall Street, and political power.

Summers bear huge responsibility for the current economic mess:

Consider: As a rising economist at Harvard and at the World Bank, Summers argued for privatization and deregulation in many domains, including finance. Later, as deputy secretary of the treasury and then treasury secretary in the Clinton administration, he implemented those policies. Summers oversaw passage of the Gramm-Leach-Bliley Act, which repealed Glass-Steagall, permitted the previously illegal merger that created Citigroup, and allowed further consolidation in the financial sector. He also successfully fought attempts by Brooksley Born, chair of the Commodity Futures Trading Commission in the Clinton administration, to regulate the financial derivatives that would cause so much damage in the housing bubble and the 2008 economic crisis. He then oversaw passage of the Commodity Futures Modernization Act, which banned all regulation of derivatives, including exempting them from state antigambling laws.

Also,

Over the past decade, Summers continued to advocate financial deregulation, both as president of Harvard and as a University Professor after being forced out of the presidency.

Not only did Summers set up the structure that allowed reckless bets with other people' money on opaque financial derivatives by finance leaders who stood to make huge gains if they won their bets, but could foist all losses on others, but he actively attempted those who tried to warn us all of the impending economic collapse.

Summers remained close to Rubin and to Alan Greenspan, a former chairman of the Federal Reserve. When other economists began warning of abuses and systemic risk in the financial system deriving from the environment that Summers, Greenspan, and Rubin had created, Summers mocked and dismissed those warnings. In 2005, at the annual Jackson Hole, Wyo., conference of the world's leading central bankers, the chief economist of the International Monetary Fund, Raghuram Rajan, presented a brilliant paper that constituted the first prominent warning of the coming crisis. Rajan pointed out that the structure of financial-sector compensation, in combination with complex financial products, gave bankers huge cash incentives to take risks with other people's money, while imposing no penalties for any subsequent losses. Rajan warned that this bonus culture rewarded bankers for actions that could destroy their own institutions, or even the entire system, and that this could generate a 'full-blown financial crisis' and a 'catastrophic meltdown.'

When Rajan finished speaking, Summers rose up from the audience and attacked him, calling him a 'Luddite,' dismissing his concerns, and warning that increased regulation would reduce the productivity of the financial sector. (Ben Bernanke, Tim Geithner, and Alan Greenspan were also in the audience.)

Amazingly, rather than ending up an economic pariah after that, Summers regained power over the economy in the last few years.

Then, after the 2008 financial crisis and its consequent recession, Summers was placed in charge of coordinating U.S. economic policy, deftly marginalizing others who challenged him. Under the stewardship of Summers, Geithner, and Bernanke, the Obama administration adopted policies as favorable toward the financial sector as those of the Clinton and Bush administrations—quite a feat. Never once has Summers publicly apologized or admitted any responsibility for causing the crisis. And now Harvard is welcoming him back.

Summers was tightly aligned with the finance world, and benefited from the dominance of financial leaders on Harvard's board (see post here):

After Summers left the Clinton administration, his candidacy for president of Harvard was championed by his mentor Robert Rubin, a former CEO of Goldman Sachs, who was his boss and predecessor as treasury secretary. Rubin, after leaving the Treasury Department—where he championed the law that made Citigroup's creation legal—became both vice chairman of Citigroup and a powerful member of Harvard's governing board.

Yet in between his government and academic leadership roles, Summers got rich from finance firms' money.

Summers became wealthy through consulting and speaking engagements with financial firms. Between 2001 and his entry into the Obama administration, he made more than $20-million from the financial-services industry. (His 2009 federal financial-disclosure form listed his net worth as $17-million to $39-million.)

Ferguson went on to list several other conflicted academic economists:

The route to the 2008 financial crisis, and the economic problems that still plague us, runs straight through the economics discipline. And it's due not just to ideology; it's also about straightforward, old-fashioned money.

Prominent academic economists (and sometimes also professors of law and public policy) are paid by companies and interest groups to testify before Congress, to write papers, to give speeches, to participate in conferences, to serve on boards of directors, to write briefs in regulatory proceedings, to defend companies in antitrust cases, and, of course, to lobby. [Ed: they are thus the "key opinion leaders" of economics and economic policy.]  This is now, literally, a billion-dollar industry. The Law and Economics Consulting Group, started 22 years ago by professors at the University of California at Berkeley (David Teece in the business school, Thomas Jorde in the law school, and the economists Richard Gilbert and Gordon Rausser), is now a $300-million publicly held company. Others specializing in the sale (or rental) of academic expertise include Competition Policy (now Compass Lexecon), started by Richard Gilbert and Daniel Rubinfeld, both of whom served as chief economist of the Justice Department's Antitrust Division in the Clinton administration; the Analysis Group; and Charles River Associates.

In my film you will see many famous economists looking very uncomfortable when confronted with their financial-sector activities; others appear only on archival video, because they declined to be interviewed. You'll hear from:

Martin Feldstein, a Harvard professor, a major architect of deregulation in the Reagan administration, president for 30 years of the National Bureau of Economic Research, and for 20 years on the boards of directors of both AIG, which paid him more than $6-million, and AIG Financial Products, whose derivatives deals destroyed the company. Feldstein has written several hundred papers, on many subjects; none of them address the dangers of unregulated financial derivatives or financial-industry compensation.

Glenn Hubbard, chairman of the Council of Economic Advisers in the first George W. Bush administration, dean of Columbia Business School, adviser to many financial firms, on the board of Metropolitan Life ($250,000 per year), and formerly on the board of Capmark, a major commercial mortgage lender, from which he resigned shortly before its bankruptcy, in 2009. In 2004, Hubbard wrote a paper with William C. Dudley, then chief economist of Goldman Sachs, praising securitization and derivatives as improving the stability of both financial markets and the wider economy.

Frederic Mishkin, a professor at the Columbia Business School, and a member of the Federal Reserve Board from 2006 to 2008. He was paid $124,000 by the Icelandic Chamber of Commerce to write a paper praising its regulatory and banking systems, two years before the Icelandic banks' Ponzi scheme collapsed, causing $100-billion in losses. His 2006 federal financial-disclosure form listed his net worth as $6-million to $17-million.

Laura Tyson, a professor at Berkeley, director of the National Economic Council in the Clinton administration, and also on the Board of Directors of Morgan Stanley, which pays her $350,000 per year.

Richard Portes, a professor at London Business School and founding director of the British Centre for Economic Policy Research, paid by the Icelandic Chamber of Commerce to write a report praising Iceland's financial system in 2007, only one year before it collapsed.

And John Campbell, chairman of Harvard's economics department, who finds it very difficult to explain why conflicts of interest in economics should not concern us.

I once naively thought that the primary conflict of interest problems affecting academia involved health care, the dependence of medical schools and academic medical centers on commercial research funding, the emphasis these schools placed on faculty ties to commercial firms, leading to faculty "key opinion leaders" functioning as marketers of drugs and devices operating under the cloak of academia, and the major conflicts of academic leaders who also sit on health care corporate boards.

Now I wonder if all this came to pass because academic leaders already were comfortable with conflicts of interest after having profited from conflicts generated by relationships with the finance industry.

This now suggests that the dominance of university boards of trustees by finance leaders is a conflict of interest issue, too.

It also suggests that we in medicine should be paying more attention to how conflicts of interest shape not only the marketing of drugs and devices, but the health care policy that has lead to our currently dysfunctional system. If economists paid by finance companies could have been a major cause of the global financial meltdown, could health care policy experts paid by health care corporations be a major cause of our collapsing health care system?

Hat tip to the Naked Capitalism blog. See additional comments on the University Diaries blog and on Felix Salmon's blog.

A "Very Well Paid Boob" on the Harvard Corporation?

The ongoing investigation of the global financial collapse may also shed some indirect light on what has gone wrong with health care.  Consider the recent testimony by two leaders of the nearly failed, then bailed out global financial giant Citigroup, as reported by the New York Times. One of the leaders was Robert Rubin,

Robert E. Rubin, the former Treasury secretary, faced withering questions from the panel, the Financial Crisis Inquiry Commission, for his spare expressions of remorse. Repeatedly playing down his role as chairman of the executive committee of Citigroup’s board, he was met with anger and disbelief.

'You were either pulling the levers or asleep at the switch,' Philip N. Angelides, the committee’s chairman, told him.

Mr. Rubin stopped short of accepting personal responsibility. He grudgingly conceded that a few savvy investors saw the crisis coming, asserting that nearly everyone in the financial services industry had failed to see a dozen powerful forces — from excessive debt levels to trade imbalance — come together in a perfect storm.

'We all bear responsibility for not recognizing this, and I deeply regret that,' Mr. Rubin said.

Mr. Rubin’s stance left several members of the panel angry. Mr. Rubin earned more than $100 million during a decade at Citigroup.

Mr. Angelides, a former California state treasurer and a fellow Democrat, did not buy it. 'You were not a garden-variety board member,' he said. 'I think to most people chairman of the executive committee of the board of directors implies leadership. Certainly $15 million a year guaranteed implies leadership and responsibility.'

Attempts by Mr Rubin (and to some extent, former Citigroup CEO Charles O Prince III) to disavow responsibility met with more derision. For example, yesterday, see a New York Times editorial:

The latest public hearings of the Financial Crisis Inquiry Commission, held last week, made headlines for eliciting more apologies from financiers who presided over the market collapse.

You may recall a similar flurry last year, when Lloyd Blankfein, the chairman and chief executive of Goldman Sachs, was widely credited for having apologized for his firm’s role in the financial crisis.

We did not buy it then; Mr. Blankfein never said what he was sorry for or to whom he was apologizing. And we are not buying it now.

Mr. Prince says he 'could not' foresee the impending collapse, when he could have and should have seen it coming. Certainly, others did. Mr. Rubin has said that under his employment agreement, he was not responsible for the bank’s operations. But he was a towering figure at Citi, a source of its credibility and prestige. That implies responsibility, no matter what his contract said. Add all that to the 'I wasn’t the only one' context of both men’s comments, and their regret translates as, 'We feel bad about an accident we were powerless to prevent.'

Except that the financial crisis was not an accident and they were not powerless. The crisis was the result of irresponsibility and misjudgments by many people, including Mr. Prince and Mr. Rubin. Citi, under their leadership, epitomized the financial recklessness that ruined the economy.

A Seattle Times columnist was even more harsh, calling Rubin a "very well paid boob," and:

Rubin was barely contrite and went back to his meme of 'who knew?,' adding the unintended comedic line about how leaders shouldn't be responsibility for the 'granularity' of little things -- such as $40 billion in essentially fraudulent collateralized debt obligations. Rubin was being paid more than $100 million as a senior adviser to Citi while it headed toward collapse and a $45 billion taxpayer rescue. So 'granularity' is in the eye of the beholder.

Commission vice chairman Bill Thomas said, 'Apparently you get to the top without having had to experience anything the people underneath you do. You don't have a comprehension. You're not informed, but you get to make all this money on the upside, but there's no downside.'

Indeed. Rubin and Citigroup epitomize the public policies and the corporate practices that brought the economy to the brink of a new depression.

As Bill Clinton's Treasury Secretary, Rubin championed financial deregulation and the financialization of the economy as manufacturing was hollowed out. Among other things he helped keep derivatives from being regulated and encouraged the creation of 'too big to fail' institutions such as Citi. Rubin led the battle to dismantle Glass-Steagall, so Citi and its giant siblings could gamble in investment banking, while also doing commercial banking and insurance. An alum of Goldman Sachs, Rubin was fine with big compensation for executives, even if their leadership wrecked the bank (Prince walked away with $120 million). Funny how Rubin was offered the lucrative Citi position after he left such 'government service.'

So what does this tell us about health care? As we noted before, while Robert Rubin is no longer on the board of Citigroup, he has been a member of the Harvard Corporation since 2001. The Corporation is ultimately responsible for the US' oldest and most prestigious university, its equally prestigious medical school and teaching hospitals. Yet under Rubin's stewardship, Harvard's endowment has fallen a prodigious amount, and Harvard and its Partners Healthcare hospital system have faced charges of conflicts of interest and various sweetheart deals. Perhaps this is to be expected when the ultimate steward may be a "very well paid boob."

While Rubin's impressive resume and wealth in 2001 may have provided a rationale for his appointment to the Corporation, what would be the rationale for his continuing service?

As we have pointed out, as the world economy was driven to near ruin by "masters of the universe," some of the same also became leaders of academia and academic medicine in their spare time. Maybe this made sense 10 or 20 years ago, but why does it still make sense? On the other hand, now that we understand how bad the leadership of finance really was, it is a little easier to understand why the leadership of health care has become so bad.

Harvard Cut Money for Primary Care "Step-Child"

This story, about cuts in the funding for Harvard Medical School's minimal program in primary care, has received little attention in the US. I was alerted to an article about it in the Harvard Crimson by a news article in the British Medical Journal that was picked up by Medscape.

Here are the main points, from the Crimson article,

Harvard Medical School has suspended funding for its Primary Care Division as part of a broader departmental restructuring effort, prompting students and faculty to circulate a petition calling on HMS Dean Jeffrey S. Flier to reaffirm the School's commitment to primary care education.

According to Nancy J. Tarbell, dean for academic and clinical affairs at HMS, the School had provided roughly $200,000 in funding each year to the Division. She said that the Division, which has not been disbanded but whose structure and administration is being reviewed, will remain affiliated with HMS. The Division has always been funded exclusively by the Medical School, according to HMS spokesman David J. Cameron.

'The reorganization of this division is really a narrow administrative issue,' said HMS Dean of Medical Education Jules L. Dienstag. 'It has nothing to do with the commitment of HMS to primary care, which is unchanged, undiluted, and undiminished.'

Nevertheless, as of Thursday afternoon, over 450 individuals had signed the online petition, including students, residents, faculty, and physicians from HMS and its affiliated hospitals. The petition calls for the School's administration to present a detailed plan of action for expanding institutional support despite the budget cut, expand loan forgiveness initiatives that financially enable students to pursue primary care specialties, support efforts to strengthen primary care in a reformed national health care system, and solicit and implement proposals from the HMS community to improve primary care education.

The Division was previously part of the HMS-HPHC jointly administered Department of Ambulatory Care and Prevention (DACP), which Tarbell said was recently restructured and renamed as the Department of Population Medicine and placed solely under HPHC's administrative purview in order to better reflect its core research and teaching activities.

Tarbell, who seemed unclear about what actual services were provided by the Division, said that the HMS administration is conducting a 'comprehensive review' of the its programs and that the Division has historically been 'relatively small.'

'When you look at [HMS's primary care initiatives] as a whole, at the big picture, you can't make the argument that funding has decreased for primary care training at HMS,' Tarbell said, adding that the school is expanding its funding this year for a required third-year medical clerkship from $600,000 to $800,000.

But despite administrators' reassurances that primary care education remains a top priority at the Medical School, some students and faculty maintain that the cut sends a negative message about the School's priorities, which they say have traditionally centered on specialty medicine and research. And the petition expressed concern about the future of outreach activities previously coordinated by the Division, including a Primary Care Mentorship Program, if funding or a Divisional home were to be eliminated.

'Primary care, from the perspective of the Medical School, was sort of a stepchild [in the past], and not much was done to provide students with information about primary care careers or to connect them with role models in primary care,' said Susan Edgman-Levitan, executive director at The John D. Stoeckle Center for Primary Care Innovation.

'Harvard's goal has always been to create leaders in medicine, with regards to basic science and new developing fields. Primary care has never really been a major emphasis, although I think on a global basis, Harvard has put a major emphasis on reaching out to the rest of the world,' said Martin P. Solomon, an assistant clinical professor of medicine at the Brigham. 'People like Jim Kim and Paul Farmer are all very important and have had an enormous impact on primary care worldwide, but in our own backyard, Harvard has had very little impact. [Primary care] is not ... glamorous....'

Indicating where the medical school's priorities lie, during the month in which the cuts were announced, Dean Flier took the time to open, and thereby endorse the meeting of ACRE (the Association of Clinical Researchers and Educators). The grandiosely named group promotes unrestricted financial relationships among medical academics and health care corporations, and dismisses those concerned with the effects of these relationships (see our posts here and here).

It is true that the cuts in primary care occurred at a time of general belt-tightening, due to the sudden decline in the value of Harvard University's endowment. However, as reported in a muck-raking article in Vanity Fair by Nina Munk, even the reduced endowment is still the largest of any university in the US.

Furthermore, primary care generated relatively small costs to the university. However, as reported by Vanity Fair, the current financial crisis was generated on the University's tremendous building binge during the years the endowment seemed like it would grow forever:

... the university is facing the onerous financial consequences of over-building. Consider this: Over the 20-year period from 1980 to 2000, Harvard University added nearly 3.2 million square feet of new space to its campus. But that’s nothing compared with the extravagance that followed. So far this decade, from 2000 through 2008, Harvard has added another 6.2 million square feet of new space, roughly equal to the total number of square feet occupied by the Pentagon. All across campus, one after another, new academic buildings have shot up. The price of these optimistic new projects: a breathtaking $4.3 billion.

The University also rewarded the managers of the endowment with pay sufficient to make them very rich.

By the early 2000s, Harvard’s top moneymen were making as much as $30 million to $40 million a year. Finally, in 2003, seven members of Harvard’s class of 1969 wrote a strong letter of protest to the university’s president, Larry Summers. They spoke out loudly, publicly, informing any member of the media who would listen that compensation at Harvard Management Company was 'obscene.'

At other American universities, where investing money for the institution is regarded as a kind of public service, Harvard’s swagger raised deep suspicion. 'Harvard became a bunch of mercenaries,' the chief investment officer of another big private university told me.

Most of these managers decamped, taking the money with them, before the endowment value crashed.

By 2005, Jack Meyer had had enough. After 15 years at Harvard Management Company, frustrated by the circular fights about compensation, and sick of justifying himself to Summers and Rubin, he walked out and started his own giant hedge fund. Shamelessly, he took many of Harvard Management Company’s best people with him, about 30 portfolio managers and traders, along with the chief risk officer, chief operating officer, and chief technology officer. Harvard’s trading floor was decimated.

No one in the current or past Harvard leadership has yet been held accountable for the overspending that seemed predicated on the absurd (at least in retrospect) assumption that the endowment would continue to grow indefinitely.

At some point in the last five years, the men and women who run Harvard convinced themselves that the endowment would grow at double-digit rates forever. If Harvard were a publicly traded company, those people would have been fired by now.

Because of the case of the Harvard endowment, the US Internal Revenue service is reportedly investigating how university endowments were run (e.g., see Reuters).

But meanwhile, primary care, already a step-child, was cut.

The case of primary care at Harvard shows how the leadership of academia, and academic medicine in particular, has become entranced by the glamorous, the glitzy, the high-tech, and the prospects of wealth to be made by their pursuit, while neglecting the core academic and health care missions that are the reasons for the existence of universities and medical schools.

No wonder US health care is in a crisis. Those who want meaningful health care reform should find a way to push academic medicine to uphold its mission rather than enrich and glamorize its leaders, and to allow health care professionals to reaffirm their professionalism (regardless of past interpretations of US anti-trust law to the contrary).

ADDENDUM (5 August, 2009) - see more comments on Harvard's failed governance here on the ACTA Blog.