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US: Six universities failed to report $1.3bn in foreign funding

An investigation by the US Department of Education has found that six universities failed to report receiving in excess of US$1.3 billion from foreign sources over the past seven years, despite having a “clear legal duty” to do so.

The Department of Education has investigated six universities, claiming they have not reported in excess of 1.3bn of foreign money. Photo: Wikimedia/Fry1989

The report noted that Chinese money comes with “strings that can compromise academic freedom”

MIT, Georgetown University, Cornell, Texas A&M, Rutgers University and the University of Maryland were all investigated to see whether they were in compliance with Section 117 of the Higher Education Act.

“There is a lot of confusion… because the department has never issued formal guidance”

Under the Act, universities are required to report to the Federal agency statutorily defined gifts from, and contracts with, foreign sources.

The findings of the investigation were revealed in a letter by Reed Rubinstein, the principal deputy general counsel of the DoE to Rob Portman, chairman of the Senate Permanent Subcommittee on Investigations, Homeland Security and Governmental Affairs Committee in November.

However, the letter has come under criticism from the American Council on Education, who claim it is “rife with inaccuracies and distortions”.

According to ACE, the DoE has failed to clarify the current requirements so that they are “clear and unambiguous.”

ACE also criticised the department for proposing an expanded information collection process that, according to the council, imposes a vast array of new requirements far exceeding the language of the statute.

Sarah K. Spreitzer, director of the Department of Government and Public Affairs at ACE, told The PIE that her organisation took issue with the figure of 1.3bn because they are not sure what the department are including under that figure.

“There is a lot of confusion amongst universities because the department has never issued formal guidance and so universities have been reporting, in a lot of cases, in good faith,” she said.

“But the department is now expanding what they believe should be reported. If you look at the investigatory letters, they ask for a lot of information that goes beyond the Section 117 statute.”

The DoE began their investigation in response to the Permanent Subcommittee on Investigations Homeland Security and Government Affairs Committee’s report entitled “China’s Impact on the U.S. Education System,” which was released in February of this year.

The congressional findings said that foreign government spending on US schools “is effectively a black hole” because US colleges and universities fail to report foreign money as required by law.

“The department is now expanding what they believe should be reported”

It found that the Communist Chinese government invests strategically in US education through Confucius Institutes and other vehicles.

Additionally, it found that the public lacks an accurate or complete picture of China’s overall spending because US colleges and universities “routinely” fail to report foreign money (nearly 70% of colleges and universities failed to report in this case).

The report noted that Chinese money comes with “strings that can compromise academic freedom”.

The Doe’s consequent investigations into the six universities found that one had received research funding from a Chinese multinational conglomerate to develop new algorithms and advance biometric security techniques for crowd surveillance capabilities.

According to Rubinstein’s letter, one university had multiple contracts with the Central Committee of the Communist Party of the People’s Republic of China.

Another university accepted funds from the arm of a foreign government to create an “academic” centre expressly for the dissemination of propaganda and to conduct other “soft power” information activities.

Other examples of Chinese influence included one university promoting a “Talents” program through a Chinese company with close ties to the Communist government.

Another university received gifts from a foundation suspected of acting as a propaganda and influence front for the Chinese Communist government.

In the letter, it was stated that one university had a relationship with Kaspersky, a Russian company that has been banned from contracting with the US government.

It also stated that five of six universities reviewed have or had multiple contracts with the Chinese telecommunications company Huawei,  a company that has been the subject of US national security and trust concerns.

ACE’s president Ted Mitchell wrote his own letter to Rob Portman where he criticised the department for making it harder for universities to comply fully with foreign gifts and contract reporting requirements.

He also responded to the investigation’s findings on the relationships between Huawei and Kaspersky.

“The letter fails to note that Huawei was not listed on the Bureau of Industry and Security entity list until May 2019 and there was no final rule regarding Kaspersky and government contracts until September 2019,” he said.

“Therefore, until recently, there were no federal requirements stopping or discouraging a university, or any US organisation… from engaging and working with those companies.”

“There were no federal requirements stopping… a university… from engaging with those companies”

Mitchell blamed the department’s “continuing punitive and non-responsive actions” towards Section 117 compliance, saying it had caused many institutions to be afraid of asking questions for fear of being investigated.

“This runs counter to the goal of enhanced transparency of foreign gift and contract reporting,” he added.

The Department has developed and released an information collection pursuant to the Paperwork Reduction Act, which it says will improve reporting accuracy and provide for “meaningful public access” to the data as required by law.

ACE has responded to this new information collecting process, saying that it “unlawfully exceeds the authority granted to it by Congress” in Section 117.

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