Modern kleptocracy thrives on the ability of kleptocrats and their associates to use their ill-gotten gains in open settings. This often takes the form of investing in high-end real estate or other luxury goods, which serves to both obscure the corrupt origin of the money and to protect it for future use. But there is also a subtler dynamic at play. The use of kleptocratic-linked funding or other forms of engagement in open societies to blur the illicit nature and source of the donation serves to launder kleptocrats' reputations, as well as their cash. This careful cultivation of positive publicity and influence empowers autocrats and their cronies. It also entrenches kleptocrats—and the regimes with which they are associated—in positions of power.
Universities and think tanks in open settings are prime targets for reputation laundering. The rapid internationalization of the higher education sector, as well as the swelling demand worldwide for Western education makes academic institutions particularly vulnerable to this form of transnational kleptocratic activity. Indeed, over recent years, there has been a major surge of foreign funding to U.S. and U.K.universities. The composition of fundraising has also changed. Major gifts comprise a growing share of donations, and a relatively small number of wealthy individuals contribute nearly 80 percent of gift-giving to universities.
These challenges also affect other open countries where foreign gifts traditionally have not been a major source of funding but are now actively being offered and sought. Countries like the Czech Republic and Germany have witnessed high-profile scandals involving funding from PRC-connected sources, both in exerting influence through opaque payments to faculty or through the application of Chinese law to donor agreements with the university. Such examples highlight the transnational nature of this challenge.
This report examines how foreign donors may engage with universities in open settings to launder their reputations. It draws on primary research as well as publicly available secondary data. In a survey of officers in charge of donations at U.K. and U.S. universities, the authors selected the higher education establishments most likely to attract significant funding from potentially illicit sources: the 24 Russell Group universities in the United Kingdom, and the Top 20 large U.S. universities as ranked by the 2020 edition of US News and World Report. The survey asked the respondents to share their institution's gift acceptance policies and the ways in which these policies have changed in recent years. The survey was designed to identify the role of university offices involved in the gift approval process and explain whether gifts are treated differently depending on specific criteria. In the United Kingdom, 17 out of the 24 institutions contacted responded to the survey. In the United States, however, administrators were reluctant to reply or did not respond; that said, many of the surveyed institutions when asked were under compliance investigation concerning the reporting of foreign funds. Although our findings are preliminary, they potentially capture similar funding trends and challenges confronting institutions of higher education in other open societies such as those of Australia, New Zealand, and Europe.