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. Last Updated: 07/27/2016

Harvard Partners Accused Of Theft

The U.S. government Monday accused a Russian legal foundation of stealing office equipment worth $500,000 in an acrimonious finale to an ill-fated economic reform program run by Harvard University.

Over the weekend, movers working for the Institute for a Law-Based Economy, or ILBE, cleared computers, books, desks and telephones out of a central Moscow office it had shared with its partner, the Harvard Institute for International Development.

Nearly all the equipment had been purchased with money from the U.S. Agency for International Development for programs to support economic and legal reforms in Russia. The U.S. government said the Russian foundation had no right to take it.

"The United States government very much regrets ILBE's action, which was taken despite repeated instructions from [the Harvard institute] and USAID not to take the property," said Olivia Hilton, a U.S. Embassy spokeswoman. "We are hopeful that ILBE will return all of the property immediately."

The alleged theft was the culmination of a rift between Russian employees of ILBE and foreign consultants on the payroll, who until recently were working together on Russian market reforms. ILBE was set up by Harvard to employ Russian experts working on legal reform, and has received funding from USAID, the World Bank and the British Know-How Fund.

But since at least April of this year, ILBE has been at the center of a USAID investigation into the misuse of U.S. technical aid for Russian reforms.

In May, USAID accused two top Harvard advisers, Andrei Schleifer and Jonathan Hay, of ordering ILBE to provide free investment services for Schleifer's wife, Nancy Zimmerman. The institute has fired Hay and Schleifer, but the investigation is still under way.

At the request of First Deputy Prime Minister Anatoly Chubais, USAID canceled part of a $57 million contract with the Harvard institute in June. All of the institute's economic reform efforts in Russia were supposed to have been closed out by the end of July, except for a tax reform project that will go on until December.

The alleged theft was apparently part of the division of the property that Harvard and ILBE had obtained using U.S. funds.

Last week, slightly past its deadline, Harvard provided a plan to USAID of how office equipment left over from the closed projects would be distributed. According to a U.S. Embassy official, about a third was to go to ILBE, a third to the tax reform project and the rest to various USAID-funded projects throughout Russia.

"We think that we came up with a fairly reasonable list of who got what," said the embassy official, who asked not to be identified. "ILBE clearly wanted everything."

The official suggested that ILBE might not have been interested in the equipment itself, but in computer files that could have fallen into the hands of investigators. "It may be that they think there's stuff on there that they'd just rather we not see," the official said.

Lester Gordon, who took over for Hay as the Harvard institute's field director for Russia, said he was baffled by ILBE's move.

"It seems like an irrational act," he said. "It's disappointing to have an institution that's supposed to strengthen the rule of law ... flouting the legal agreement" under which Harvard was to distribute the equipment.

The office, in the Citibank building at 8/10 Ulitsa Gasheka, was empty Monday except for a few institute employees. Building security produced a document, signed by ILBE director Sergei Shishkin, listing the equipment that had been removed Friday evening and Saturday morning: 45 desktop computers, 64 desks, 103 chairs and more. All that remained of the telephone system was a thatch of cut wires protruding from the wall.

"They broke into bookcases," said Olga Shargorodska, a librarian on the Harvard payroll. "They also took the library catalog with them and the software that goes with the catalog."

Hilton estimated that the equipment and books taken were worth about $500,000.

Shishkin could not be reached for comment Monday. Viktor Bakhorikov, an ILBE administrator, refused to comment.

According to Shargorodska, relations between the foreigners and the Russians at Ulitsa Gasheka began to deteriorate soon after USAID ended its contracts with the Harvard institute. Last month, she said, ILBE cut off the Harvard employees' access to e-mail and to international telephone lines. Gordon confirmed this.

"It was very sad at the end," said the embassy official.

The Harvard institute and USAID were aware of ILBE's intentions and had advised the building's security not to release any valuable equipment without the signature of David Weiler, the Harvard employee responsible for closing out the projects.

A letter to that effect from USAID regional legal adviser Mark Ward, dated Aug. 8 and addressed to Shishkin, was taped to the door of the director's former office.

"Any attempt to move this equipment would be a clear violation of your agreements with [the Harvard institute] and could amount to a theft of valuable United States Government property," stated the letter.

Still, the building's security let ILBE remove the equipment on Shishkin's signature.

"That's not our business," said one senior security officer, who asked not to be identified. "That's the business of ILBE and Harvard University."