In mid-May of last semester, a small shock coursed through Butler, momentarily jolting many of my friends and myself from our finals-induced stupor. The Panama Papers had just been released by the International Consortium of Investigative Journalists, and it appeared that Columbia was listed among the thousands of international shareholders shamefully hiding their taxable dollars offshore. A Facebook friend posted, “you start to think that Columbia can't get much more corporate and then you find out that they have LITERALLY established shell corporations in the Cayman Islands.” Even the New York Post and Business Insider joined in on the fun, writing articles with titles like “Meet the New York hotshots exposed in the Panama Papers."
The problem was that what the headlines alleged just wasn’t the case at all. While the headlines would have you believe that Prezbo and the University Trustees were embroiled in a glamorous analog to Pizzagate, as with most scandals, the reality was a lot less incriminating. Sometimes, even major news organizations seize unverified stories simply because they coast along with the prevailing winds.
First, a clarification: Columbia was listed in the Offshore Leaks, not the Panama Papers. While both leaks were processed and released by the ICIJ, the Offshore Leaks only date until 2010 and are completely unrelated to the more recent leaks through 2016.
More importantly, the ICIJ did nothing to fuel the idea that Columbia was setting up shell corporations or offshoring its money. The ICIJ gives the following disclaimer when you first enter its website: “There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly."
So how law-abiding was Columbia? I decided to actually look into the “offshore entity” Columbia was tied to: a Chinese company called Haton Polymer and Fibre Corp., which, as the name suggests, was a major polymer distributor. In 2010, the company was bought by China Lumena New Materials, a major player in the “polyphenylene sulfide resin” industry (one that is probably incredibly impressive in some social circles).
After some clicking around, I found myself on a 460-page financial disclosure document detailing Lumena's purchase of Haton. On page 271, I unearthed my ticking bomb: The trustees of Columbia invested roughly five million dollars into Haton in the form of a convertible promissory note, a kind of loan which would allow the trustees to claim preferred shares of the company’s stock after a certain amount of time passed (in this case, it was 150 days).
Columbia bought the convertible promissory notes on April 26, 2007, and they were converted into preference shares on July 20 of the same year. As of June 30, 2010, there were no outstanding convertible preference shares, which means Columbia has sold all of its stock in the company.
In other words, Columbia’s endowment invested in a Chinese polymer company that was later bought by another Chinese polymer company. The first company—Haton—was the force that blighted Columbia in the ICIJ archives; when you click on Haton’s Offshore Leaks entry, you’re treated to a web of addresses and intermediaries that sprawl from Hong Kong to the Caymans.
Columbia was probably implicated in the Offshore Leaks simply because its investment was detected among the slew of data about the 130,000 accounts. The University did nothing wrong.
Ironically, things got a lot more scandalous after Columbia exited the picture. In April 2014, Lumena suspended its trading on the stock market amid reports that the company grossly misrepresented its production and revenue; shortly thereafter, a chairman and one of their biggest shareholders apparently went completely AWOL. According to a report published by Emerson Analytics, the Lumena empire “was a sand castle built with fraud.”
But again, none of the salacious stuff involved Columbia.
Regardless, the New York Post, Business Insider, and the innocents of my News Feed were convinced that Columbia was doing some kind of illegal money-hiding in a tax haven. This would be a bit silly, because as a nonprofit institution Columbia doesn’t even pay taxes to begin with.
The speed with which people elected to believe that Columbia had “LITERALLY established shell companies” isn’t totally shocking. The idea of a major university committing global espionage has all the makings of thrilling, schadenfreude-induced clickbait. And the fact that the ICIJ website didn’t give a huge amount of context or background information on the Columbia findings also may have contributed to the erroneous assumptions people made. But as a bit of digging revealed, Columbia has no plasticky blood on its hands.
Untruths, of course, have a tendency to float into public consciousness, especially if they confirm a prevailing worldview.
Take, for example, Donald Trump’s recent announcement on Twitter that he had prevented Carrier from outsourcing 1,000 of its jobs to Mexico. On Breitbart and other pro-Trump crevices of the Internet, people rejoiced. Online commenters on Breitbart’s website made claims like, “Donald Trump accomplished more in 3 weeks before being sworn in than Obama in 8 years.” That is assuredly false: Obama created about 15 million jobs during his time as president.
And if we go even further, Trump’s boasts are downright pathetic. Carrier is still shipping 1,400 jobs to Mexico and still managed to secure a $7 million tax break for its purported magnanimity (or in Trump’s world, MAGAnimity). Bernie Sanders speculated in the Washington Post that the alleged deal will inspire other corporations that weren’t even considering outsourcing their jobs to threaten to do so, just so they can get a Trump tax break too.
It might seem dramatic to equate a minor conspiracy circulated by the Post with a major announcement tweeted by a strongman president-elect. But how different are the two really? The Panama Papers announcement came seemingly out of nowhere, and people quickly seized upon the apparent news of Columbia’s wrongdoing; Trump ejaculated his Carrier announcement into the Twittersphere, leaving his dutiful legions of Nazi frogs (and admittedly, many Republicans and Democrats) to cheer.
Oddly, one could argue that the Panama Papers faux-scandal and the Carrier tweet illustrate a similar phenomenon: Anyone can be seduced by their own narrative and assumptions. For whatever reason (be it resentment about high tuition prices, a conspiracy-hungry mindset, boredom during finals), some students were happy to believe that Columbia actually had offshore accounts in the Cayman Islands. For other reasons (legitimate concerns about joblessness, unshakeable assurance that Obama was terrible for the economy, dedication to the doctrine of MAGA), Trump’s supporters think that an occasional display of autocratic coercion will save millions of industrial employees.
If students didn’t bother to fully investigate whether Columbia was rightfully listed as an offshore money hoarder before sounding off on social media, why should Trump supporters be expected to hold their beloved authoritarian accountable? In a time when the truth can be bastardized by a 140-character sentence, we need to start holding everyone, including ourselves, accountable for what we say and what we believe. So resist the allure of scandal, examine unsexy documents like financial disclosures, and don’t take people’s claims for granted.
In short, we’d better start digging—out of the Cayman sand and toward the truth.
Elena Burger is a Barnard College junior majoring in history with a cautious minor in economics. You can follow her on Twitter @VirtualElena. Unaccompanied Data Miner runs alternate Wednesdays.
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