Give the Laureate money back, Bill (Clinton)

Priorities USA Action, a major super-PAC supporting Hillary Clinton, just returned a $200,000 contribution it received illegally from a construction company with federal government contracts. The super PAC returned the money after the contribution was disclosed by the Center for Public Integrity.

Hillary’s husband, Bill, should follow Priorities’ example and give up the $16.5 million he collected from Laureate Education Inc., a for-profit company with a sketchy record. Returning the money would also be consistent with Hillary’s condemnation of underperforming and deceptive for-profit education institutions.

Selling out as a corporate shill has rarely been so lucrative as it has been for ex-president Bill Clinton.

In 2010, he signed on to become an “Honorary Chancellor” for Laureate International Universities, part of Baltimore, MD-based Laureate Education Inc.

clintonlaureate

Former President Bill Clinton speaking as honorary Chancellor at Laureate Education

Laureate has 86 schools serving about 1 million students online and on physical campuses in 28 countries across the Americas, Europe, Asia, Africa and the Middle East.

bill-hillary-clinton-laureate

In return for serving as a front man for the privately held company, Clinton collected $16.5 million between 2010 and 2014. Laureate also has donated between $1 million and $5 million to the Clinton Foundation.

While Clinton worked for Laureate, he and the company consistently refused to say how much he was being paid, but an analysis of the Clinton’s tax returns revealed the numbers.

In the statement released with their tax returns, Hillary Clinton said of their financial success, “…we owe it to the opportunities America provides.” That’s one way to look at it.

Laureate aggressively marketed its relationship with Bill Clinton and it paid off.

New York Magazine described Bill Clinton as the “face” of Laureate. When Laureate secured approval to build a new for-profit university, Torrens University Australia, in Adelaide, South Australia (where for-profits are called “private” institutions), the headline in The Australian newspaper read: “First private university in 24 years led by Clinton.”

Bill Clinton resigned his Honorary Chancellor position at Laureate in April 2015.

If he’d done his homework before hooking up with Laureate, he’d have found a lot of reasons not to sign on (aside from avoiding blatant money-grubbing).

As New York Magazine put it, “While some of the company’s schools are highly ranked, others have been accused of low admissions and academic standards, “turbocharging enrollment” to boost revenues, and deceptiveness about tuition costs — the same troubling practices that caused the Obama administration to try to stanch the flow of federal-student-loan dollars to for-profit schools in the United States.”

So, Bill, a little advice. Rid yourself of this stain by returning the $16.5 million to Laureate or (preferably) donate it to a worthy education program (Not the Clinton Foundation). It’s the right thing to do.

 

 

 

Benefit corporations: no sure thing

Lots of progressives in Oregon are big on public affirmations of goodness. That’s why they love the idea of benefit corporations, such as Neil Kelly, Rogue Creamery, Metropolitan Group, Medolac and Good Clean Love.

But before Oregonians conclude that benefit corporations are by their nature more socially responsible businesses, think again, and do some rigorous research. The fact is, in some cases the designation is being used as little more than a way to add a patina of respectability to otherwise questionable firms.

For a truly inauthentic attempt at sincerity and goodness, look no further than Laureate Education, Inc. It announced plans earlier this year its plans to do a $1 billion initial public offering (IPO) that would make it the first publicly traded benefit corporation.

If you’ve heard of Laureate, it may be because of its connection to former president Bill Clinton. In 2010, he signed on to become an “Honorary Chancellor”, or paid shill to be more accurate, for Laureate. In return for serving as a front man for the privately held for-profit education company, Clinton collected $16.5 million between 2010 and 2014. Laureate also has donated between $1 million and $5 million to the Clinton Foundation.

In its IPO prospectus, Laureate says, “we may take actions that we believe will benefit our students and the surrounding communities, even if those actions do not maximize our short- or medium-term financial results.” There’s little in its history, however, that suggests such an approach is part of the company’s DNA.

“We recognized the enormous importance that society places on education as a public good,” said Douglas L. Becker, Founder, Chairman and CEO of Laureate. “This inspired us to create a culture that combines the ‘head’ of a business enterprise with the ‘heart’ of a non-profit organization. “

With one million students studying online and on campuses at 88 institutions in 28 countries, Laureate is currently a private company, but it plans to go public. The company grew out of the K-12 tutoring company, Sylvan Learning Systems, in 2004 when Sylvan was spun off.

Laureate was taken private in a $3.8 billion deal in 2007. Investors included KKR & Co., Soros Fund Management, Paul Allen’s Vulcan Capital, Steve Cohen’s SAC Capital Advisors, Citi Private Equity, Sterling Capital and others, all investors whose commitment to corporate citizenship and the public good is unclear.

Registration as a public benefit corporation is also no guarantee that the governance of a company will be friendly to shareholders.

Steven Davidoff Solomon, a professor of law at the University of California, Berkeley, has pointed out that Laureate’s form of governance is especially unfriendly to shareholders. While Laureate is listing its stock as a public benefit corporation, it will also be going public with dual-class stock, which will maintain its current owners’ control over the company. This includes K.K.R. which will indirectly hold a greater than 10 percent interest in the company.

This doesn’t make sense, Solomon argues. K.K.R. is out to sell its stake at the highest price possible, not benefit other causes. So one has to wonder how strongly Laureate will even pay heed to the public benefit standard.

Then there’s the question of whether Laureate’s schools operate in the best interests of their students.

It’s 5 schools in the U.S. include: NewSchool of Architecture & Design, San Diego, CA; Santa Fe University of Art & Design, Santa Fe, NM; Kendall College, Chicago, Il; University of St. Augustine for Health Sciences, St. Augustine, FL; and the online-only Walden University, Minneapolis, MN.

newschool

Consider their records on the U.S. Department of Education’s College Scorecard, an online system designed to help students, parents and advisers make better college choices.

For example, according to the Scorecard:

  • The average annual net cost of attending NewSchool is about twice the national average, only 50 percent of students return after their first year and the graduation rate after six years is only 33 percent.
  • The average annual net cost of attending Kendall College is more than twice the national average, only 57 percent of students return after their first year and the graduation rate after six years is only 45 percent.
  • At the Santa Fe University of Art & Design, only 31 percent of the students graduate within six years and only about half of those graduates subsequently earned, on average, more than those with only a high school diploma.

Laureate also operated The National Hispanic University in East San Jose, CA, but it closed in August 23, 2015. The San Jose Mercury News attributed the closure to the U.S. Department of Education reducing financial aid and online opportunities for students enrolled in programs that did not offer good prospects for employment. Other media reported that the school also failed to meet its goals in enrollment for online coursework.

It will be interesting to see how this company, that has a history of questionable payments to Bill Clinton, is $4.7 billion in debt, is burdened with high interest payments, has lost money every year since 2010 and has a habit of saddling its students with debt and low graduation rates pulls off its public benefit corporation charade.

It may be a hard lesson for a lot of true believers in benefit corporations.

Shameless: Bill Clinton and Laureate Education Inc.

During his 1992 campaign for the presidency, Bill Clinton proclaimed that if he was elected the county would benefit because it would “get two for the price of one”, him and Hillary.

Now there are indications that, with Hillary slipping in the polls, Bill plans to hit the hustings again to reinforce the “two for one” mantra. If that’s true, he may bring more controversy than help given his tarnished past.

Part of that past is his association with Laureate Education Inc.

Selling out as a corporate shill has rarely been so lucrative as it has been for ex-president Bill Clinton.

clinton

In 2010, he signed on to become an “Honorary Chancellor” for Laureate International Universities, part of Baltimore, MD-based Laureate Education Inc. In return for serving as a front man for the privately held for-profit education company, Clinton collected $16.5 million between 2010 and 2014. Laureate also has donated between $1 million and $5 million to the Clinton Foundation.

Logos Laureate

While Clinton worked for Laureate, he and the company consistently refused to say how much he was being paid, but an analysis of the Clinton’s tax returns in July revealed the numbers. In the statement released with their tax returns, Hillary Clinton said of their financial success, “…we owe it to the opportunities America provides.” Well, that’s one way to look at it.

Laureate aggressively marketed its relationship with Bill Clinton and it often paid off. New York Magazine described Clinton as the “face” of Laureate. When Laureate secured approval to build a new for-profit university, Torrens University Australia, in Adelaide, South Australia (where for-profits are called “private” institutions), the headline in The Australian newspaper read: “First private uni in 24 years led by Clinton.”

Bill Clinton at Torrens

Bill Clinton at Torrens

(Subsequent reporting on the school has, however, not been all that positive. The consensus world university rankings for Australia put Torrens dead last in a list of 41 Australian universities in 2015.)

Clinton resigned his Honorary Chancellor position at Laureate in April 2015. “Laureate students represent the next generation of leadership. I have seen a commitment to quality and leadership throughout the Laureate network, and I have enjoyed being a part of it,” Clinton said in announcing his resignation.

Had Clinton not resigned, Laureate likely intended to use its close ties with him to bolster a planned $1 billion initial public offering (IPO). In April 2015,

Clinton may hold the Laureate network in high regard, but if he’d done his homework he’d have found a lot of reasons not to sign on to Laureate’s marketing campaign (aside from avoiding blatant money-grubbing).

As New York Magazine put it, “While some of the company’s schools are highly ranked, others have been accused of low admissions and academic standards, “turbocharging enrollment” to boost revenues, and deceptiveness about tuition costs — the same troubling practices that caused the Obama administration to try to stanch the flow of federal-student-loan dollars to for-profit schools in the United States.”

Even Bill’s wife has been critical of for-profit colleges. “Unfortunately there are some programs that take people’s money and do not produce the results that were promised, and we’ve got to crack down on that and put them out of business,” Hillary said during a June 2015 event at Trident Technical College in South Carolina.

Laureate has 86 schools serving about 1 million students online and on physical campuses in 28 countries across the Americas, Europe, Asia, Africa and the Middle East. It’s 5 schools in the U.S. include: NewSchool of Architecture & Design, San Diego, CA; Santa Fe University of Art & Design, Santa Fe, NM; Kendall College, Chicago, Il; University of St. Augustine for Health Sciences, St. Augustine, FL; and the online-only Walden University, Minneapolis, MN.

Laureate also operated The National Hispanic University in East San Jose, CA, but it closed in August 23, 2015. The San Jose Mercury News attributed the closure to the U.S. Department of Education reducing financial aid and online opportunities for students enrolled in programs that did not offer good prospects for employment. Other media reported that the school also failed to meet its goals in enrollment for online coursework.

Laureate grew out of the K-12 tutoring company, Sylvan Learning Systems, in 2004 when Sylvan was spun off.

The company was taken private in a $3.8 billion deal in 2007. Investors included KKR & Co., Soros Fund Management, Paul Allen’s Vulcan Capital, Steve Cohen’s SAC Capital Advisors, Citi Private Equity, Sterling Capital and others.

In 2013, the International Finance Corp, part of the World Bank Group, joined the list of supporters when it made an equity investment of $150 million in Laureate “to expand access to career-oriented higher education in emerging markets and support the growth of Laureate’s global network of institutions.”