Cambridge implicated in Paradise Papers leak
Many colleges invested millions in offshore funds to avoid paying tax
Leaked documents from the Paradise Papers have shown that several Cambridge colleges, as well as the University itself, invested in offshore funds, including a joint venture into fossil fuel extraction.
An investigation by The Guardian has revealed that tens of millions were committed to private equity funds in the Cayman Islands, in order to avoid taxes on hedge funds by use of 'blocker' corporations.
Some of the leaked papers showed Cambridge made a direct investment of $1.7m in Coller International, a private equity firm based in Guernsey, split between individual colleges and the University itself. Oxford also invested $3.4m in the scheme. One of the funds used is the largest of its type, standing at $4.8bn, over a fifth of which is invested in Royal Dutch Shell's technology and exploration fund. With increasing calls by student organisations to divest from fossil fuels, the revelation is likely to put further pressure on the University and the colleges.
Further investments into 'blocker' corporations include those into Dover Street, managed by Boston private equity firm HarbourVest, which holds the Gates Cambridge Trust. Originally set up by Bill Gates, the trust holds $4.5m in capital, which along with investments by Jesus and Magdalene (Oxford) is under the umbrella of Dover Street, avoiding hedge fund tax.
Regarding the offshore investments, the University told The Tab : "The Colleges and the University are charities and therefore their holdings in investments are tax-exempt in the UK, US and many other countries. This means there is normally no tax to pay.
"The fund arrangement, through which the University and Colleges invest, is standard for collective investments of this type. The fund is managed by a highly reputable investment advisor and, as is normal, the adviser makes the decisions about specific investments to be made by the fund.
"A divestment working group was set up by University council in May 2016 to consider the question of divestment from businesses involved in fossil fuel industries. The university is currently seeking views from a wide range of organisations and individuals. In addition to written submissions we are holding Town Hall meetings open to staff and students from across the University."
Regarding the prospect of divestment, a University spokesperson also said: "“The University’s investment approach was reviewed last year. Following the review the University then rejected full divestment in favour of a policy of ‘active engagement’ with fund managers."
"The resulting report made clear that the University had no directly held exposure to the most pollutive industries, such as thermal coal and tar sands, and no expectation of having any such exposure in the future. In relation to investments managed externally, there were only negligible holdings in these more polluting fossil fuel industries.”
For further information on fossil fuel investments by Cambridge Colleges, refer to our latest investigation into college finances.