Six Questions for Charles Ortel about the Shady University that paid Bill Clinton $17 million to be its Honorary Chancellor


We’ve heard a lot about problems surrounding Trump University, which sounds like a pretty big scam. We’ve heard a lot less about Baltimore-based Laureate Education, which is one of the world’s largest for-profit schools. Unlike its major American competitors, most of its operations are overseas in little regulated countries. Its main area of business is Latin America, where it has more than 30 schools.

On the campaign trail, of course, Hillary Clinton is a staunch critic of privately run universities and has claimed as this excellent Sunday Times story put it yesterday, that students “find little support once they actually enroll, or they graduate and discover that, when it comes to finding a job, their degree isn’t worth what they thought.”

But Hillary has close political ties to Laureate and for five years Bill was Honorary Chancellor of the company’s universities; he got paid about $17 million for part-time work. Most of his job appeared to be flying around the world and being photographed at events with smiling university students.

Meanwhile, Laureate has repeatedly been sued by students, in the U.S. and abroad. Some claim they were recruited fraudulently and bilked out of huge sums of money for a less then stellar education experience. Laureate has attempted to go public and issued a multi-billion IPO filing, but it was riddled with red flags and failed to launch.

Chales Ortel is perhaps the leading expert on the Clinton Foundation. He is an independent financial expert, an enemy of crony capitalism, a former managing director of Dillon, Read & Co., and his research helped expose massive financial fraud by GE, GM, and AIG before the 2008 global financial meltdown. (For more on his work on the foundation, go to

This interview has been lightly edited for length and clarity.

Q1: When did Laureate get started and tell me a little about its founder and CEO, Douglas Becker? What sort of business and educational expertise did he bring to the table?

A: Laureate was founded in 1991 out of a business called Sylvan Learning Systems which was focused on helping students perform better in K-12 classes and on standardized college tests. By 2003, after Becker and his team took it over, Laureate had turned to operating for-profit college and university campuses, both online and physical, domestic and international.

Becker’s official biography is silent on his own educational background but it appears that he never attended college himself. One account suggests that he turned down Harvard to work at a Computerland store in Baltimore and develop venture projects. An earlier conflicting account in the New York Times proposes that Becker graduated from Gilman, an elite Baltimore area prep school but then declined an offer from the University of Pennsylvania as a pre-med student. Whatever the truth of his mysterious background, it’s ironic that the founder and major shareholder of Laureate University skipped college himself.

Q2: When did Bill Clinton get involved and what did he do for his $17 million? Is he still involved?

A: By 2007, shortly after going private in a leveraged buyout transaction, Laureate formed a “joint venture” with the Clinton Foundation through its purported charity “Clinton Global Initiative.” This joint venture was called “Clinton Global Initiative-University” or CGI-U.

CGI-U’s operations are murky. For many years, Laureate didn’t even disclose its operating and financial results to the IRS or New York state tax authorities. Of special concern is Laureate’s failure to reveal whether it had any “related party” deals with  the Clinton Foundation or if Laureate investors compensated members of the Clinton family or contributed to Hillary Clinton’s political campaigns.

Bill apparently began part-time work as “Honorary Chancellor” of Laureate in 2010 and stayed on for five years. All told he was paid more than $17 million in cash compensation. It’s not clear if he or any family members received equity interests in Laureate or in various investment vehicles that controlled Laureate.

Bill seems to have served as a roving goodwill ambassador, traveling to foreign campuses during his term. So far, it’s impossible to know just what he did that might justify paying him $17 million for this part-time assignment. It’s especially troubling when you compare his pay to what top full-time university presidents get paid, at which point Clinton’s compensation looks especially dubious.

Q3: What about other ties between Becker and Laureate with the Clinton family and its foundation? Is he a donor to the foundation or to Hillary’s campaign?

A: Becker has been a contributor to Hillary Clinton’s political campaigns and to the foundation, apparently to the tune of between $1 million and $5 million. It also has a number of joint “educational” programs with the foundation, which helps it promote itself as a legitimate company and attract new students.

Q4: Did Laureate receive any support from the U.S. government when Hillary Clinton was secretary of state, or after she left?

A: In 2012, Laureate announced plans to file a $billion IPO but it was unable to launch it due to investor concerns. Just as Hillary Clinton finished her term as Secretary of State in January 2103, the International Finance Corporation invested $100 million in Laureate equity securities. More investment funding came in from an IFC-managed fund and the Korean sovereign wealth fund, bringing a total of about $200 million in purchase Laureate securities.

The IFC and its sister organization the World Bank are heavily supported by the U.S. government. Jim Kim headed the World Bank at the time. He was a founder along with Dr. Paul Farmer of Partners in Health, a charity on whose board Chelsea Clinton serves. Meanwhile, Farmer has long served on the board of Clinton Health Access Initiative, Inc.

Since receiving this timely cash injection from the IFC — Laureate has repeatedly had serious cash flow problems — the company revived its plans to go IPO and has announced numerous underwriters, among them JPMorgan, Citigroup, KKR and Goldman Sachs. But nothing has come to fruition with these announcements either, perhaps because the company’s fundamentals are so shaky.

So far, there has been minimal disclosure by Laureate, the IFC and especially the Clinton Foundation about why the IFC and its co-investors elected to purchase $200 million of equity securities in Laureate in 2013. Moreover, these documents do not reveal if money was channeled to Clinton family members for speeches or other compensation they received from Laureate investors.

Q5: So how have Laureate schools performed? And why do you think so many are located overseas, especially in South America? Is there less regulation there than in the U.S.?

A: Financial disclosures to the Securities and Exchange Commission are worrying, especially those involving “Risk Factors” and potential lapses in the area of “financial controls.” At headline level, these financial statements show a complex entity with far-flung international operations that generates revenues but may have great problems producing profits and hence positive cash flows. In addition, Laureate has mammoth total debts and scant and dwindling shareholders’ equity.

There are many fine publicly-supported colleges and universities out there, here in the United States and abroad. Laureate, which is run by a politically-connected businessmen and educational dropout has a goal of getting the maximum return on the dollar for its investors. Becker himself has profited nicely from Laureate, though it’s not at all clear that its students have reaped great intellectual rewards or training for the future.

As for regulation, each nation takes a different approach. Many actually bar operation of for-profit colleges and universities, including some in which Laureate is lobbying to do business. In Chile, regulators refused to allow Laureate to operate, despite a significant push by the company.

Q6: The Trump University story has received notable coverage but the Laureate story has, until recently, gone relatively unnoticed. How do they compare in size?

A: In New York state where Donald Trump is based and where CGI-U also has been operating, regulators normally take their jobs seriously. They do what they can to defend vulnerable students from paying large fees and taking out big loans.

Trump University had around $40 million in cumulative reported revenues. while Laureate is a multi-billion dollar. I am not familiar with the intricacies of the Trump University matter, but I do think that regulators need to examine carefully the claims made by any entity that holds itself out as an institution of higher learning and particularly if it competes with nonprofit schools and targets vulnerable students who may not be prepared to do thorough due diligence on assertions made in marketing materials.

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