Report outlines tobacco policies

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Citing previously secret industry documents, a report by researchers at the University of California at San Francisco School of Nursing claims tobacco company Philip Morris used the promise of donating and the threat of removing research funding to discourage Yale and other medical schools from divesting Philip Morris stock throughout the 1990s.

Though the University sold its $2.8 million Philip Morris holdings in spring 2001, a large portion of the endowment is currently held by private managers not prohibited from investing in tobacco companies. Nearly 15 years after Yale stock holdings in tobacco companies first raised ethical concerns among the University’s investment overseers, Yale has still not officially divested from tobacco stocks.

Yale President Richard Levin said Yale investments change rapidly from day to day and outside money managers handle individual stock decisions.

“I couldn’t say definitely today whether the University holds any tobacco stocks,” Levin said. “The last time I checked about a year ago, Yale did not own any tobacco stocks. There was a period of several years where the University did not own any tobacco stocks, but I do not know offhand if that is still the case.”

Though Yale has no explicit policy against tobacco investments, other universities — including Harvard, Stanford, UCSF and Johns Hopkins — have formally divested tobacco stock over the last 15 years. In both 1991 and 1998, Yale considered formal divestment but ultimately voted against it.

“After a lengthy and deliberative process, the corporation voted not to divest of tobacco holdings, but to continue to exercise [its] voice as a shareholder, encouraging the companies not to market to minors,” Levin said.

Representatives from the University Investments Office declined to comment for this article.

Nathaniel Wander, a co-author of the UCSF report, said that during meetings with university investment advisors at Yale and Johns Hopkins, Philip Morris representatives described grants made by company executives to the universities, in an effort to dissuade divestment.

Wander’s report, available to the public online along with the recently disclosed Philip Morris documents, cites a list of the company’s talking points at a 1991 meeting with the Yale Advisory Committee on Investor Responsibility. The list included a section named “long relationship with Yale,” which highlighted donations from Philip Morris, including over $2.5 million and a tennis center given by former Philip Morris chairman Joseph Cullman, a $1 million grant to the School of Management and a potential future $900,000 grant to Yale’s Bush Center for Child Development and Social Policy.

Wander said he thought Philip Morris’s efforts were ultimately effective, pointing to Yale’s decisions against divestment and Johns Hopkins decision to divest quietly without much publicity in 1991.

“I would say based on my research, there is no question that the promise of funding and threat of removing that funding influenced universities’ decisions,” Wander said.

But Yale Law School professor Peter Schuck, the ACIR chair in 1991, said the group’s seven-to-one decision against divestment was not based on any fear of losing research funding, but on the practical considerations involved in divestment.

Schuck said the Philip Morris representative’s comments about grants and personal relationships at the 1991 meeting were nevertheless inappropriate.

“I was very offended by that,” Schuck said. “We stopped him and made it clear that that wasn’t what we wanted to hear.”

Schuck said he still stands by the ACIR decision against divestment because divesting stock in every company responsible for some social harm would be impractical.

“It is very difficult to make distinctions between products that are dangerous,” Schuck said. “You get on a slippery slope with regard to other products, like alcohol, for example. We saw tobacco was very dangerous — but our goal was to focus on helping those who did not consent to their exposure, such as young people.”

This slippery-slope argument was also listed among the talking points in the 1991 Philip Morris document, along with a reference to Law School professor John Simon’s suggestion in a 1983 letter to The New York Times that, at least in the case of South African divestiture, “shareholder vote and voice” would be more powerful tools with which to influence social change than divestiture.

But by 1998 Simon, who co-wrote Yale’s investment ethics guidelines in his 1972 book “The Ethical Investor,” said he believed tobacco investments created an exception to his rule of using “voice” before “exit” when asked to advise a Yale Corporation financial committee.

“With tobacco, you have one of those cases that fits the exception,” Simon said. “You can yell and scream and vote as a shareholder, but the company will still market the stuff to minors in the third world, and kill hundreds of thousands of people in this country every year.”

Simon said he disagreed with the slippery-slope argument, because he saw a difference between tobacco and other potentially harmful products like alcohol and automobiles.

“I said that was not a proper argument, because cigarettes kill when they are used as intended,” Simon said.

Attorney Nina Morrison ’92, the undergraduate member of the 1991 Yale ACIR who gave the minority opinion on divestment, said she tried to convince the group that Yale’s possession of tobacco stock was inherently wrong. She said a university should not finance its medical school with tobacco profits, and she is saddened that Yale has not formally divested its tobacco stock.

“After so much time, Yale is now lagging behind its contemporaries,” Morrison said.

Yale School of Management professor and current ACIR chairman Geert Rouwenhorst said he has not encountered any strong pressure to push the University towards divestment of all tobacco stocks. He said many students protested Yale’s investment in Farallon Capital Management at this past spring’s open ACIR meeting, but tobacco investments were not mentioned.

School of Medicine Dean Robert Alpern said it is not his place to advise Yale’s tobacco investments.

“It is a decision Yale as a university has to make, irregardless of whether or not there is a medical school attached,” Alpern said. “It’s certainly one of our missions as a medical school to promote public health.”