Oxford and Cambridge colleges will be hauled before Parliament after an investigation by this newspaper revealed that many are funnelling hundreds of millions of pounds into secretive offshore funds.
Using Freedom of Information requests, Cherwell and Varsity, the Cambridge student newspaper, obtained and analysed the full investment portfolios of over 40 Oxbridge colleges, providing an unprecedented insight into how the ancient institutions invest their multi-billion pound assets.
The responses reveal that multiple Oxford colleges invested almost £150m in a network of funds registered in tax havens stretching from Jersey to the Cayman Islands. These include the same offshore funds that provoked outcry last November after being identified in the Paradise Papers leaks.
One year on, St Catherine’s College Oxford still holds investments in two funds managed by Coller International, the private equity firm in the offshore financial centre of Guernsey, that were revealed by The Guardian last year to have past links to offshore oil and gas exploration.
The disclosures also reveal how Oxbridge colleges directly invest tens of millions of pounds in fossil fuel, arms, and tobacco companies, despite growing pressure from students and academics to divest their endowments.
John Mann MP, Chair of the House of Commons’ Treasury Sub-Committee, which is carrying out an inquiry into tax avoidance and evasion, claimed he would call Oxbridge colleges to Parliament to address the findings.
“Oxford and Cambridge colleges have attempted to draw a veil of secrecy over their funds,” Mann said. “They will be called to Parliament to account for this behaviour and how they intend to remedy it. Oxbridge colleges were already on our radar, and this exposure greatly assists in moving them into our agenda.”
Other Oxford colleges investing a combined £144.9m in offshore funds domiciled in tax havens including Jersey, Guernsey, Cayman and Bermuda include Exeter, Hertford, Keble, Merton, New, Pembroke, Queen’s, Somerville, St Peter’s, Trinity, and University. New College is Oxford’s biggest offshore investor, with a combined £118.611m invested in three offshore funds based in Cayman, Guernsey and Jersey
There is no suggestion that colleges – who register as tax-exempt charities – are avoiding or evading any UK taxes by investing in offshore funds.
However, critics say that the only motivation for investing in the offshore jurisdictions is greater secrecy, fewer regulations, and lower taxes.
Prem Sikka, an emeritus professor in accounting at the University of Essex, last year questioned the ethics of universities sending their endowments offshore.
He told The Guardian: “All the Caymans offer is secrecy and tax avoidance. There is nothing else there. It’s not as if this is a place actively engaged in advancing science, research or human knowledge.”
Cherwell’s findings prompted fresh criticism over the transparency of colleges’ investments.
Alan Cobha, CEO of the advocacy group Tax Justice Network, said: “The colleges might claim that these holdings in financial secrecy jurisdictions are just ‘business as usual’ for the offshore asset industry.
“But the public might expect some kind of leadership in transparency and accountability from these institutions, which are also leading players in UK education – and, of course, significant beneficiaries of taxpayers’ money, and of charitable status.”
St Catherine’s Oxford and Trinity Cambridge continue to hold investments in Coller International Partners V – identified in the Paradise Papers as having invested $1bn in Royal Dutch Shell, which in turn funded oil and gas production and exploration projects.
St Catherine’s bursar, Fram Dinshaw, defended the Coller investment, saying the college most recently held $3,892 in the fund “as part of its wider endowment strategy”.
He told Cherwell: “Offshore structures for investment partnerships are entirely legal and commonly employed investment vehicles that provide multiple benefits quite unconnected with tax avoidance to their investors. The fact that the college is itself a tax-exempt charity makes any link in our case to tax avoidance evidently absurd.”
Recent data shows Trinity still invests £1.1m in the fund. A college spokesperson said: “As a charitable institution, Trinity ploughs all income received from its investments into education and research, and the maintenance of the College’s historic buildings and library collections for future generations.”
Oxford bursars stressed that their offshore investment structures were legitimate.
A spokesperson for Pembroke told Cherwell: “As with other Colleges, Pembroke holds long term investments in order to generate returns which are vital to meeting our annual expenditure on core academic activities. Pembroke currently has some international investments which are held through professionally managed funds.
“However, as a charity, we are not liable for UK tax on income from our worldwide investments.”
A University College spokesperson said the college is not due to pay tax on its investments and “uses its investment income and gains to provide essential support to its charitable higher educational purposes.”
St Peter’s said its investments were regulated by the UK’s Financial Conduct Authority.