The Department of Education opened an investigation into Penn’s foreign funding records on Thursday after a review of the University’s financial reports revealed “inaccurate” and “incomplete” disclosures.
The investigation — launched by the Education Department’s Office of the General Counsel on May 8 — cites Penn’s failure to comply with Section 117 of the Higher Education Act of 1965, which requires postsecondary institutions receiving federal financial assistance to disclose “qualifying foreign source gifts and contracts” with a value of $250,000 or more annually — alone or combined — to the Education Department. According to a press release, Penn has 30 days to comply with the Education Department’s request for information.
“The Department’s review of UPenn’s Sec. 117 foreign funding disclosures submitted to the Department reveals that incomplete, inaccurate, and untimely disclosures may have been submitted by UPenn, in possible violation of its foreign source funding statutory disclosure obligations,” the Office of the General Counsel wrote in a Thursday letter addressed to Penn President Larry Jameson.
The investigation also calls attention to the “extremely large” amount of “foreign donors whose identities remain undisclosed” by Penn.
A request for comment was left with a University spokesperson.
The May 8 letter — signed by Education Department Chief Investigative Counsel and Assistant General Counsel Paul Moore — warned that Penn’s “failure to provide timely and accurate reports” could result in “civil action by the U.S. Department of Justice.”
According to the letter, Penn did not “promptly report” 61 of its 115 foreign funding disclosure reports submitted this January, which the letter characterized as “non-compliance” on “timeliness alone.”
Moore also alleged that the University failed to comply with federal regulation on three counts: by “erroneously” reporting some transitions as non-governmental, by providing incomplete descriptions of some transactions, and by making multiple “reporting errors” related to foreign agents and entities.
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The letter criticized the University’s decision to conceal the identities of some donors, a practice described as “anonymizing” donors, which is “now explicitly disallowed by the [Education] Department.”
Among other records, the Education Department is requesting tax records, a copy of the University’s procedures in compliance with Section 117, and the “Identification of university personnel and contract personnel … involved in the university’s assistance and/or efforts related to F-1 Student Visa” and travel for international students and faculty since Jan. 1, 2017.
The demands included requests for copies of documents outlining Penn’s relationships with foreign institutions and governments — including a complete list of foreign gifts, grants, and contracts received by the University.
The Education Department also asked that Penn identify University personnel and faculty involved with international student visas, research with foreign institutions, and the administration of Penn’s compliance with “federal Foreign Government Talent Recruitment Program restrictions and/or export and import control regulations.”
“UPenn has a troubling Section 117 compliance history, having failed to disclose any foreign funding until February of 2019 despite a decades-long statutory obligation to do so,” acting Education Department General Counsel Tom Wheeler wrote in a Thursday press release. “The Trump Administration will vigorously uphold the law and ensure universities are transparent with their foreign gifts and investments.”
Increasing transparency surrounding foreign donations to American colleges and universities has been a recent priority for Republican lawmakers, who argue that foreign adversaries use financial ties to exert influence over these institutions.
In March, the House of Representatives passed a bill to increase oversight over universities that receive foreign donations and investments.
The Defending Education Transparency and Ending Rogue Regimes Engaging in Nefarious Transactions Act furthers Republican-led efforts to reinforce reporting requirements for foreign funding — particularly from entities linked to China and other nations characterized as opposition to United States interests — in higher education.
According to the Education Department press release, the Education Department has recently submitted a similar records request to Harvard University, and launched an investigation into University of California at Berkeley after reviews of both universities revealed inconsistencies in disclosure of foreign funding.
The investigation into UC Berkeley came after an April 23 Trump executive order targeted the enforcement of Section 117 to increase “transparency regarding foreign funds flowing to American higher education and research institutions.”
The executive order instructed the Education Department to take steps to “require universities to more specifically disclose details about foreign funding” and “hold accountable higher education institutions that fail to comply with the law concerning disclosure of foreign funding.”
The executive order also warned that federal grant funds may not be awarded to colleges and universities that do not comply with foreign funding disclosure requirements.
The new investigation comes 10 days after the Education Department announced that Penn violated Title IX by allowing transgender athletes to compete in women’s intercollegiate athletics and issued three demands to the University.
In its April 28 announcement, the Education Department included a “Resolution Agreement” from the Office for Civil Rights that gave Penn 10 days to “voluntarily” comply with the three demands: issuing a statement affirming compliance with Title IX, restoring accolades to “female athletes … misappropriated” by transgender athletes, and sending individual letters to the affected athletes.
