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March 27, 2011
David Warsh, Proprietor


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A Recent Exercise in Nation-Building by Some Harvard Boys

It was worth a smile at breakfast that morning in February 2006, a scrap of social currency to take out into the world. Michael Porter, the Harvard Business School management guru, had grown famous offering competitive strategies to firms, regions, whole nations.  Earlier he had taken on the problems of inner cities, health care and climate change.  Now he was about to tackle perhaps the hardest problem of all (that is, after the United States’ wars in Afghanistan and Iraq).

He had become adviser to Moammar Gadhafi’s Libya.

There at the bottom of the front page of the Financial Times was a story that no one else had that day, or any other – a scoop. It turned out that Porter and his friend Daniel Yergin and the consulting firms which they had respectively co-founded and founded, Monitor Group and Cambridge Energy Research Associates, had been working for a year on a plan to diversify the Libyan economy away from its heavy dependence on oil. Their teams had conducted more than 2,000 interviews with “small- and medium-scale entrepreneurs as well as Libyan and foreign business leaders.” (Both men are better-known as celebrated authors:  Porter for Competitive Strategy: Techniques for Analyzing Industries and Competitors and The Competitive Advantage of Nations, Yergin for The Prize: the Epic Quest for Oil, Money and Power and The Commanding Heights: the Battle for the World Economy.)

The next day Porter would present the 200-page document they had prepared in a ceremony in Tripoli. Gadhafi himself might attend. The FT had seen a copy of the report, which envisaged a glorious future under the consultants’ plan. If all went well, it said, then by 2019 – the 50th anniversary of the military coup that brought Col. Gadhafi to power – Libya would have “one of the fastest rates of business formation in the world,” making it a regional leader contributing to the “wealth and stability of surrounding nations.”

From Cairo, the FT’s William Wallis reported:

The Harvard project is part of the efforts of Saif al-Islam, the colonel’s son, to restore Libya’s international legitimacy after his father’s renunciation of weapons of mass destruction and Tripoli’s agreement to pay compensation to the victims of the 1988 Lockerbie aircraft bombing.

A year later, in February 2007, BusinessWeek trumpeted the relationship, first on the eve of another Porter lecture on the “New Dawn” in Tripoli, then again a month later. The Cambridge, Mass., firm that Porter had started fifteen years before with seven other HBS professors had become. BW reported, “deeply engaged in overhauling the Mediterranean petro-state.” It wasn’t clear, the magazine noted, that partial bank privatization and “mini-MBAs” for some 250 emerging leaders would prevail over statism and red tape.

We now know that Gadhafi’s son bribed his way into his PhD from the London School of Economics (LSE); that Monitor Group had been paid to help him write his dissertation there (much of which apparently turns out to have been plagiarized, anyway); that the Libyan government was paying Monitor $250,000 a month for its services; that, according to The New York Times, Libya’s sovereign wealth fund today owns a portion of Pearson PLC, the conglomerate that publishes the Financial Times and The Economist; that the whole deal quietly fell apart two years later.

Sir Howard Davies resigned earlier this month as director of the LSE after it was disclosed he had accepted a ₤1.5 million donation in 2009 from a charity controlled by Saif Gadhafi.

It turns out that Monitor also proposed to write a book boosting Gadhafi as “one of the most recognizable individuals on the planet,” promised to generate positive press, and to bring still more prominent academics, policymakers and journalists  to Libya, according to Farah Stockman of The Boston Globe. She did a banner job of pursuing the details she found in A Proposal For Expanding the Dialogue Surrounding the Ideas of Moammar Khadafy, a proposal from Mark Fuller in 2007 that a Libyan opposition group posted on the Web.

Among those enlisted were Sir Anthony Giddens, former director of the LSE; Francis Fukuyama, then of Johns Hopkins University; Benjamin Barber, of Rutgers University (emeritus); Nicholas Negroponte, founder of MIT’s Media Lab; Robert Putnam and Joseph Nye, both former deans of Harvard’s Kennedy School of Government.  Nye received a fee and wrote a broadly sympathetic account of his three-hour visit with Gadhafi for The New Republic. He also told the Globe’s Stockman he had commented on a chapter of Saif’s doctoral dissertation. (When The New Republic scolded Nye earlier this month, after Mother Jones magazine disclosed the fee, Nye replied that his original manuscript implied that he had been employed as a consultant by Monitor, but that the phrase had been edited out).

Connoisseurs of the consultant’s art will relish Monitor’s 2007 proposal, with its elaborate plan to write and sell a book about Gadhafi as a world-historical figure to a major publisher, and its hints of prospective visits from Cass Sunstein, future constitutional adviser to President Barack Obama (“positive preliminary conversation”) and Nelson Mandela. No memo dated before Porter’s February 2006 appearance in Tripoli has surfaced yet. An earlier letter of understanding, dated May 2006, stated that “Monitor is not a lobbying organization.”

But the lobbying law may be involved, as noted earlier this month by Paul Blumenthal, of the Sunlight Foundation.. Last week Monitor acknowledged it may have a problem with the Foreign Agents Registration Act and hired an outside counsel to advise its internal investigation. Chances are we’ll hear more about this.

Curiously enough, Porter’s name didn’t appear in the Boston Globe account until the twelfth paragraph under the headline “Local Consultants Aided Gadhafi/Cambridge firm tried to polish his image”, well below the continuation of the article on an inside page.  Stockman’s account of Porter’s explanation is worth quoting in full.

Monitor’s work in Libya began when Michael Porter, a Harvard Business School professor who is among the country’s top theorists on management strategies, received a call from Saif Gadhafi around 2001, according to Porter. Saif, a western-leaning doctoral student who US officials hoped would become the next leader of Libya, asked for his expertise to help change Libya’s battered, Soviet-style economy.

Porter met Saif and several Libyan ministers in London but said he could not help until Libya resolved the issues that had earned it international condemnation, including the bombing of Pan Am flight 103 over Lockerbie, Scotland.  The terrorist attack killed all 259 passengers and crew and 11 villagers.

“I remember telling Saif, ‘We can’t do anything until you settle your dispute with the rest of the world,’” Porter recalled in a recent interview.

In the next few years Libya offered compensation to the Lockerbie victims and gave up its nuclear weapons program, putting it on a path of normalize relations with the United States.

So in 2005, Porter agreed to be a senior adviser on a program, to lay out a blueprint for reforms.

He told the Globe’s Stockman he ended his personal involvement in later 2007, after he realized “that the reforms were going nowhere when a person who opposed them was appointed head of the group charged with implementing them.”

Why did a couple of guys as smart at Porter and Yergin become involved in such a mug’s game?  It is always possible that Porter thought really thought Saif Gadhafi was full of promise as a democratic reformer when they met. (Today Saif is back in Tripoli, vowing to fight “to the last bullet.”) It is possible that Porter thought the Bush administration would welcome the access to Libyan business that he and Yergin gained through their project. Nicholas Negroponte’s brother John was, after all, Director of National Intelligence from 2005-07.

It’s true, too, that Harvard University was in no way institutionally involved. After its mission to advise the Russian government on behalf of the US State department collapsed in 1997 amid a welter of conflict of interest charges, Harvard closed its Institute for International Development. After losing a long court battle, and partly as a consequence of it, the university relieved Lawrence Summers of his presidency (but made him a university professor) and revoked economics professor Andrei Shleifer’s endowed chair.

But Porter is also a university professor, one of just twenty who hold Harvard’s highest honor. Monitor consultants and journalists writing about the Libyan program have indiscriminately brandished the Harvard name. How can he have been so personally reckless?

I’ve followed Porter’s career with interest for twenty-five years. Some part of the explanation for his interest in Libya surely has to do with a nearly boundless sense of personal efficacy. A fine student-athlete – an All-American golfer for Princeton in 1968 – Porter graduated with a degree in aeronautical engineering and then moved easily into technical economics at Harvard, managing a rock band in his spare time.

The 1970s were a time of great ferment in theories of industrial organization. As Harvard undergraduates, Bill Gates and Steve Ballmer honed their wits in A. Michael Spence’s advanced micro course, before Gates went out into the world to found Microsoft. By the end of the decade, Porter decided his competitive advantage lay in codifying the latest understandings for corporate executives. Three spectacular business best-sellers followed.

Porter became a rising star in the Reagan administration; a frequent consultant to governments around the world in the 1990s; proprietor (with Jeffrey Sachs, of Columbia University), of a Global Competitiveness Report; a peripatetic adviser to corporations large and small; and, by 2000, the single most famous professor at the Harvard Business School. He advised presidential candidate Mitt Romney in 2007. Here he is addressing the National Governor’s Association last month about budget balancing.

But there is also all that Libyan oil and money. The sovereign wealth fund at its peak was worth $70 billion or so, all of it operating under the indirect control of Saif Gadhafi. Income from Libya’s oil production is as much as $40 billion a year. The US eased its sanctions on Libya in April 2004, permitting US companies to bid on Libyan oil and gas for the first time in twenty years, sparking considerable interest in a country whose plentiful reserves can cost as little as $1/bbl to lift. Libya’s “new dawn” would be well lubricated, in any event. Porter and Yergin signed on to coach the country less than a year later.

In a statement last week, Monitor wrote that “just a few years ago many saw a period of promise in Libya.”  That was certainly true in Cambridge. What dissenting Libyans in Tripoli witnessed was a parade of well-paid visitors flattering their half-mad dictator, and a squad of Harvard-connected consultants bent on creating a National Security Organization for the government, designed to augment the existing security apparatus with a new corps of MBA-trained personnel officers.

I’m not going to hold my breath waiting for Porter to give some evidence of contrition about his mission to Tripoli. Sir Howard Davies may have resigned as director of the LSE (“The short point is that I am responsible for the school’s reputation and that has suffered”), but being a Harvard professor apparently means never having to say you’re sorry. Perhaps instead the university will find some way to rein in on its professors’ more self-serving ambitions.

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14 Comments

  1. Tom wrote:

    Wow! Great essay containing deep detective work revealing potentially corrupt interrelations between Harvard professors and the Khadafy regime. The paragraph reporting that employees of Porter’s & Yergin’s firm Monitor helped Saif write his PhD dissertation will be disgusting to all those hard-working souls who devote many years in poverty toiling to write their own dissertations. What ever happened to the old-fashioned ideal espoused by Frank Knight? That ideal held that professors’ research should be directed to pursuit of the truth, rather than being for sale to bidders offering the highest price reckoned in dollars and/or prestige.

    Monday, March 28, 2011 at 1:32 am | Permalink

  2. JLo wrote:

    Such an honest article. I suppose the classic sayings still hold – a leopard does not change its spots.
    Gadaffi also organized the Munich Olympics slaughter of Israeli athletes, as well as many more horrors. He was a regular visitor to Zimbabwe and South Africa. He does need to be judged and treated with the contempt he deserves, but I suppose waving dollar bills or euros seems to wipe clean the memories of even very smart people. Plato in The Republic did address this corruption by material wealth.
    Porter must have seen the money his clients made and wanted some of the lucre for himself too and why not help out a cruel killer’s son, particularly when he is at the LSE doing a PhD.
    Outrageous about the PhD and this will increase the cynicism people feel for the elite.
    Porter is an amazing man though, his intellectual additions to business are significant. I hope he will use these lessons to teach us all about capitalism’s pull when used by African dictators pretending to be nice English aristocracy with their PhDs and hobby projects which they throw off to pick up the nearest rifle to shoot their own people. Murderers are murderers.
    The sums of money bandied about are also mind boggling large. Is Harvard and Monitor like GE, avoiding taxes due to their freindships into high places?

    Monday, March 28, 2011 at 12:40 pm | Permalink

  3. Faze wrote:

    Porter has nothing to be ashamed of. He got in at at time when it seemed like Libya was transitioning to a mainstream nation, and he got out when he saw that this wasn’t going to happen. What business thinker wouldn’t want the opportunity to help remake a nation with so much wealth and so much potential? It’s true that Khadafy’s are exceptionally dirty, but the current rulers of China surely exceed him in every measure of wickedness short of the Captain Hook-like flamboyance. And one rarely hears about the ethics of doing business in China anymore.

    Monday, March 28, 2011 at 5:06 pm | Permalink

  4. Dave, This is a horrendously trivial comment, but I am anal about such things.

    It is true that there is no universally accepted transliteration into the Latin alphabet of the Libyan leader’s name. However, the one you used (and also the less frequently seen “Ghadafi”) is indeed incorrect. It implies his name begins with the Arabic letter that is pronounced “h” as in “chutzpah,” which is not it.

    The letter, the qof, is transliterated by scholars as “q,” but is pronounced as a hard g with a k on front. Which is why one also sees it as “k” and “g,” all of which do not imply an incorrect letter. “Kh” does that. “Qaddafi” is the most scholarly.

    Monday, March 28, 2011 at 9:59 pm | Permalink

  5. Judy wrote:

    Faze, I’m afraid you’re wrong – Porter should feel mightily ashamed of having been involved in the fraudulent PhD of Saif al-Islam. The comparison to China is quite wrong-headed; it’s not a simple matter of ‘doing business in’ Libya (or China), which may have its own challenges, but isn’t anything like the grand plan to rehabilitate the image of the Qaddafi regime as one of dignified professionalism. It’s true that lots of people have jumped at the chance to do business in Libya – including the oil companies and oilfield service providers who happily pay the bribes that prop up the corrupt officials at the ongoing cost of the Libyan people – but that’s exactly why Porter and his colleagues should have the decency to recognize their own guilt.

    Tuesday, March 29, 2011 at 10:54 am | Permalink

  6. Ian Mccarthy wrote:

    Some rather dubious assertions here: “We now know that Khadafy’s son bribed his way into his PhD from the London School of Economics (LSE)”. We know nothing of the sort. Saif had studied, and obtained, an M.Sc. from LSE and was admitted into the doctoral program. Also:”After losing a long court battle, and partly as a consequence of it, the university relieved Lawrence Summers of his presidency”. This ignores completely the fuss about Summers’ perfectly legitimate comments about women in science which most authorities blame for his “resignation”. During the period in question Summers wasn’t even at Harvard! He was President from 2001-2006.

    Tuesday, March 29, 2011 at 1:13 pm | Permalink

  7. admin wrote:

    Mainly what’s known about Saif Kadaffy’s dissertation at the moment is that it being reviewed by the LSE.

    Tuesday, March 29, 2011 at 1:47 pm | Permalink

  8. Ivan K wrote:

    This article is penned by the journalist David Warsh. Has he publicly criticised these Gaddafi-linked intellectuals before 20 February this year? My googling produced no evidence of that. The unprincipled in this affair are exactly the critics. They seem to have waited for any excuse to attack some public intellectuals.

    Tuesday, March 29, 2011 at 3:24 pm | Permalink

  9. btraven wrote:

    You might have pointed out the participation in the Monitor Group’s Libyan activities of Anne Marie Slaughter, a top advisor to Secretary of State until she resigned just before the publication of the reports about the project. Slaughter taught at Harvard Law for many years before leaving for Princeton.

    Wednesday, March 30, 2011 at 1:36 am | Permalink

  10. Manuel wrote:

    First, I agree with the central idea that Porter should feel compelled to explain his dealings with Lybia more fully, and Harvard should show more diligence to press for further disclosure. But then this article seems to me to be all about character assassination, still-not-proven conjectures, and after-the-fact clever hindsight. Try again when you really have sound information to communicate.

    Wednesday, March 30, 2011 at 9:45 am | Permalink

  11. As usual you have done a masterful job of connecting the dots , putting things in perspective and honing in on the real issues. You are among a handful of persons whom I consider “must read.” Always informative and instructive.

    My time as a student at the LSE was truly magnificent. It is a wonderful intellectually stimulating place.The student body is very diverse and the place is teeming with the energy of young strivers.Quite sad to see the school’s name sullied by its association with Saif Khadaffi. Sir Howard did the right thing by resigning.

    Friday, April 1, 2011 at 4:40 pm | Permalink

  12. admin wrote:

    Joseph Nye, Distinguished Service Professor, Harvard University; Author, ‘The Future of Power,’ writin in The Huffinton Post

    Gaddafi and Change
    Posted: 03/31/11 08:23 PM ET

    David Warsh, generally a respected journalist, has just published in the Providence Journal an attack on Michael Porter of Harvard Business School for consulting with Gaddafi about change in Libya in the period after Gaddafi gave up his nuclear weapons program and his overt support for terrorism. Porter, a founder of the Monitor Consulting Group, developed a plan to promote change in Libya. He hired a number of Western intellectuals to help by going to Libya to promote new ideas.
    Porter can reply for himself about Warsh’s attack, but in his piece Warsh repeated a false account of my role based on a now discredited story by David Corn of Mother Jones. It is an interesting example of how misinformation on the internet can get legs when reporters do not live up to their professional standards.
    Here is what Warsh wrote:
    Among those enlisted were Sir Anthony Giddens, former director of the LSE; Francis Fukuyama, of Stanford University; Benjamin Barber, of Rutgers University (emeritus); Nicholas Negroponte, founder of MIT’s Media Lab; Robert Putnam and Joseph Nye, both former deans of Harvard’s Kennedy School of Government. Nye received a fee and wrote a broadly sympathetic account of his three-hour visit with Gadhafi for The New Republic. He also told The Globe’s Stockman he had commented on a chapter of Saif’s doctoral dissertation. (When The New Republic scolded Nye earlier this month, after Mother Jones magazine disclosed the fee, Nye replied that his original manuscript implied that he had been employed as a consultant by Monitor, but that the phrase had been edited out).

    The facts are that Monitor never asked me to write about my trip to Libya, and my 2007 article in TNR was my own idea. I referred to Gaddafi as a domineering autocrat with a bad record on human rights and terrorism. Most important as a matter of professional ethics, I clearly told TNR that I had been hired by Monitor to make the trip. Franklin Foer, then editor of TNR, mistakenly told David Corn that I had not so disclosed, and Corn, violating a fundamental principle of journalism, never checked with me. When I showed TNR the original document I sent them in 2007, they replied “I owe you an apology: Clearly my recollection was very wrong. We will publish this ASAP. And again, you have my sincere apologies.” Their retraction was published (though Corn never had the decency to acknowledge his mistake.) I wonder why Warsh never checked his facts? As for my involvement with Seif”s thesis, at the request of a friend, I read one chapter that referred to soft power, something I have done for many who have written about that topic. Otherwise, I was not involved in his thesis and know nothing about the controversy about it that the London School of Economics is now investigating.
    In any case, I have never supported Gaddafi and am on record wishing him gone, and also on record supporting Obama’s actions in recent weeks. We now know that Gaddafi’s departure is the only change that will work in Libya.

    Friday, April 1, 2011 at 10:04 pm | Permalink

  13. admin wrote:

    You are right, Barkley. It seems important enough to make the change. AP is Gadhafi. Thanks.

    Tuesday, April 12, 2011 at 8:40 pm | Permalink

  14. Naom Chomsky wrote:

    Porter’s contribution to management theory was significant during his early years. However, he is now touching everything from healthcare to corporate social responsibility. Firstly, he do not have deep understanding about these subjects and he states the obvious. Harvard and its faculty including Porter is overrated. If you look at the rating by Economist magazine Harvard ranks as one of the top 3 buisness schools in the world, but its faculty ranking is 27th. Harvard makes it to the top due to other reasons (diversty of students, salary of alumni etc.)

    Thursday, May 3, 2012 at 9:50 pm | Permalink

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