Questionable connections: activist group calls for investigation into Harvard's Enron ties. (In The News).

What did Harvard's governing board know about the collapse of Enron, and when did they know it? That's the question being asked in a report by HarvardWatch (www.people.fas.harvard.edu /~skomarov/harvardwatch), an activist group concerned with governance at the 366-year-old university.

At issue is Highfields Capital, Harvard's main private investment fund that profited by short-selling its Enron stock just before the energy trading company filed for bankruptcy in December. Highfields earned at least $50 million in the transaction, according to HarvardWatch, raising questions about whether Highfields was privy to insider information regarding Enron's impending collapse.

The connection between the two, says HarvardWatch, is Herbert "Pug" Winokur. Winokur is not only a member of the Harvard Corporation--the school's highest governing body--but he is also a member of Enron's Board of Directors and chair of the Board's Finance Committee. At Enron, Winokur reportedly approved the creation of 3,000 partnerships and subsidiaries that investigators claim were used to hide debt and avoid taxation.

In response to the HarvardWatch report, entitled "Trading Truth: A Report on Harvard's Enron Entanglements," university spokesman Joe Wrinn said the Harvard Corporation did not participate in investment decisions by Highfields Capital, although the hedge fund, which manages about $2 billion of the school's endowment, was founded with $500 million of Harvard's endowment funds.

Still, it's the appearance of a conflict of interest--and its ultimate effect on Harvard--that concerns many. "Herbert Winokur was aware of Enron's difficulties as much as four years ago," says the HarvardWatch report. "Although this doesn't amount to proof that Winokur tipped off Highfields about Enron's financial woes, it makes for a very interesting set of coincidences--one that warrants a thorough investigation."

Winokur told a congressional committee investigating Enron in February that he had been "misled" by Enron management and its auditor Arthur Andersen. But critics claim that, regarding Enron's financial affairs, it's unlikely a person in Winokur's position could have been kept in the dark for so long. They are urging his removal from the Harvard Corporation, pending the results of a credible investigation.

The HarvardWatch report also notes that Enron was the subject of five glowing case studies by members of the Harvard Business School, as recently as August 2001--just before the company imploded.