The universities of Oxford and Cambridge, and nearly half of all Oxbridge colleges, have secretly invested tens of millions of pounds in offshore funds, including in a joint venture to develop oil exploration and deep-sea drilling, leaked documents from the Paradise Papers reveal.
Oxford and Cambridge, Both universities are said to have invested in funds based in the Cayman Islands, a tax haven popular with many American and British hedge funds.
In 2006, Oxford invested £2.6m in a Guernsey-based private equity firm and Cambridge invested £1.3m in the same scheme, The Guardian reported.
Money was separated into two funds, one directly from the universities and the other from individual colleges.
The arrangement allows the universities to avoid a US tax on hedge fund investments and receive dividends tax free.
Prem Sikka, an emeritus professor in accounting at the University of Essex, said it was important that universities were more transparent with their investments.
“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,” Sikka told The Guardian.
The universities were said to have invested in a private equity firm, Coller International, which invested £760m in Royal Dutch Shell, the oil and gas company.
The revelation is likely to increase pressure on the two universities to divest from fossil fuels.
Both universities have already faced several calls in recent years to move away from carbon-based investments but these have so far gone ignored.
A spokesman for Cambridge University said: "The Colleges and the University are charities and therefore their holdings in investments are tax-exempt in the UK, US and many other countries. This means there is normally no tax to pay.”
“The fund arrangement, through which the University and Colleges invest, is standard for collective investments of this type.”
A spokesman for Oxford University said: "'As charitable trusts, Oxford University’s endowment is exempt from UK tax. The taxpayer therefore does not lose a penny from our investments.
"The investments generate some £80 million a year which is spent on key academic priorities in Oxford. These include the majority of our scholarships and bursaries for students, vital research across medicine, the sciences, social sciences and humanities and our globally outstanding teaching.
On Sunday, the US-based International Consortium of Investigative Journalists (ICIJ), as well as multiple media, published materials, based on the leaked database of powerful individuals’ and corporations’ offshore activities.
Source: The Guardian, ICIJ, Independent