David Petraeus as Equity Firm Education Ambassador
The private-equity firm’s portfolio includes billions of dollars of investments in hydraulic fracturing and health care
In April, David Petraeus, a former head of the Central Intelligence Agency and leader of coalition forces during the war in Iraq, took an adjunct professorship at Macaulay Honors College at the City University of New York. Other high-level national-security officials have also recently moved into academia. In September 2011, former CIA director and onetime secretary of defense Robert Gates became the chancellor of the College of William and Mary. And last month Janet Napolitano, former director of the Department of Homeland Security, assumed the office of president of the University of California system.
Petraeus’ appointment has generated opposition. Criticism from many — including New York City mayoral hopeful Bill de Blasio — led to the reduction of Petraeus’ reported $200,000 salary for teaching one seminar to $1. (Adjunct professors usually earn $3,000 per course.)
Hundreds of students and others signed a petition protesting Petraeus’ faculty position, suggesting CUNY had become a “war college.” A demonstration on Oct. 16 included accusations that Petraeus was the “architect of almost 3,000 ‘targeted killings’ by drones” and that he had “rained death on Afghan civilians.”
Unlike Napolitano and Gates, who became university administrators, Petraeus opted to teach. While Petraeus’ role in the U.S.-led wars in Iraq and Afghanistan has served as the basis for protests over his CUNY professorship, the content of his course, The Coming North American Decades, has received less attention.
Petraeus’ course syllabus does not mention the U.S.-led Iraq War, its estimated $3 trillion cost to U.S. taxpayers or the hundreds of thousands of Iraqi civilian lives lost. Rather, on the CUNY website, a course description promises that participants in the Petraeus seminar will “arrive at recommendations for America’s leadership role in the emerging global economy.” It also neglects to mention his connections to Kohlberg Kravis & Roberts (KKR), a New York–based private-equity firm whose portfolio includes billions of dollars of investments in industries such as hydraulic fracturing (fracking), biotechnology and health care.
In May, a little more than a month after the announcement of his association with CUNY, KKR announced Petraeus would head its new Global Institute. The Wall Street Journal revealed the arrangement had been in the works since the day after his CIA departure in November 2012 after revelations of an extramarital affair and well before his CUNY appointment
The dean of Macaulay Honors College is Ann Kirschner, a Victorian-literature specialist. The Macaulay website also describes her as an “entrepreneur” whose “start-up businesses include … Fathom, a for-profit online learning venture in partnership with Columbia University, London School of Economics and other leading institutions.” According to the British publication Times Higher Education, Columbia invested $25 million in Fathom. The venture launched in 2000 and closed in 2003 without turning a profit. Since 2007, Kirschner has been a member of the board of directors of Apollo Group, which owns Phoenix University, another for-profit school.
In an April 17, 2013, email to Kirschner, obtained through a Freedom of Information request, Petraeus discussed the timing of his hiring announcement with his future boss.
“And I’d say the sooner the better,” he writes, “as we are holding off other actions/announcements given our commitment that ‘CUNY goes next.’” Petraeus seems to acknowledge that his work at KKR has enabled and would shape his work at Macaulay, adding, “And as you know, one of those other actions is what enables me to do CUNY.”
On its website, KKR’s Global Institute describes itself as dedicated to “anticipating, understanding and knowing how to respond to … the impacts of revolutionary technological change.” According to the course syllabus, Petraeus’ class aims to “examine the ongoing energy, manufacturing, life sciences and information technology ‘revolutions’” and that understanding their implications will “enable the U.S. to capitalize” on economic opportunities and “contribute to the global economic recovery.” The Global Institute’s website states that grasping “revolutionary technological changes” is “critical to smart investing, portfolio management and risk mitigation.”
KKR, based in a midtown Manhattan, about a mile from Macaulay, describes itself as “a leading global investment firm with deep roots in private equity.” According to Investing Daily, it holds $87 billion in assets, including billions of dollars in investments in the economic sectors covered in the CUNY seminar, including fracking for unconventional oil and gas, pharmaceuticals and health care, biotechnology, and information technology.
The economic “revolutions” language in Petraeus’ syllabus also appears in a well-choreographed recorded conversation between Petraeus and Henry Kravis — unlikely revolutionary figures — in a KKR boardroom announcing the hiring announcement.
Petraeus will devote two weeks of his CUNY course to the “energy revolution.” Two of the assigned readings — one from IHS CERA, an energy consulting firm, and the other by the Massachusetts Institute of Technology — are well-known industry-funded studies defending fracking. Known by critics as “frackademia,” these studies have been influential in informing U.S. policymakers on the fracking issue.
Fracking is the horizontal-drilling process through which oil and gas is obtained from shale-rock basins. It has come under fire by activists and scientists because of its impact on groundwater and climate change. Mark Lipschultz, KKR’s head of energy and infrastructure, referred to the firm, with more than $4 billion in an energy-investment fund, as a “mini oil and gas company” in an April 2013 interview with Privcap, a media firm focused on private-capital investment.
Petraeus will spend one week of his seminar on the U.S. health care debate and the opportunities it presents for the pharmaceutical industry. KKR lists four pharmaceutical companies as portfolio partners — Alliance Boots, Capsugel, Jazz Pharmaceuticals and PRA International — and has invested billions of dollars in the pharmaceutical industry.
Capsugel had been a wholly owned subsidiary of industry giant Pfizer, purchased by KKR for $2.4 billion in April 2011. The Petraeus seminar includes assigned readings by Harvard Business School and the Boston Consulting Group.
One of Boston Consulting’s clients is Pfizer. Boston Consulting works with Pfizer to “leverage different supply-chain and inventory strategies for different Pfizer products based on their demand and volatility patterns,” according to PharmaManufacturing.com.
Students in Petraeus’ class will spend a week on information technology. They focus on privacy issues, big data, high-speed Internet for consumers, cellphone issues and cybersecurity. KKR owns shares in SunGard, a spin-off of the computer-services division of Sun Oil Co. in 1982 and now the largest privately held software and services company in the world.
In 2006, Goldman Sachs, the Blackstone Group, KKR and other firms sealed the deal on a leveraged buyout of SunGard for $11.4 billion. In 2007, KKR laid down $700 million in investments in Sun Microsystems, and three years later, Sun was sold to Oracle for $7 billion.
Petraeus’ syllabus promises students will learn how to “capitalize on the opportunities presented by the revolutions.”
On May 22, eight days before the announcement of his hire, Petraeus sent an email to his future colleagues at the KKR Global Institute. It called attention to a global economic survey written by Vivek Chilukuri, one of Petraeus’ graduate assistants at Harvard University’s Kennedy School of Government. Petraeus serves as a nonresident fellow there, leading a project called The Coming North America Decades — almost the same name as his CUNY seminar. Chilukuri’s survey, wrote Petraeus “will have considerable value ... for the undergrads in the course.”
One undergraduate, Patryk Perkowski, a Macaulay student studying mathematics and economics, is enrolled in the course and offered an endorsement. He said that while the quantitative focus of his studies has helped him “doing and evaluating public policy,” Petraeus’ course has “shown me the flip side, being exposed to the people who will decide if my policy is going to be implemented.” Research, continued Perkowski, “needs to be seen through the nonacademic and more practical nature of the world.”
Ann Kirschner and former CUNY Chancellor Matthew Goldstein did not return repeated calls for comment.