Documents leaked from the Paradise Papers have revealed that the universities of Oxford and Cambridge, and nearly half of all Oxbridge colleges, have been investing tens of millions of pounds in secret offshore funds, including in a joint venture to develop oil exploration and deep-sea drilling.
The Paradise Papers refer to a leak of 13.4 million individual files detailing the use of tax havens by a vast number of public figures and major corporations. The documents were originally obtained by the German newspaper Süddeutsche Zeitung before being distributed by the International Consortium of Investigative Journalists.
Files leaked have shown that both Oxbridge universities have invested significant funds to multibillion-dollar private equity partnerships based in the Cayman Islands, a tax haven which the documents have shown are popular with hedge funds. This means the universities could avoid a US tax on hedge fund investments and receive their dividends tax-free.
In 2006, Oxford University invested over £2.6m in a private equity firm based in Guernsey. Cambridge invested over £1.2m in the same fund. Prem Sikka, an emeritus professor in accounting at the University of Essex, has publicly questioned the ethics the two universities sending endowments offshore.
Mr. Sikka said all the Cayman Islands offer “is secrecy and tax avoidance,” and added: “There is nothing else there. It’s not as if this is a place actively engaged in advancing science, research or human knowledge.”
Among the investments made by the universities were ventures concerning fossil fuels and deep-sea drilling, which has exacerbated the tension of the situation, as the actions of the universities fly directly in the face of their pledges to uphold and encourage sustainable development.
The Guardian report that one of the largest joint ventures by Oxford and Cambridge was in Xtreme Coil, a firm which specialises in “innovative and efficient drilling rigs” which are able to “reach hydrocarbons in deeper horizons.”
Commenting on the revelations, Cambridge said the university and colleges are charities, claiming “this means there is normally no tax to pay.” The university adds: “A highly reputable adviser” managed funds and made independent decisions about specific investments.
Oxford University said there was a “robust oversight” of its holdings, and added that offshore investments are “commonly used in the investment industry, including higher education endowments globally.”
The revelations increase the pressure on the universities to abandon fossil fuel investments.