Institutional Compliance 

with Section 117 of the 

Higher Education Act of 1965

U.S. Department of Education 

Office of the General Counsel

October 2020

 I. EXECUTIVE SUMMARY .......................................................................................................1

 II. BACKGROUND .....................................................................................................................4

A. Legislative History.........................................................................................................4

B. Scope of the Problem................................................................................................... 7

C. Recent History...............................................................................................................10

D. Congressional Communications and Department Investigations.....................12

E. Initial Review .................................................................................................................13

III. OBSERVATIONS..................................................................................................................14

A. Institutions’ Resources. ..............................................................................................14

B. Inadequate Reporting. ...............................................................................................15

C. Inadequate Accounting Processes. .........................................................................17

D. Limited Oversight for International Business. ......................................................18

E. Ties to National Security Risks. ................................................................................19

F. Vulnerability of R&D Technologies. ........................................................................ 27

G. Risks posed by Overseas Operations. ...................................................................29

IV. DEPARTMENT OF EDUCATION PLANNED ACTIVITIES........................................... 32

 V. CONCLUSIONS...................................................................................................................34

Contents
The Office of the General Counsel acknowledges and thanks Bucky 

Methfessel, Senior Counsel for Technology and Information; Paul R. Moore, 

Chief Investigative Counsel; Kevin Slupe, Special Counsel; and Thea Dunlevie, 

Senior Analyst, for their work in preparing this Report.

The question of foreign influence on and 

foreign funding of domestic activities has 

long been a matter of concern for the United 

States government and the American people.

Congress did not task the Department 

of Education with assessing the positive, 

negative, or neutral impact of foreign money 

and foreign influence in American higher 

education.

Rather, Congress asked us to ensure the 

public had transparency from colleges and 

universities so that you could make such 

an assessment yourself and hold those 

institutions accountable.

This report is designed to empower you 

to make decisions, as an informed citizen, 

consumer, and taxpayer, about what is or is 

not appropriate behavior regarding financial 

interactions between institutions of higher 

education and foreign sources. 

We hope you will find it useful.
I. EXECUTIVE SUMMARY

Congress requires U.S. colleges and universities (“institutions”) publicly to report foreign 

gifts and contracts to the U.S. Department of Education (“Department”). Codified at Section 

117 of the Higher Education Act of 1965 (HEA), 20 U.S.C. 1011f (“Section 117”), this mandate 

requires nearly all colleges and universities to report, twice each year, foreign gifts and 

contracts the value of which is $250,000 or more (considered alone or in combination with 

other gifts or contracts with a foreign source) and to disclose any foreign ownership or 

control to the Secretary of Education. Section 117 does not prohibit institutions from taking 

foreign money; it mandates accurate and transparent disclosures of sources and amounts to 

the Department.

Under Secretary Betsy DeVos’ leadership, the Department has, for the first time, taken 

concrete steps to enforce Section 117 by ensuring the integrity of reporting requirements, 

confirming the correct reporting and categorization of donations, and prohibiting the use of 

domestic conduits and intermediaries to avoid the disclosures of foreign gifts.1

 Specifically, 

the Department has:

• Opened 12 compliance investigations yielding important and actionable 

information.

• Catalyzed disclosure of $6.5 billion in previously unreported foreign money.

• Modernized the Section 117 information reporting portal, yielding significant 

information bearing on compliance. This new reporting portal – released in 

June 2020 – recorded approximately 7,000 transactions and approximately 

$3.8 billion of foreign gifts and contracts from institutions. Illustrating the 

Department’s success in increasing statutory compliance, approximately 

60 of the institutions who filed a Section 117 disclosure report through the 

Department’s new reporting portal are “new filers,” meaning that between 

1986 and June 2020 these institutions had not previously submitted any 

reports. These “new filers” disclosed more than $350 million in foreign gifts and 

contracts during the July 31, 2020, reporting period.

• Issued a notice of proposed rulemaking requiring institutions to submit true 

copies of foreign gifts and contracts to confirm the accurate reporting and 

categorization of foreign money.

• Collaborated with the U.S. Department of Justice, Offices of Inspectors General, 

and other agencies on issues of mutual concern, as appropriate.

1 Section 117 of the Higher Education Act of 1965. U.S. Department of Education, 29 June 2020, www2.ed.gov/

policy/highered/leg/foreign-gifts.html.

1
The facts uncovered during the Department’s investigations and information collection 

confirm that many large and well-resourced institutions of higher education have 

aggressively pursued and accepted foreign money while failing to comply with Section 117 

of the HEA. At the same time, higher education industry trade organizations have argued 

against donor transparency and sought to block disclosure of strings attached to foreign 

funds.2 Our findings include:

• First, the filings received to date by the Department indicate the largest, 

wealthiest, and most sophisticated of America’s institutions of higher education 

have received nearly all foreign funds, receiving billions of dollars in assets 

using an assortment of related intermediaries, including functionally captive 

foundations, foreign operating units, and other structures.

• Second, all institutions, even those with multibillion-dollar endowments, depend 

on direct and indirect subsidies from U.S. taxpayers, including through Federal 

student loans that have encumbered Americans with staggering debt loads, 

to operate. However, the evidence suggests institutional decision-making is 

generally divorced from any sense of obligation to our taxpayers or concern for 

our American national interests, security, or values.

• Third, higher education industry players have solicited foreign sources – 

including foreign governments, corporations, and persons – through official 

fundraising operations, quasi-entrepreneurial activities by professors and 

administrators, and through captive or affiliated foundations and alumni 

organizations. For at least two decades, the industry has been on direct notice 

that at least some of these foreign sources are hostile to the United States 

and are targeting their investments (i.e., “gifts” and “contracts”) to project 

soft power, steal sensitive and proprietary research, and spread propaganda. 

Yet, the Department is very concerned by evidence suggesting the higher 

education industry’s solicitation of foreign sources has not been appropriately 

or effectively balanced or checked by the institutional controls needed to 

meaningfully measure the risk and manage the threat posed by a given 

relationship, donor, or foreign venture.

• Fourth, Section 117 reporting requirements are neither complicated nor 

burdensome. Institutions manage to track every cent owed and paid by their 

students; there is no doubt they can – and indeed do – track funds coming 

from foreign sources, including those adversarial to American interests. 

Moreover, most foreign funds flow to large, wealthy, and sophisticated 

institutions with highly credentialed administrators and ready access to the 

very best accountants and attorneys. All institutions have extensive foreign 

revenue reporting obligations to the Internal Revenue Service (Schedule F).3

Nevertheless, our investigations confirm a Senate subcommittee’s finding 

2 Representing institutions of higher education, the American Council on Education commented on the 

Department’s November 2019 information collection request, “Practically speaking, this would preclude any 

anonymous gifts from foreign individuals, even very modest gifts, which is likely to have a chilling effect on 

the willingness of such donors to make charitable contributions at a time when affordability is a key issue on 

campuses and among policymakers.” See Bloom, M. Steven, “RE: Agency Information Collection Request – 

Foreign Gift and Contracts Disclosure – Docket No. ED-2019-ICCD-0114,” American Council on Education, 5 

Nov. 2019, https://www.regulations.gov/document?D=ED-2019- ICCD-0114-0022.

3 “Form 990 Filing Tips: Reporting Foreign Activities (Schedule F).” Internal Revenue Service, www.irs.gov/

charities-non-profits/form-990-filing-tips-reporting-foreign-activities-schedule-f#:~:text=.

2
that Section 117 reporting is systemically underinclusive and inaccurate.4 This 

is extremely troubling because the evidence shows that institutions have 

sophisticated systems for managing, soliciting, and tracking contributions, 

grants, and contracts over time and from many thousands of sources, foreign 

and domestic. All investigative subjects have produced data at a very high 

level of granularity (e.g., individual contributions from foreign sources of 

$100 or less), demonstrating their capability to track from foreign sources 

exists. Therefore, it is hard to understand, for example, how Yale University 

could have simply failed to report any foreign gifts or contracts for four years 

or Case Western Reserve University for 12 years, precisely when both were 

rapidly expanding their foreign operations and relationships — including with 

China and Iran.5–6

• Fifth, there is very real reason for concern that foreign money buys influence 

or control over teaching and research.7 Disclosure and transparency might 

mitigate the harm to some extent. However, the evidence shows the industry 

has at once massively underreported while also anonymizing much of the 

money it did disclose, all to hide foreign sources (and, correspondingly, 

their influence on campus) from the Department and the public. Since 2012, 

institutions reported anonymous donations from China, Saudi Arabia, Qatar, and 

Russia totaling more than $1.14 billion.

The Department offers this report to highlight for institutions of higher education the 

importance of compliant, transparent, and effective reporting under Section 117 and to 

assist schools in assessing the state of their compliance. This report is also designed to 

empower students to make decisions as informed consumers and to inform the public about 

financial interactions between various institutions of higher education and foreign sources. 

4 China’s Impact on the U.S. Education System. U.S. Senate Permanent Subcommittee on Investigations, www.

hsgac.senate.gov/imo/media/doc/PSI Report China’s Impact on the US Education System.pdf.

5 Rubinstein, Reed. “Letter to Yale University.” Received by Dr. Peter Salovey, U.S. Department of Education, 11 

Feb. 2020, https://www2.ed.gov/policy/highered/leg/yale-20200211.pdf.

6 Rubinstein, Reed. “Letter to Case Western Reserve University.” Received by Barbara R. Snyder, U.S. 

Department of Education, 27 May 2020, www2.ed.gov/policy/highered/leg/cwru-20200527.pdf.

7 For example, “U.S. school officials told the Subcommittee that Confucius Institutes were not the place to 

discuss controversial topics like the independence of Taiwan or the Tiananmen Square massacre in 1989. 

As one U.S. school administrator explained, when something is ‘funded by the Chinese government, you 

know what you’re getting.’” See China’s Impact on the U.S. Education System. U.S. Senate Permanent 

Subcommittee on Investigations, p. 1, www.hsgac.senate.gov/imo/media/doc/PSI Report China’s Impact on 

the US Education System.pdf. Similarly, a 2009 study of universities in the United Kingdom concluded there 

was “evidence that foreign donations have substantially and demonstrably affected the academic activities 

of many universities, and their handling of subjects designated strategically important.” At some universities, 

“the choice of teaching materials, the subject areas, the degrees offered, the recruitment of staff, the 

composition of advisory boards and even the selection of students are now subject to influence from 

donors.” Foreign donations, on occasion, “manifested themselves in a range of events put on by universities 

which seemingly serve as platforms for these donors to eulogise their system of government” making 

domestic universities “sound like the diplomatic arm of a foreign government.” According to this study, “the 

main problem with the Confucius Institutes is that, as they acknowledge, this is precisely what they are; 

and academics have not always been able to contradict the vision being presented.” See Simcox, Robin. 

“A Degree of Influence: The Funding of Strategically Important Subjects in UK Universities.” Henry Jackson 

Society, The Centre for Social Cohesion, 16 March 2019, henryjacksonsociety.org/publications/a-degree-ofinfluence-the- funding-of-strategically-important-subjects-in-uk-universities/.

3
Congress has not directed the Department to police international education partnerships 

or to assert when criminal activity has or has not occurred within these partnerships; the 

Department is simply obligated under Section 117 to ensure compliance with reporting 

practices. The American public should be informed about the role of foreign dollars at 

institutions of higher education. As intended by Section 117, such transparency is achieved 

through institutions’ compliance with that section’s requirements to report certain foreign 

gifts and contracts.

II. BACKGROUND

American higher education is a critical human and technological strategic resource. The 

intellectual dynamism created by our nation’s historic commitment to academic freedom, 

free inquiry, and free speech on campus has substantially contributed to America’s 

economic and national security. Accordingly, for decades, foreign state and non-state actors 

have devoted significant resources to influence or control teaching and research, to the 

theft of intellectual property or even espionage, and to the use of American campuses as 

centers for propaganda operations and other projections of soft power.8

A. Legislative History

Congress first required U.S. institutions of higher education to publicly report 

their foreign gifts and contracts to the U.S. Department of Education in 1986. A 

contemporaneous opinion article explained that the proposed section “sought to 

protect academic integrity threatened by gifts or contracts with foreign entities...”9

At the time, donations from Arab countries were building a Center for Contemporary 

Arab Studies at Georgetown University, and this project strongly motivated drafting 

of the statute. Other concerns included Japanese companies partnering with U.S. 

8 In the 1930s, Soviet state-directed communism expanded across American academic institutions. American 

students, both at home and abroad, were targeted by Communist Party operatives to advance Soviet 

interests and U.S. colleges and universities were mined for intelligence and technology. In 1938, the firstknown Soviet agent enrolled at the Massachusetts Institute of Technology where he stole American scientific 

secrets for the Russian government as part of a broader strategic effort. See Hunt, Jonathan. Communists 

and the Classroom: Radicals in U.S. Education, 1930-1960. University of San Francisco, 2015, pp. 24-25, 

repository.usfca.edu/cgi/viewcontent.cgi?article=1000&context=rl_fac; Stein, Harry. “The Red Decade, 

Redux.” City Journal, 26 June 2019, www.city-journal.org/eugene-lyons- the-red-decade; Golden, Daniel. 

“Why Russian Spies Really Like American Universities.” ProPublica, 23 July 2018, www.propublica.org/article/

why-russian-spies-really-like-american-universities.

Throughout the Cold War, Soviet agents targeted American research institutions to steal research, creating 

an espionage pipeline allowing copycat weaponry to be, in some cases, produced by the Soviets faster than 

by the Americans who had first designed them. Fialka, John J. “How the Secrets Moved East.”

Air Force Magazine, 29 June 2020, www.airforcemag.com/article/0497secrets/. Beginning in the 1960s 

and continuing until today, Saudi Arabia, Qatar, and non-state actors targeted U.S. institutions and Middle 

Eastern study centers as platforms for the global advancement of certain Islamic religious and political 

beliefs. Gutfeld, Arnon. “The Saudi Specter over the American Education System.” Jerusalem Center for 

Public Affairs, 23 May 2019, jcpa.org/article/saudi-specter-over-american-education-system/; Litwin, Oren, 

“Islamist Qatar Buys American Teachers.” National Review, 2 March 2018, https://www.nationalreview.

com/2018/03/qatar-educational-foundation-spreads-islamist-propaganda-to- us-schools/. During the 1980s, 

Japan’s practice of using American institutions as commercial research laboratories raised economic security 

concerns. Epstein, Stephanie. Buying The American Mind: Japan’s Quest For U.S. Ideas In Science, Economic 

Policy And The Schools. The Center for Public Integrity, 1991, pp. 2, 5, cloudfront-files-1.publicintegrity.org/

legacy_projects/pdf_reports/BUYINGTHEAMERICANMIND.pdf.

9 Maslow, Will. “Education Act Would Curb Foreign Gifts.” The New York Times, 16 Oct. 1986, www.nytimes.

com/1986/10/16/opinion/l-education-act-would-curb-foreign-gifts-148386.html.

4
research institutions to undercut American competitors while foreign governments 

were failing to reciprocate such educational agreement privileges to American 

companies.10-11Since 1998, the reporting requirement has been codified as Section 

117 of the Higher Education Act of 1965, as amended, 20 U.S.C. § 1011f, and titled 

“Disclosure of Foreign Gifts” (“Section 117”).12

Congress enacted Section 117 believing transparent reporting might counteract any 

distorting influence of foreign money on teaching, research, and culture and provide 

policymakers and the public with information to assess, detect, and respond to 

foreign influence operations under the guise of “academic” activities and to threats 

against the U.S. research enterprise. Until recently, the Department took no action to 

verify the reports it was receiving or to enforce the law against resisting institutions, 

and Congress failed to conduct effective oversight.

In 2004, the Department explicitly permitted anonymous foreign gifts and 

contracts, allowing the higher education industry and its foreign donors to avoid 

American public scrutiny, particularly foreign governments that used individuals and 

foundations as conduits for propaganda, indoctrination, and influence-peddling.

In 2008, concerned about the national security and domestic policy impact of post9/11 Saudi Arabian conditional and substantial “donations” to Middle Eastern studies 

centers, a Senate committee directed the Department to ensure “the integrity of 

the reporting requirements” and confirm “donations are reported and categorized 

correctly.”13 This committee further directed the Department to “prohibit avoidance of 

the disclosure of foreign gifts through the utilization of domestic conduits or through 

the reimbursement of domestic entity contributions.”14 However, the Department took 

no action to implement these directives, to verify reporting accuracy, or to enforce 

the law against resisting institutions. Congress did not conduct effective oversight on 

these matters.

10 Kristof, Nicholas D. “Foreign Funding of Research.” The New York Times, 5 Aug. 1985, www.nytimes.

com/1985/08/05/business/foreign-funding-of-research.html.

11 Ibid.

12 Reporting of Foreign Gifts, Contracts, and Relationships by Institutions. U.S. Department of Education 

Federal Student Aid, 4 Oct. 2004, www.insidehighered.com/sites/default/server_files/media/2004%20

IFAP%20-%20Dear%20Colleague%20Letter.pdf.

13 Joint Explanatory Statement of the Committee of Conference. U.S. Senate Committee on Health, Education, 

Labor & Pensions, www.help.senate.gov/imo/media/doc/Statement_of_Managers.pdf.

14 “Title IV – International Education Programs.” Congressional Record, 30 July 2008, p. 17249, books. 

google.com/books?id=rF_oi2GuH6sC&pg=PA17249&lpg=PA17249&lpg= prohibit+ 

avoidance+of+the+disclosure+of+foreign+gifts+through+the+utilization+of+domestic+ conduits+or+thro 

ugh+the+reimbursement+of+domestic+entity+contributions& source=bl& amp;ots=Mmh6GBrjIy&a 

mp;sig=ACfU3U2ID8lCtKwvryYM5rvRi3g3YZ-Ylg&hl=en&sa=X&ved=2ahUKEwjQ6_

KdlarqAhXXkHIEHVJoC- wQ6AEwAHoECAoQAQ #v=onepage&q=prohibit%20avoidance%20 

of%20the%20disclosure%20o f%20foreign%20gifts%20through%20the%20utilization%20of%20

domestic%20conduits%20or%20throu gh%20the%20reimbursement%20of%20domestic%20entity%20

contributions&f=false.

5
Beginning in 2009, the flow of foreign money, especially from instrumentalities of the 

governments of Qatar, Saudi Arabia, and China, rose massively. Simultaneously, higher 

education institutions accelerated and strengthened their financial and operational 

partnerships with foreign governments, including repressive regimes hostile to 

American policies and interests by opening many new foreign campuses.

In 2011, the Federal Bureau of Investigation Counterintelligence Strategic 

Partnership Unit issued the white paper “Higher Education and National Security: 

The Targeting of Sensitive, Proprietary and Classified Information on Campuses of 

Higher Education.” It warned the sector, “Foreign adversaries and competitors take 

advantage of” the American higher education and research enterprise to “improve 

their economies and militaries by stealing intellectual property to gain advantages 

over the United States.”15 These nations “use varied means to acquire information and 

technology to gain political, military, and economic advantages” including recruiting 

individuals for “espionage,” exploiting the student visa program for “improper 

purposes,” and spreading false information for “political or other reasons.”16 Generally 

inadequate campus information technology and network security was also identified 

as a major security risk. The Department did not implement policies based on the 

FBI’s findings, to verify reporting accuracy, or to enforce the law against institutions. 

Congress again failed to conduct effective oversight.

Then, in February 2019, the U.S. Senate Permanent Subcommittee on Investigations 

of the Committee on Homeland Security and Governmental Affairs issued a 

comprehensive bipartisan report on Chinese Communist Party propaganda 

operations on U.S. campuses.17 China’s Impact on the U.S. Education System found 

these operations were part of “China’s broader, long-term strategy ... to change the 

impression in the United States and around the world that China is an economic 

and security threat.”18 Furthermore, these “soft power” operations encourage 

“complacency towards China’s pervasive, long-term initiatives against both 

government critics at home and businesses and academic institutions abroad.”19

It also found foreign government propaganda and influence efforts, in the form of 

“investments” in U.S. higher education industry are “effectively a black hole” because 

up to 70% of all U.S. colleges and universities fail to comply with the law, and those 

that do substantially underreport.20 Congress also noted the Department’s historic 

failure to enforce the law.

15 “Higher Education and National Security: The Targeting of Sensitive, Proprietary, and Classified Information 

on Campuses of Higher Education.” Federal Bureau of Investigation, U.S. Department of Justice and Federal 

Bureau of Investigation, April 2011, p. 1, www.fbi.gov/file-repository/higher- education-national-security.pdf/

view.

16 Ibid.

17 China’s Impact on the U.S. Education System. U.S. Senate Permanent Subcommittee on Investigations, www.

hsgac.senate.gov/imo/media/doc/PSI Report China’s Impact on the US Education System.pdf.

18 China’s Impact on the U.S. Education System. U.S. Senate Permanent Subcommittee on Investigations, p. 1, 

www.hsgac.senate.gov/imo/media/doc/PSI Report China’s Impact on the US Education System.pdf.

19 Ibid.

20 China’s Impact on the U.S. Education System. U.S. Senate Permanent Subcommittee on Investigations, p. 70, 

www.hsgac.senate.gov/imo/media/doc/PSI Report China’s Impact on the US Education System.pdf. 

6
B. Scope of the Problem

The higher education sector has self-reported over $6.6 billion from Qatar, China, 

Saudi Arabia, and the United Arab Emirates, with the most recent July 31, 2020, 

reporting period yielding an additional $1.05 billion reported from these countries 

alone. Based on Congressional and Executive Branch investigations, the Department 

believes this amount is a fraction of the true total.21 The risk to academic freedom, 

integrity, and independence posed such contributions has been historically 

ignored by regulators and overlooked or downplayed by the beneficiaries of 

foreign largess. 22–23

Historically, fewer than 300 of the approximately 6,000 U.S. institutions self-report 

foreign money each year. Most foreign funds flow to a relatively small number of 

large institutions, many of which appear to have inadequately, or in some cases 

failed entirely, to report as required by law. A 2019 U.S. Senate subcommittee report 

described the industry’s foreign funding sources and ventures as a “black hole.”24

The disclosure mandated by Section 117, and the law’s robust enforcement, are 

essential because hostile governments and their instrumentalities have targeted the 

higher education sector for exploitation to infiltrate cutting-edge American research 

projects, influence curricula, and gain access to systems and information available 

through overseas “campuses” that receive less rigorous oversight than their domestic 

counterparts. Additionally, they recruit top American talent through talent programs 

or academic exchanges. For example:

• On July 20, 2020, the U.S. Attorney for the Northern District of California 

charged a visiting Stanford university researcher “with visa fraud in connection 

with a scheme to lie about her status as an active member of the People’s 

Republic of China’s military forces while in the United States conducting 

research at Stanford University.”25

21 P.L. 99-498, section 1206(a), October 17, 1986; 100 Stat. 1577 - 1579 (adding what was then section 1209 to 

the HEA (20 U.S.C. 1145d)).

22 As used in §117, the term “institution” is defined by §117(h)(4) of the HEA, 20 U.S.C. § 1011f(h)(4). The 

Department understands that to mean any “institution of higher education”, as defined in §102(a) of the 

HEA, 20 U.S.C. 1002(a) that participates in the program of student financial aid under Title IV of the HEA.

23 The HEA generally uses (and defines) the term “institution of higher education”, not “postsecondary 

institution,” although §117 uses the term “institution,” which it defines in §117(h)(4) without reference to 

either “higher education” or “postsecondary.” The Department regards §117 as applying to all IHEs that 

participate in Title IV, which uses the term “institution of higher education.”

24 China’s Impact on the U.S. Education System. U.S. Senate Permanent Subcommittee on Investigations, www.

hsgac.senate.gov/imo/media/doc/PSI Report China’s Impact on the US Education System.pdf.

25 “Visiting Stanford University Researcher Charged with VISA Fraud.” U.S. Department of Justice, 20 July 

2020, https://www.justice.gov/usao-ndca/pr/visiting-stanford-university-researcher-charged-visa- fraud.

7
• On June 9, 2020, the Department of Justice indicted Harvard University’s 

Chemistry Chair for lying about his professional affiliation with the 

Thousand Talents Plan, a research recruitment program run by the 

Chinese government.26-27

• In 2018, a Chinese national who came to the US on a F-1 student visa for 

electrical engineering study at the Illinois Institute of Technology in Chicago, 

was arrested for illegally working as an agent of the People’s Republic 

of China.28 He allegedly served a high-level intelligence officer in China’s 

Ministry of State Security, which “handles civilian intelligence collection and 

is responsible for counter-intelligence and foreign intelligence, as well as 

political security.”29–30

• Also in 2018, the Justice Department charged nine Iranians affiliated with 

a Tehran-based company called the Mabna Institute for hacking into 144 

American universities to steal sensitive data and intellectual property on behalf 

of the Islamic Revolutionary Guard Corps.31 First, the Iranians conducted online 

reconnaissance of university professors. Second, the Iranians sent “spear 

phishing” emails. Third, the conspirators used stolen account credentials to 

obtain unauthorized access to victim professor accounts, through which they 

then exfiltrated intellectual property, research, and other academic data and 

documents from the systems of compromised universities, including, among 

other things, academic journals, theses, dissertations, and electronic books. The 

defendants targeted data across all fields of research and academic disciplines, 

including science and technology, engineering, social sciences, medical, and 

other professional fields. At least approximately 31.5 terabytes of academic 

data and intellectual property from compromised universities were stolen and 

exfiltrated to servers under Iranian control.

• In 2017, a Virginia Tech professor of biological systems engineering was indicted 

for conspiracy to commit or defraud the United States.32He and two associates 

provided false statements and certifications to the National Science Foundation 

(NSF). He submitted a proposal to NSF to receive federal funding for work that 

had already been completed in China, and it appeared that he “also sought to 

benefit China” through the project.33

26 “Harvard University Professor Indicted on False Statement Charges.” U.S. Department of Justice, 9 June 

2020, www.justice.gov/opa/pr/harvard-university-professor-indicted-false-statement-charges.

27 Indictment, United States v. Lieber, No. 20-cr-10111 (D. Mass. June 9, 2020).

28 Lighty, Todd. “How a Chicago College Student Ended up in the Middle of an FBI Investigation into Chinese 

Spying.” Chicago Tribune, 26 Sept. 2019, www.chicagotribune.com/investigations/ct-chinese- espionagechicago-20190926-xh74yrhorzakjpsnojyx4aapfm-story.html.

29 Complaint, United States v. Chaoqun, No. 18-cr-00611 (N.D. Ill. Sept. 21, 2018).

30 McKay Aff., United States v. Chaoqun, No. 18-cr-00611 (N.D. Ill. Sept. 21, 2018).

31 Indictment, United States v. Rafatnejad et al., No. 18-cr-00094 (S.D.N.Y. Feb. 7, 2018).

32 Seckers Aff. ¶ 35, United States v. Yiheng Zhang, 2019 WL 2779107 (D. Va. 2017) (No. 17-mj-00093). 

33 Ibid.

8
Under Secretary DeVos’ leadership, the Department has taken action to expose 

and redress the higher education’s disturbing failure properly and transparently to 

report foreign money. To be clear, the Department’s present institutional interests are 

limited to Section 117’s transparency and disclosure requirements and the integrity 

of its higher education grant programs. Congress has not asked the Department 

to assess whether institutions’ international entanglement has, on balance, served 

American interests or whether access to foreign money should be more effectively 

fettered. Obviously, responsible American college and university administrators and 

fundraisers should be sensitive to the relevant geopolitical context and properly 

scrutinize financial relationships that might serve as potential vehicles of adversarial 

foreign influence, particularly in dealings with strategic competitors.34

Since June 28, 2019, Secretary DeVos has initiated 12 civil investigations to 

ensure institutional compliance with Section 117: Georgetown University, Texas 

A&M University, Rutgers University, Cornell University, University of Maryland, 

Massachusetts Institute of Technology, and most recently, Harvard University, Yale 

University, University of Texas, Case Western Reserve University, Fordham University, 

and Stanford University.35 Since July 1, 2019, these investigations have prompted 

institutions to “catch up” on their reporting, amounting to $6.5 billion of previously 

unreported foreign gifts and contracts, according to Department data.

The Department’s concerns regarding the threat posed by foreign money and 

foreign interference to academic integrity, free speech on campuses, and national 

security are widely shared. For example, the White House Office of Science and 

Technology Policy has voiced concerns over “increasingly sophisticated efforts 

to exploit, influence, and undermine our research activities and environments.”36

In 2018, the National Institutes of Health sent letters to top research institutions 

regarding underreporting of foreign support amid foreign influence in U.S. 

biomedical research.37

The U.S. Senate Permanent Subcommittee on Investigations has issued at least two 

major reports highlighting the threat posed by Confucius Institutes and Chinese 

talent recruitment plans.38–39

34 Summary of the 2018 National Defense Strategy of The United States of America. U.S. Department of 

Defense, 2018, https://dod.defense.gov/Portals/1/Documents/pubs/2018-National-Defense-StrategySummary.pdf. Accessed 26 Feb. 2020.

35 Section 117 of the Higher Education Act of 1965. U.S. Department of Education, 12 Feb. 2020, www2.ed.gov/

policy/highered/leg/foreign-gifts.html.

36 Droegemeier, Kelvin K. Executive Office of the President Office of Science and Technology Policy, September 

2019, https://www.whitehouse.gov/wp-content/uploads/2019/09/OSTP-letter-to-the-US- researchcommunity-september-2019.pdf.

37 Collins, Francis S. Department of Health and Human Services, https://www.insidehighered.com/sites/default/

server_files/media/NIH Foreign Influence Letter to Grantees 08-20-18.pdf.

38 China’s Impact on the U.S. Education System. U.S. Senate Permanent Subcommittee on Investigations, www.

hsgac.senate.gov/imo/media/doc/PSI Report China’s Impact on the US Education System.pdf.

39 “Threats to the U.S. Research Enterprise: China’s Talent Recruitment Plans.” U.S. Senate Committee on 

Homeland Security and Governmental Affairs, U.S. Senate Permanent Subcommittee on Investigations, 18 

Nov. 2019, www.hsgac.senate.gov/.

9
The Department has taken strong efforts to promote effective interagency 

collaboration and cooperative use of existing government infrastructure, and the 

Department continues to pursue concerted efforts. An example of interagency 

collaboration is the Foreign Investment and National Security Act of 2007 (known 

as “FINSA”), which “authorizes the President to review mergers, acquisitions, and 

takeovers by or with any foreign person which could result in foreign control of any 

person engaged in interstate commerce in the United States, to determine the effects 

of such transactions on the national security of the United States,” as explained by 

the U.S. Department of the Treasury.40 FINSA amended the Defense Production Act 

of 1950, and FINSA established the Committee on Foreign Investment in the U.S. 

(“CFIUS”), including a host of U.S. federal government agencies to control investment 

and evaluate national security risks associated with these financial transactions.41

Recently modified by the Foreign Investment Risk Review Modernization Act of 

2018, FINSA provides an example of an existing forum for government agencies that 

can be used to further address malign foreign influence, particularly at institutions, 

since Section 117 data can be used to inform FINSA’s ongoing work.42 In summary, 

U.S. federal government agencies can and should be collaborating to better assess 

and address threats related to Section 117. The Department offers this report as a 

resource for other federal agencies that regularly address similar issues and aspire to 

collaborate with other agencies.

C. Recent History

Since 2000, the higher education industry has increased its entanglement with 

foreign adversaries, leading to correspondingly larger and more dangerous foreign 

threats to American academic freedom, national and economic security, and 

research integrity. Following the 9/11 terror attacks, Saudi Arabia began advancing 

Islamic ideology across the globe through multimillion-dollar donations to elite 

Western institutions, such as Harvard University and Cambridge University. Saudi 

Arabia began funding Middle Eastern National Resource Centers, a critical part of a 

Department program to prepare Americans to engage strategic languages, cultures, 

and governments to serve American strategic interests, at record levels.43

At the same time, the sector took aggressive steps to increase foreign student 

enrollment. Some state-supported and private, nonprofit universities have even paid 

foreign “headhunters” a large contingency fee to find and enroll foreign students. An 

Australian study reported that, in 2007, the Chinese government sent approximately 

500 Chinese military scientists to study at American schools “as part of a widespread 

40 “Regulations Pertaining to Mergers, Acquisitions, and Takeovers by Foreign Persons.” U.S. Department of 

the Treasury, Federal Register, 21 Nov. 2008, www.treasury.gov/resource- center/international/foreigninvestment/Documents/CFIUS-Final-Regulations-new.pdf.

41 FINSA amended The Defense Production Act of 1950, so the Foreign Investment Risk Review Modernization 

Act of 2018 modified The Defense Production Act of 1950, in turn modifying FINSA.

42 Oleynik, Ronald A., et al. “FIRMA Expands CFIUS Jurisdiction in 2 Major Ways: Insights.” Holland & Knight, 

August 2018, www.hklaw.com/en/insights/publications/2018/08/firma-expands-cfius- jurisdiction-in-2-

major-ways.

43 Gutfeld, Arnon. “The Saudi Specter over the American Education System.” Jerusalem Center for Public 

Affairs, 23 May 2019, jcpa.org/article/saudi-specter-over-american-education-system/.

10
effort to collect military technology.”44 In 2010, a group of Russian government 

agents, 70% of which had attended U.S. universities, were convicted and pled guilty 

to acting as foreign agents.45

Currently, the Chinese Communist Party sends Chinese students “under the guise 

of international scientific collaboration to systematically target critical technologies 

to advance China’s national security interests.”46 The Chinese Ministry of Education 

even proposed a “patriotic education” initiative which enumerated studying abroad 

as a way for Chinese students to “serve the country.”47 China also lures international 

scholars to advance its causes through the Thousand Talents Program designed 

to attract foreign scholarship by providing them research funding, salaries, and 

laboratory space, among other perks.48

China’s infiltration of American higher education is increasingly evidenced by the 

number of American-based researchers recently charged with Chinese collaboration, 

as discussed previously. Furthermore, the U.S. federal government had identified a 

substantial uptick in Chinese espionage. The Department of Justice has filed over 

20 criminal cases concerning economic espionage, trade secret theft, and research 

control since 2018.49 Secretary of Defense Mark Esper asserted that China “is 

perpetrating the greatest intellectual property theft in human history,” as it pursues 

global military and technological supremacy.50

America’s adversaries have long exploited the openness of American society, our 

deeply held belief in free inquiry and academic freedom, and the misjudgments of 

some higher education industry leaders to advance their institutional interests at the 

risk to American security.

44 The RSC National Security: Strengthening America & Countering Global Threats. Republican 

Study Committee, 2020, p. 15, rsc-johnson.house.gov/sites/republicanstudycommittee.house.gov/

files/%5BFINAL%5D%20NSTF%20Report.pdf.

45 Golden, Daniel. “Why Russian Spies Really Like American Universities.” ProPublica, 23 July 2018, www.

propublica.org/article/why-russian-spies-really-like-american-universities.

46 The RSC National Security: Strengthening America & Countering Global Threats. Republican 

Study Committee, 2020, p. 8, rsc-johnson.house.gov/sites/republicanstudycommittee.house.gov/

files/%5BFINAL%5D%20NSTF%20Report.pdf.

47 Dukalskis, Alexander. “The Chinese Communist Party Has Growing Sway in Western Universities.” Democratic 

Audit, 3 Jan. 2018, www.democraticaudit.com/2018/01/04/the-chinese-communist-party-has- growingsway-in-western-universities/.

48 The RSC National Security: Strengthening America & Countering Global Threats. Republican 

Study Committee, 2020, p. 13, rsc-johnson.house.gov/sites/republicanstudycommittee.house.gov/

files/%5BFINAL%5D%20NSTF%20Report.pdf.

49 The RSC National Security: Strengthening America & Countering Global Threats. Republican 

Study Committee, 2020, p. 10, rsc-johnson.house.gov/sites/republicanstudycommittee.house.gov/

files/%5BFINAL%5D%20NSTF%20Report.pdf.

50 The RSC National Security: Strengthening America & Countering Global Threats. Republican 

Study Committee, 2020, p. 8, rsc-johnson.house.gov/sites/republicanstudycommittee.house.gov/

files/%5BFINAL%5D%20NSTF%20Report.pdf.

11
D. Congressional Communications and Department Investigations

The Department has reported to Congress twice on foreign money underreporting. 

First, on February 28, 2019, Deputy Secretary Dr. Mitchell M. “Mick” Zais testified 

before the Senate Committee on Homeland Security and Governmental Affairs 

Permanent Subcommittee on Investigations.51 Second, on November 27, 2019, the 

Department sent a letter to Senator Rob Portman, Chairman of the U.S. Senate 

Permanent Subcommittee on Investigations. Building on Deputy Secretary Zais’ 

testimony, the letter outlined how six investigated universities failed to report over 

$1.3 billion of foreign gifts and contracts over the past seven years, and in particular, 

the concerning nature of contracts with China, Qatar, and Russia.52 These initial 

reviews also revealed how one institution was pressured by a foreign government 

to hide its donations, another held an agreement with a foreign government to 

promulgate foreign propaganda, and others held direct agreements with the Chinese 

Communist Party. This report elaborates on the initial findings included within the 

letter to Chairman Portman.

Investigations of foreign influence within America’s education system have occurred 

across the U.S. government. The February 2019 Senate Permanent Subcommittee 

on Investigations Staff Report, “China’s Impact on the U.S. Education System,” 

highlighted the role of Chinese government interference at U.S. universities and 

schools and illuminated shortcomings in institutions’ foreign gift and contract 

reporting processes.53-54 It found that “foreign government spending on U.S. schools is 

effectively a black hole, as there is a lack of reporting detailing the various sources of 

foreign government funding.” In fact, almost 70% of American schools that received 

more than $250,000 from the Chinese education ministry, Hanban, “failed to properly 

report that information to the Department of Education,” according to the report.

Pursuant to its investigatory authority, the Department requested additional 

information from twelve institutions. Generally, the Department requested information 

concerning foreign gifts and contracts with particular foreign organizations and 

foreign governments of concern, records of compliance with Section 117 and other 

federal obligations, and IRS Form 990s and internal auditing records.

On June 28, 2019, the Department published a notice of investigation and record 

request in the Federal Register that formally launched investigations of Georgetown 

University and Texas A&M University.55 Georgetown University was particularly 

directed to produce documentsrelated to Chinese, Saudi Arabian, and Qatari foreign 

gifts and contracts. Texas A&M University was particularly directed to produce 

documents related to Chinese and Qatari foreign gifts and contracts. In both letters, 

contracts with organizations of concern were highlighted, such as Huawei and ZTE 

51 Zais, Mitchell “Mick” M. https://www.hsgac.senate.gov/imo/media/doc/2019-02-28 Zais Testimony - PSI.pdf.

52 Rubinstein, Reed. U.S. Department of Education Office of the General Counsel, November 2019, https://

www2.ed.gov/policy/highered/leg/psi-nov27-2019.pdf.

53 China’s Impact on the U.S. Education System. U.S. Senate Permanent Subcommittee on Investigations, p. 70, 

www.hsgac.senate.gov/imo/media/doc/PSI Report China’s Impact on the US Education System.pdf.

54 Ibid.

55 Federal Register. U.S. Government Publishing Office, 28 June 2018. https://www.govinfo.gov/content/pkg/

FR-2019-06-28/pdf/2019-13904.pdf.

12
Corporation. The Department sent another set of letters on July 19, 2019, to Cornell 

University and Rutgers University, requesting documents from similar sources.56

Subsequently, additional investigations were opened into Yale University, Harvard 

University, University of Texas, Case Western Reserve University, Fordham University, 

and Stanford University. Yale University apparently failed to comply with federal 

reporting obligations when it underreported its foreign gifts and contracts by $375 

million, and Harvard University appears to possess inadequate institutional controls 

over its foreign donations and contracts.

Document productions are still being received and are being reviewed by the 

Department. Most recently, the Department has opened investigations into Fordham 

University and Stanford University, inquiring about millions of dollars in anonymous 

Chinese donations received by Stanford University and incoherence between 

universities’ global involvement and nearly nonexistent foreign gift and contract 

reporting at Fordham University. These investigations — at Fordham and Stanford 

— are ongoing, and document productions have not yet been fully received by the 

Department, so findings from these investigations are not included within this report.

E. Initial Review

The Department has announced 12 Section 117 investigations. The Department has 

conducted an initial review of various documents including contracts, financial 

records, and institutional practices provided by six of the institutions: Georgetown 

University, Texas A&M University, Cornell University, Rutgers University, Massachusetts 

Institute of Technology, and the University of Maryland. Findings from Harvard 

University, Yale University, University of Texas, and Case Western Reserve University 

have largely not been included because review of these institutions’ document 

productions was ongoing at the time of this report’s publication, but some facts 

about their reporting compliance, as noted in the investigatory letters sent to the 

institutions, are occasionally referenced. Document productions had not been 

received from Fordham University and Stanford University at the time of this report’s 

publication, so findings from these investigations are currently unavailable.

The Department’s review, located within this report, is not “audit or litigation grade” 

and does not allege criminal activity by any institution, nor does it necessarily 

indicate a referral or intent to refer any matters to the Department of Justice, 

as any such referrals would occur separately from this review. The Department’s 

review shines a spotlight on previously unknown foreign gifts and contributions, 

their prevalence and magnitude, and the consequences of porous or nonexistent 

institutional oversight and lax federal enforcement. Stanford University, for example, 

has reported over $64 million in unidentified, anonymous Chinese donations since 

May 2010 (when Stanford ceased reporting foreign donor names).57 Perhaps most 

disturbing are apparent efforts by some institutions to avoid public scrutiny of 

their receipt of foreign dollars by failing to disclose or maintain appropriate internal 

controls. The Department is now addressing years of previously unknown, substantial 

disclosure reporting errors, beginning with these 12 investigations.

56 Federal Register. U.S. Government Publishing Office, 19 July 2019. https://www.govinfo.gov/content/pkg/FR2019-07-19/pdf/2019-15425.pdf.

57 Rubinstein, Reed. “Letter to Stanford University.” Received by Marc Tessier-Lavigne, U.S. Department of 

Education, 10 Aug. 2020, https://www2.ed.gov/policy/highered/leg/stanford-20200810.pdf.

13
III. OBSERVATIONS

A. Institutions’ Resources. 

Institutions — and their related entities (i.e., any legal entity, including foundations or 

organizations that operate substantially for the benefit for or under the auspices of 

institutions) — are multinational, multibillion-dollar enterprises.

A.1. IRS Form 990s.

Generally, institutions are well-funded, influential research producers, very 

often with opaque foreign gift and contract reporting practices.

 

reported incomes in 2017 that exceeded $1 billion while, in the same reporting 

period, one institution reported over $20 billion of net income. 

six investigated institutions reported at least $100 million of yearly income. 

Institutions’ outgoing cash to regions such as East Asia and the Pacific, the 

Middle East and North Africa, and Russia and Neighboring states is also 

remarkable, and while not necessary to report under Section 117, these cash 

flows demonstrate a significant global scope for these schools. 

for example, sent $12 million abroad and received $196 million of foreign gifts 

and contracts in 2014 alone, according to financial documents received by the 

Department.58 Incoming and outgoing institutional dollars recorded by Form 

990s demonstrate that foreign influence on institutions is measured by millions 

and billions of dollars. Although gifts and contracts do not necessarily equal 

influence, gifts and contracts create opportunities for foreign influence.

A.2. Harvard “Q71 data” – $1,143,899,998 since 2012.59

Demonstrating foreign financial involvement with top U.S. research institutions, 

Harvard University alone has received over $1 billion of foreign funding since 

2012.60 As the Department is currently conducting an investigation, the 

Department cannot confirm whether these numbers accurately reflect the 

entirety of Harvard’s foreign funding. Harvard’s self-professed improper vetting 

of domestic contributions raises questions about its foreign gifts and contract 

58 The Department believes that cash-out agreements can fall under Section 117 reporting requirements. 

Cash being sent abroad may be part of contract that would fall under Section 117’s purview. Currently, it 

can be difficult to ascertain whether these agreements should be reported without further Department 

investigation.

59 Section K, question 71 (“Q71”) of the electronic application (“E-App”), the Department’s online IHE reporting 

system, accepts IHEs’ data about foreign gifts and contracts or foreign ownership and control.

60 The Department acknowledges that some foreign gifts and contracts that may comprise this foreign funding 

may fall below the reporting threshold.

14
reporting procedures.61 By the institution’s own standards, the Department’s 

pressure on, and evaluation of, Harvard’s current foreign gift and contract 

reporting mechanisms should be considered reasonable.

A.3. Data on Gift Reporting

Q71 data reveals the level of granularity in institutions’ financial reporting.62

Institutions and representative organizations have expressed concerns about 

unclear or cumbersome reporting processes, but the data demonstrate that 

institutions are capable of reporting gifts and contracts below the $250,000 

threshold. Universities can account for and report transactions as low as 

$1, according to the Department’s historical foreign gifts data.63 However, 

capability does not translate into compliance. Underreporting remains a 

pervasive problem, despite many major universities possessing sophisticated 

and fully capable accounting systems.

B. Inadequate Reporting. 

Reporting fails to comply with HEA, Section 117 and is otherwise incomplete 

and inaccurate.

B.1. letter

 admitted that its disclosures to the Department failed to 

document more than $760 million in funding for an entire educational 

institution University officials chose the word “dumbfounded” to 

explain this reporting error and provided no explanation. Universities’ lack of 

awareness about their own reporting processes is consequential. This single 

omission led to an incomplete and inaccurate picture of foreign 

funding. which informs 

concerns about the broader reporting errors across institutions, especially

 was unable properly to account for its foreign 

gifts and contracts.

B.2. U.S. Senate Permanent Subcommittee on Investigations Committee 

on Homeland Security and Governmental Affairs Report on Confucius 

Institutes.

Incomplete and inaccurate understandings of institutions’ foreign funding 

hinder timely assessment of how these gifts and contracts could undermine 

U.S. academic and security interests. Embodying concerns about national 

security and China leveraging soft power within U.S. institutions, the Confucius 

Institute was identified as an organization of particular concern by the U.S. 

61 Bacow, Lawrence S. “A Message to the Community Regarding Jeffrey Epstein.” Harvard University, 12 

Sept. 2019, www.harvard.edu/president/news/2019/message-to-community-regarding-jeffrey-epstein. It is 

currently unclear if, under Section 117, Harvard should have reported Epstein’s donations, which may have 

originated from a foreign source, but Epstein’s donations are a high-profile example illustrating the presence 

of unexamined “dark money” in the U.S. education system.

62 Section K, question 71 of the electronic application or “E-App,” the Department’s online IHE reporting 

system, accepts IHEs’ data about foreign gifts and contracts or foreign ownership and control.

63 Section 117 of the Higher Education Act of 1965. U.S. Department of Education, 12 Feb. 2020, www2.ed.gov/

policy/highered/leg/foreign-gifts.html.

15
Senate Permanent Subcommittee on Investigations. Funded by and using 

materials approved by the Chinese government, Confucius Institutes offer 

international audiences Chinese language instruction and cultural activities.

The February 2019 report illuminated how Confucius Institutes, operated on 

American campuses by China’s education ministry, were political instruments 

of the Chinese state. “Confucius Institute funding comes with strings that can 

compromise academic freedom,” according to the report.

Confucius Institutes have been established at alarmingly exponential rates 

since 2004.64 The Permanent Subcommittee on Investigations (PSI) reported 

that China provided over $158 million of funding to place and operate 

Confucius Institutes on U.S. campuses.65 Despite Beijing’s heavy spending, 

institutions’ reporting was lax. The report observed how “U.S. schools 

failed to comply with statutory requirements to report foreign gifts to the 

Department of Education.” Nearly 70% of “schools required to file reports 

with the Department of Education failed to report Hanban gifts, contracts, or 

contributions in excess of $250,000,” exemplifying a much wider problem of 

underreporting across institutions.66

The Department can specifically confirm three findings from the PSI report: 

U.S. schools systematically failed to comply with statutory requirements to 

report foreign gifts to the Department; the Department did not conduct 

regular oversight of U.S. schools’ compliance with required foreign gift 

reporting; and the Department failed to update U.S. school reporting 

requirements. Our report confirms that U.S. schools alarmingly fail to meet 

statutory requirements to report foreign money, measured in the billions of 

dollars of unreported gifts and contracts.

PSI’s final two observations are currently being addressed by the Department. 

First, the Department is correcting a historically nonexistent record of 

compliance through these eight institutional investigations. Second, the 

Department published for public comment a modern and robust information 

collection under the Paperwork Reduction Act to promote compliance and 

transparency.67 The new reporting portal was mandatory for the foreign money 

reports due by July 31, 2020, which yielded a significant increase in compliance 

with reporting obligations. These actions demonstrate the Department’s 

renewed commitment to ensuring that institutional foreign gift and contract 

reporting is complete and compliant with Section 117 requirements.

64 Jakhar, Pratik. “Confucius Institutes: The Growth of China’s Controversial Cultural Branch.” BBC News, BBC, 7 

Sept. 2019, www.bbc.com/news/world-asia-china-49511231.

65 China’s Impact on the U.S. Education System. U.S. Senate Permanent Subcommittee on Investigations, p. 2, 

www.hsgac.senate.gov/imo/media/doc/PSI Report China’s Impact on the US Education System.pdf.

66 China’s Impact on the U.S. Education System. U.S. Senate Permanent Subcommittee on Investigations, p. 3, 

www.hsgac.senate.gov/imo/media/doc/PSI Report China’s Impact on the US Education System.pdf.

67 “Agency Information Collection Activities; Submission to the Office of Management and Budget for 

Review and Approval; Comment Request; Foreign Gifts and Contracts Disclosures.” Federal Register,U.S. 

Government Publishing Office, 10 Feb. 2020, www.federalregister.gov/documents/2020/02/10/2020- 02574/

agency-information-collection-activities-submission-to-the-office-of-management-and-budget- for?utm_

content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=.

16
B.3. Institutions’ investigatory data is not consistent with reported Q71 

data.

Prompting investigation, failed to report over $1.2 billion. 

By own admission , it failed

to report foreign gifts and contracts involving later 

discovered that even more foreign funds had been underreported. Only as a 

result of other Section 117 investigations was compelled to 

rectify this reporting error. Q71 data does not appear accurately to capture 

universities’ foreign gifts and contracts reporting because since reporting 

has been largely incomplete or nonexistent before enforcement by the 

Department.

Beyond , institutions played catch-up and reported $6.5 billion of 

foreign gifts and contracts since July of 2029, when Section 117 compliance 

investigations were first opened. This statistic exemplifies how institutions are 

both recognizing the gravity of Section 117 compliance and that institutions 

are largely capable of reporting these foreign gifts and contracts when they 

choose to do so. Yale additionally failed to report its foreign gifts and contracts 

for four years, then retroactively reported them.

C. Inadequate Accounting Processes. 

Institutions do not have adequate accounting processes for complying with HEA, 

Section 117.

C.1. description and its defects.

provided the Department with a detailed account of its auditing 

processes. Although the institution records inbound and outbound financial 

transactions adequately, its financial ledger systems are not fully integrated 

with its contracts/agreements management systems. Hence, tracing specific 

financial transactions to specific contracts/agreements requires manual 

analysis, which has the effect of degrading the accuracy and reliability of HEA, 

Section 117, reporting.

 yet even its accounting procedures do not 

appear to fulfill reporting obligations.68 

 little confidence can be held in reporting processes 

across America’s wide range of universities and colleges with fewer resources. 

This is not to suggest that compliance with statutory reporting requirements 

is unattainable; rather, the Department is concerned that universities are not 

properly structuring and supporting their accounting processes to achieve 

compliance.

C.2. student aid officer.

A string of confused exchanges between prompted 

concern over universities’ internal, standardized reporting mechanisms. 

According to records obtained by the Department, university officers debated 

interpretation of Department regulations, causing division over 

68

17
reporting requirements, because there was no point-person who facilitated 

Section 117 compliance at the time. Documents provided to the Department 

show administrators deliberating over who is responsible for overseeing 

Section 117 reporting, so one employee unfamiliar with the Section 117 

reporting process offered to quickly learn about it and oversee the process. 

Resulting disputes included the definition of a “restriction,” among other 

fundamental matters to labeling and processing foreign gifts and contracts. In 

such cases of confusion, risks persist that certain gifts and agreements will be 

left out of the reporting process or improperly recorded in accordance with 

Department stipulations. These examples suggest that universities may not 

be adequately prioritizing and adapting to meet their reporting obligations 

and, consequently, lack the institutional tools — even as minor as identifying a 

project coordinator for the reporting process — to achieve compliance.

C.3. process description.

 explanation of its processes for reporting foreign gifts 

and contracts suggests that some institutions, including institutions receiving 

significant amounts of foreign gifts and contracts, may not have adequate 

accounting processes for complying with Section 117. Without third-party 

verification of accounting mechanisms, institutional controls — no matter how 

sophisticated — may not properly integrate foreign gifts or contracts into their 

systems to report all agreements that would be subject to Section 117 reporting 

requirements.

D. Limited Oversight for International Business. 

Institutions — and their related entities — do business with foreign governments and 

persons with limited oversight.

D.1. Q71 Data is incomplete.

Although institutions have demonstrated their ability to record financial 

transactions with great detail — albeit imperfectly — Q71 data does not provide 

a complete picture of their foreign gifts and contracts. Many institutions have 

been catching up with their reporting, retroactively submitting records of 

foreign gifts and contracts, but Q71 data is intended to capture universities’ 

foreign gift and contracts in the requested timeframe.

The Department found that during the July 31, 2020, reporting cycle 

institutions reported approximately $2 billion of “late transactions,” which 

should have been disclosed before the July 31, 2020, reporting deadline.69

Since the Department began its enforcement efforts, many institutions 

have been “catching up” with their foreign gift and contract reporting by 

retroactively reporting foreign gifts and contracts. Case Western Reserve 

University, which received an investigatory notice in May 2020, failed to report 

a single foreign gift or contract to the Department over a more than 12-year 

period.70 Case Western Reserve University reported these transactions many 

69 For example, if, during the July 31 reporting period, an institution chose to report a contract that ended in 

2017, this report would be considered a “late transaction.”

70 Rubinstein, Reed. “Letter to Case Western Reserve University.” Received by Barbara R. Snyder, U.S. 

Department of Education, 27 May 2020, www2.ed.gov/policy/highered/leg/cwru-20200527.pdf.

18
years later, but significantly postponing the reporting of foreign gifts and 

contracts violates efforts to promote public transparency. Yale University also 

retroactively reported many of its foreign gifts and contracts, but this does 

not fulfill its obligation to report its gifts and contracts for the preceding 

six months, twice a year. Timely disclosures are not only statutorily required 

but may be essential to national security considerations and other agency 

transparency efforts.

D.2. gift procedures.

Rather than increasing internal scrutiny of foreign money, 

attempted to reduce its own foreign gift and contracts oversight burdens. 

 established its to evaluate of 

certain foreign gifts and contracts. 

 arm apparently increase the monetary threshold 

meriting committee review of foreign gifts and contracts, effectively reducing 

the committee’s workload. proposal 

would have raised the standard of “suspect” from . The legal 

threshold for reporting, however, is $250,000. proposal would substantially 

decrease the body of foreign gifts and contracts closely reviewed by university 

staff. This example illustrates a broader concern across institutions that foreign 

gifts and contracts are not being carefully evaluated by institutions even when 

reported.

E. Ties to National Security Risks. 

Institutions regularly work with foreign entities known or suspected to present 

national security risks.

E.1. Huawei – nearly all investigated institutions.

Chief among these security concerns is Huawei, a heavily state-influenced 

technology company based in Shenzhen, China, which has become the largest 

global retailer of telecommunications equipment. Huawei became a household 

name not only because of its products’ international presence but because 

of these products’ potential enablement of foreign espionage.71 Huawei’s 

corporate structure includes a Party Committee that “exerts influence, 

pressure, and monitoring of corporate activities” for the Chinese Communist 

Party, according to subject experts.72 Huawei has admitted to receiving 

“support from the Chinese government,” and The Wall Street Journal reported 

how $75 billion in Chinese government grants promoted Huawei’s global 

prowess, making its presence a potential tool of the Chinese government and 

71 Maizland, Lindsay, and Andrew Chatzky. Huawei: China’s Controversial Tech Giant. Council on Foreign 

Relations, 12 Feb. 2020, www.cfr.org/backgrounder/huawei-chinas-controversial-tech-giant.

72 Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies 

Huawei and ZTE. U.S. Senate Permanent Select Committee on Intelligence, 8 Oct. 2012, fas.org/irp/

congress/2012_rpt/huawei.pdf.

19
grave national security concern in the U.S. and abroad.73-74 Beyond Huawei, 

Article 28 of China’s 2016 Cybersecurity Law requires, “Network operators 

shall provide technical support and assistance to public security organs 

and national security organs that are safeguarding national security and 

investigating criminal activities in accordance with the law.”75 Meaning, Chinese 

companies can be tapped by the Chinese Communist Party to serve any stated 

“patriotic” cause.

 all reported at least one contract with or donation from 

the Chinese technology giant, Huawei.76 , for example, reported nearly 

$1 million of agreements, while has held nearly $11 million in contracts and 

agreements with Huawei since 2013, ranging from research agreements to 

donations for specific research projects and programs. , Huawei 

was also a dues-paying member of , an official university 

program 

 .

77

Across these investigated universities, many of these Huawei agreements and 

gifts strategically concerned sensitive topics like nuclear science or those 

related to competitive industries like robotics, semiconductors, and online 

cloud services. For example, Huawei made several hundred thousand dollars of 

donations towards , applied physics 

research at , and cutting-edge research projects at 

the .

E.2. Central Committee of the Communist Party of the People’s Republic 

of China at 

Institutions have directly entered into agreements with foreign governments, 

even repressive governments that are often hostile to American national 

security interests, such as China. For example, the Central Committee of 

Communist Party of the People’s Republic of China has been under contract 

with since 2006. Based on the last available IRS Form 

990 obtained through the Department’s investigation of , 

 derived $2,369,807 from 

 . Further, the Party School of the Central Committee of the Communist 

Party of China entered into an academic exchange agreement with 

 . The Party School of the Central Committee of the Communist Party is 

73 “Huawei Says Relationship with Chinese Government ‘No Different’ from Others.” South China Morning 

Post, 26 Dec. 2019, www.scmp.com/tech/big-tech/article/3043558/huawei-says-relationship- chinesegovernment-no-different-any-other.

74 Ibid.

75 “China Initiative Conference,” U.S. Department of Justice and Center for Strategic and International Studies. 

6 Feb. 2020, Washington, D.C., https://www.youtube.com/watch?v=M1dtxt82HFE.

76

77

20
a Chinese government-run institution, which exclusively trains officials who are 

joining, or are already within, echelons of the Communist Party of China. 

 agreement was established to discuss areas 

of joint interest, bringing speakers from, and hosting events in, both China and 

the United States. Chinese and American scholars were scheduled to share 

findings from respective academic research projects that could provide the 

Chinese government direct access to U.S. research and lend legitimacy to 

Chinese government propaganda masked as scholarship.

Additionally, entered into an agreement with the State 

Administration for Religious Affairs of the People’s Republic of China to train 

public officials. The State Administration’s presence might imply the existence 

of religious pluralism within China, but the State Administration is charged with 

tightly regulating religious expression.

According to itself, China recognizes only five official 

faiths, and these religions are overseen by government-run Religious 

Patriotic Associations and face further internal regulations or displacement 

to guarantee their allegiance to the Chinese government.78 These agreements 

raise questions about how U.S. research institutions may be enabling 

foreign agendas domestically and abroad. The Department does not seek to 

monitor these exchanges or direct institutional curricula, for example, but it 

is responsible for ensuring that institutional reports are readily available and 

reviewable by the public at large, if they meet the reporting thresholds under 

Section 117.

E.3. Kaspersky at ; Skolkovo Institute of Science and 

Technology at .

 either received funding from a Russian government 

affiliate or entered into technology agreements with the Russian government. 

The Russian government is infamous for initiating large-scale hacks against 

foreign governments and corporate entities and for ignoring international 

cybersecurity norms. Russia is also identified as a strategic competitor in the 

2018 National Defense Strategy.79

 accepted a $25,000 sponsorship from Kaspersky 

Government Security Solutions, a cybersecurity company with suspected ties 

to the Russian government, to host 

. Kaspersky Government Security Solutions is a Moscow-based 

cybersecurity company whose services are employed worldwide; in 2017, 

the Department of Homeland Security expunged Kaspersky products from 

U.S. government servers due to “ties between certain Kaspersky officials and 

78

79 Summary of the 2018 National Defense Strategy of The United States of America. U.S. Department of 

Defense, 2018, https://dod.defense.gov/Portals/1/Documents/pubs/2018-National-Defense-StrategySummary.pdf. Accessed 26 Feb. 2020.

21
Russian intelligence and other government agencies.”80 A document leaked by 

a suspected Russian cybercriminal revealed cooperation between the Russian 

government’s Federal Security Service (FSB) — which conducts Russia’s 

intelligence and security affairs – and Kaspersky Lab, the parent company 

of Kaspersky Government Security Solutions.81 This document relayed how 

a Russian FSB agent and a Kaspersky Lab technician cooperated to access 

decrypted documents for the Russian government agent. Kaspersky alleges 

independence from the Kremlin, but credible documentation continues to 

suggest otherwise.82

Another example of sensitive research cooperation is illustrated within 

foreign gifts and contracts. The Skolkovo Institute of Science and Technology 

— also known as “Skoltech” — was founded in conjunction with . 

The research institution is one part of a larger project launched by Russian 

President Dimitry Medvedev in 2010 aimed at empowering Russia’s technology 

sector and attracting foreign investment.83 This graduate institution facilitates 

academic exchange and cooperation between Russian and American graduate 

students and professors from regarding key technology topics like 

oil and gas extraction, biomedical research, communication infrastructure, 

energy research, manufacturing, and space technology. Its board of directors 

consists of high- ranking Russian government officials, and Americans are 

scarcely represented on the Board of Trustees.84 For example, its Chairman, 

Arkady Dvorkovich, most recently served as Appointed Deputy Prime Minister 

of the Russian Federation under Prime Minister Dimitry Medvedev (who 

transitioned from his previous position as President). Beyond the Russian 

government, Skoltech operates joint labs with American watchlist institutions 

like Huawei.85-86 In sum, institutions are conducting sensitive research in 

80 Pham, Sherisse. “Kaspersky: U.S. Government Orders Removal of Russian Firm’s Software.” CNNMoney, 

Cable News Network, 14 Sept. 2017, money.cnn.com/2017/09/14/technology/kaspersky- software-federalgovernment-order/index.html.

81 Nakashima, Ellen. “Court Document Points to Kaspersky Lab’s Cooperation with Russian Security Service.” 

The Washington Post, WP Company, 13 Dec. 2017, www.washingtonpost.com/world/national- security/courtdocument-points-to-kaspersky-labs-cooperation-with-russian-security- service/2017/12/13/14ba9450-df42-

11e7-bbd0-9dfb2e37492a_story.html.

82 Robertson, Jordan, and Michael Riley. Kaspersky Lab Has Been Working With Russian Intelligence. 

Bloomberg, 11 July 2017, www.bloomberg.com/news/articles/2017-07-11/kaspersky-lab-has-been- workingwith-russian-intelligence.

83 “Skolkovo Institute of Science and Technology: About.” Skoltech, www.skoltech.ru/en/about/mission- ampstrategy-2/.

84 “Skolkovo Institute of Science and Technology: Board of Trustees.” Skoltech, www.skoltech.ru/en/about/

board-of-trustees/.

85 “Skolkovo Develops R&D and Venture Projects with Chinese Players.” East-West Digital News, 26 Oct. 2018, 

https://www.ewdn.com/2018/10/26/skolkovo-develops-rd-and-venture-projects-with-chinese- players/.

86 Dunleavy, Jerry. “Pentagon Releases ‘Initial’ List of Chinese Military-Linked Companies Operating in US.” 

Washington Examiner, 29 June 2020, www.washingtonexaminer.com/news/pentagon-releases- initial-list-ofchinese-military-linked-companies-operating-in-us.

22
conjunction with an adversarial government that, while the Department does 

not police subject matter, the public should be aware of such partnerships that 

concern national security.

E.4. HNA Corporation “Talents” Program at

HNA Corporation, a Chinese company spanning multiple industries including 

airline and tourism, offered $15 million of scholarships to students 

through the HNA Group International “Talents Scholarship” Fund. This is not 

the same program as the Thousand Talents Program, but it was created for a 

similar purpose. In this case, an employment pipeline existed between 

 and HNA Corporation so scholarship recipients would be given preferred 

hiring status when applying for jobs at HNA Corporation. The scholarship 

program is one part of a bigger mission to recruit international students to 

work at HNA Corporation through programs like

HNA Corporation was founded by a Communist Party official, and it currently 

operates its own Communist Party committee (a professional association 

committed to advancing the Party’s agenda). In 2018, HNA Chairman Chen 

Feng proclaimed that HNA Corporation would “consciously safeguard the 

Communist Party’s central authority with General Secretary Xi Jinping as the 

core” and “unswervingly follow the party.”87 Beyond close fellowship with the 

Chinese Communist Party, HNA Corporation has been the subject of numerous 

allegations of corruption, which resulted in U.S. government sanctions and 

forced divestment.88-89

E.5. Center for Muslim-Christian Understanding at Georgetown 

University.

 Saudi Arabian Prince Alwaleed Bin Talal gave Georgetown University 

 to establish the Prince Alwaleed Bin Talal Center for MuslimChristian Understanding. This Center seeks to promote Islamic civilization’s 

image in the United States, to disseminate findings through scholarship and 

holding academic events.

The Center for Muslim-Christian Understanding brewed controversy from 

its inception. Congressman Frank R. Wolf wrote a letter to Georgetown’s 

President, Dr. John J. DeGioia, expressing concern that the Center could 

advance Islamic ideology in a fashion that belittles opposition, threatens 

academic integrity, and improperly influences future civil servants. The Center 

also received criticism for deceptively labeling itself as pluralistic; according to 

critics, the “Christian” studies portion of the Center was a “misnomer” as there 

87 “HNA Holds Its Own Communist Party Congress amid Debt Woes.” South China Morning Post, 9 Feb. 2018, 

www.scmp.com/news/china/economy/article/2132724/hna-holds-its-own-communist-party- congress-rallysupport-amid.

88 Gertz, Bill. Chinese Conglomerate Facing U.S. Sanctions. Washington Free Beacon, 13 Feb. 2018, freebeacon.

com/national-security/chinese-conglomerate-facing-u-s-sanctions/.

89 “U.S. Tells China’s HNA to Sell Stake in NYC Building near Trump Tower: WSJ.” Business Insider, 11 Aug. 2018, 

www.businessinsider.com/r-us-tells-chinas-hna-to-sell-stake-in-nyc-building-near-trump- tower-wsj-2018-8.

23
was no Christian representation.90 Additional worries spawned from Saudi 

Arabian infiltration of an institution commonly known to siphon graduates 

into government employment.91 Such concerns were salient because the Saudi 

Arabians had communicated that their money would “follow” the Center’s first 

Director.92 This strategy of funding a particular director is concerning, as it 

would allow a foreign government unduly to guide the Center’s content.

This donation empowered the Saudi Arabian government to advance a 

particular narrative about Islamic society to the West via a legitimate Western 

institution like Georgetown University. “Soft power” is a political science term 

that explains states’ “ability to affect others to obtain the outcomes one wants 

through attraction...” and continues to explain, “a country’s soft power rests 

on its resources of culture, values, and policies.”93 Saudi Arabian “soft power” 

efforts were on display through Prince Alwaleed’s efforts 

 . Worries over soft power were manifest by Karen Hughes, Under 

Secretary of State for Public Diplomacy and Public Affairs during the George 

W. Bush Administration admission that she was “influenced by the Center.”94

The Saudi Arabian government had successfully impacted American foreign 

policy thinking through money alone.

The Saudi Arabian government invested significantly into the dissemination of 

its favored ideological views at Georgetown University and several other U.S. 

academic institutions. Prince Alwaleed has made considerable international 

donations and has conducted similar soft power operations by creating Islamic 

studies centers at the University of Cambridge and Edinburgh University 

located in the United Kingdom, for examples. Prince Alwaleed’s controversial 

and political past, ranging from anti-Zionism to handsomely rewarding Saudi 

Arabians who participated in Yemen bombing raids, shadows him and his 

donations.95-96

90 Gutfeld, Arnon. “The Saudi Specter over the American Education System.” Jerusalem Center for Public 

Affairs, 23 May 2019, jcpa.org/article/saudi-specter-over-american-education-system/.

91 Gutfeld, Arnon. “The Saudi Specter over the American Education System.” Jerusalem Center for Public 

Affairs, 23 May 2019, jcpa.org/article/saudi-specter-over-american-education-system/.

92 Strauss, Valerie. “$20 Million Saudi Gift Is Questioned [on the Prince Alwaleed Bin Talal Center for MuslimChristian Understanding, John Esposito.” Campus Watch, Middle East Forum, 15 Feb. 2008, www.meforum.

org/campus-watch/12534/20-million-saudi-gift-is-questioned-on-the-prince.

93 Nye, Joseph S. “Public Diplomacy and Soft Power.” The ANNALS of the American Academy of Political and 

Social Science, vol. 616, no. 1, 2008, pp. 94–109., doi:10.1177/0002716207311699.

94 “Letter from U.S. Representative Frank R. Wolf.” Received by Dr. John J. DeGioia, 14 Feb. 2008. https://www.

investigativeproject.org/documents/misc/98.pdf.

95 @Alwaleed_Talal. Twitter, 24 July 2015, https://twitter.com/Alwaleed_Talal/status/624673337512476672?ref_

src=twsrc%5Etfw.

96 Loveluck, Louisa. “Saudi Prince Criticised for Offering Bentleys to Pilots Bombing Yemen.” The 

Telegraph, Telegraph Media Group, 23 April 2015, www.telegraph.co.uk/news/worldnews/middleeast/

saudiarabia/11558419/Saudi-prince-criticised-for- offering-Bentleys-to-pilots-bombing-Yemen.html.

24
Prince Alwaleed’s agreement with Georgetown exemplifies how foreign money 

can advance a particular country’s worldview within U.S. academic institutions 

— influence that has often remained undisclosed to American taxpayers as 

required by Section 117. In the 1980’s, similar soft power initiatives across U.S. 

institutions from Middle Eastern countries initially prompted organizations and 

lawmakers to draft Section 117. This statute remains highly relevant today.

E.6. Alibaba contracting with the to develop new 

algorithms for crowd surveillance capabilities.

Alibaba is a Chinese company that ranks among the world’s largest retailer 

and e-commerce enterprises. Its founder and Chairman, Jack Ma, is a member 

of the Chinese Communist Party, and the company is a close partner of the 

Chinese government.97 In 2017, China’s Ministry of Science and Technology 

selected Alibaba as one of four government-backed, private-sector companies 

that would capitalize on a government-selected corner of the artificial 

intelligence market.98 Furthermore, the Chinese government strategically 

placed government workers in Alibaba and nearly 100 other Chinese 

technology companies, prompting observers to note how it appears that the 

Chinese government is consolidating control over its technology sector.99-100

By its own proclamation, Alibaba has been taking an increasingly involved role 

in academic research, both within China and abroad. entered 

into an agreement with Taobao and Alibaba regarding “Large-Scale Behavior 

Learning for Dense Crowds.” This research project harnessed 

graduate students to classify the personalities and gaits of individual 

pedestrians within crowds. This “behavior learning” project would allow the 

algorithm’s holder to “predict the behavior of individuals and their interactions 

with the environment to capture realistic, heterogeneous crowd behaviors.” 

The graduate students would also visit Alibaba labs in China and 

participate in further collaborative and exchange programs throughout the 

duration of the agreement.

This agreement raises concerns that China seeks to leverage its relationships 

with American universities to dominate a global market — in this case, the 

facial recognition market and the artificial intelligence market, at large. China 

domestically employs and internationally exports these technologies and 

products. Chinese products have been acquired by some African countries, 

which have already begun installing surveillance cameras loaded with Chinese 

97 Institutions required to report under Section 117 are essentially required to be transparent. It is not the 

Department’s responsibility to choose which organizations with which institutions may contract; ideally, 

institutions’ leadership will take greater responsibility in making thoughtful decisions about foreign 

partnerships.

98 Larsen, Benjamin. “Drafting China’s National AI Team for Governance.” New America, Stanford-New America 

DigiChina Project, 18 Nov. 2019, www.newamerica.org/cybersecurity- initiative/digichina/blog/draftingchinas-national-ai-team-governance/.

99 “Alibaba’s Jack Ma Is a Communist Party Member, China State Paper Reveals.” Reuters, Thomson Reuters, 27 

Nov. 2018, www.reuters.com/article/us-alibaba-jack-ma-idUSKCN1NW073.

100 Taylor, Chloe. China to Place Government Officials inside 100 Private Companies, Including Alibaba. CNBC, 

23 Sept. 2019, www.cnbc.com/2019/09/23/china-to-place-government-officials-in-100- companiesincluding-alibaba.html.

25
facial recognition technologies.101 Within China itself, it is estimated that 626 

million facial recognition cameras will be operating by 2020.102 The recent 

COVID-19 outbreak made Chinese government surveillance even more 

pervasive. Amid the public health crisis, one Chinese technology company, 

Hanwang, developed facial recognition software that could identify faces 

hidden behind masks with 95% accuracy.103 This technology was utilized by 

the Chinese Ministry of Public Security, prompting concerns about future 

oppressive uses against minority groups in China. And this technology is 

arguably similar to that being jointly developed by 

and Alibaba.

To add political context, the Chinese government has a troubling record of 

suppressing minorities and people with ideologies that appear threatening 

to the Chinese government. Such suppression is enabled by surveillance 

and identification of targeted groups, such as the Uyghur, Kazakh, or Kyrgyz 

minority groups. It is estimated that as many as 1.5 million Uyghurs, a Turkic 

minority group in China with Islamic cultural roots, have been detained in 

Chinese “reeducation” camps.104 This group of people is especially identifiable 

by their dress — a hijab, for example, worn by Muslim women. For this reason, 

algorithms like the one being jointly developed by Alibaba and 

could empower more Chinese government surveillance and oppression of 

vulnerable minorities like them. China has actively been employing technology 

to gather data about, surveil, and suppress minority populations, and American 

educational institutions should be concerned that China may seek partnerships 

with U.S. institutions towards these ends.105

This agreement between and Alibaba exemplifies 

how institutions’ agreements with foreign companies can exploit the openness 

of America’s research institutions to serve malicious purposes. This translates 

into foreign government access to American research projects and use of 

technology, created in part by American institutions, to oppress or control the 

people of China — and, conceivably, beyond. It is known that China lawlessly 

cultivates products in competitive markets, so these technologies will be 

copied and pasted for whatever purposes the Chinese government chooses, 

likely irrespective of international laws and norms. Four former U.S. Secretaries 

101 Yang, Yuan, et al. “Chinese Tech Groups Shaping UN Facial Recognition Standards.” Financial Times, 1 Dec. 

2019, www.ft.com/content/c3555a3c-0d3e-11ea-b2d6-9bf4d1957a67.

102 Dudley, Lauren. “China’s Ubiquitous Facial Recognition Tech Sparks Privacy Backlash.” The Diplomat, 7 March 

2020, thediplomat.com/2020/03/chinas-ubiquitous-facial-recognition-tech-sparks- privacy-backlash/.

103 “China Firm Develops System to Recognize Faces behind Coronavirus Masks.” CNBC, 9 March 2020, www.

cnbc.com/2020/03/09/china-firm-develops-system-to-recognize-faces-behind-coronavirus- masks.html.

104 Nebehay, Stephanie. “1.5 Million Muslims Could Be Detained in China’s Xinjiang: Academic.” Reuters, 

Thomson Reuters, 13 March 2019, www.reuters.com/article/us-china-xinjiang-rights- idUSKCN1QU2MQ.

105 Offord, Catherine. “China Is Using DNA From Uighurs to Predict Physical Features.” The Scientist, 3 Dec. 

2019, https://www.the-scientist.com/news-opinion/china-is-using-dna-from-uighurs-to-predict- physicalfeatures-66810.

26
of Defense recently implored America to “deliberately and carefully embed our 

values into the technology that is already shaping our world” that is achieved 

by American, not Chinese, domination of the artificial intelligence market.106

E.7. contract granting right of first refusal on nuclear research 

programs to Qatar.

Emails from demonstrated how contracts with foreign 

entities can inhibit an institution’s autonomy and decision-making abilities. A 

professor and administrator from exchanged emails 

concerning ability to enter nuclear research contracts 

with foreign governments. — a research hub focusing 

on applied research in defense, energy, health care, infrastructure, and 

manufacturing — was considering providing nuclear training to Saudi Arabia 

and the United Arab Emirates. Referencing contract with 

the Qatar Foundation, a nonprofit organization frequently partnered with the 

Qatari government, the administrator communicated that the Qatar 

Foundation must be consulted before and 

could enter into additional, external research agreements within the 

Arabian Gulf. This agreement exposes how foreign entities can tie the hands of 

an American research institutions — at home and abroad.

F. Vulnerability of R&D Technologies. 

The Department’s investigations highlight the fact that foreign adversaries are 

likely targeting specific institutions for their R&D and technologies. This information 

highlights the critical national and economic security risks created by institutions’ 

failure to be fully transparent with respect to foreign gifts and contracts.

F.1. Licensing agent at .

American universities, commonly those with research prowess, often house 

licensing offices. These offices assess compliance with U.S. domestic and 

international laws and regulations, such as export and import controls. While 

the Department appreciates these compliance efforts, foreign governments 

may be strongly motivated to recruit former university licensing officers to 

gain insider knowledge of American licensing processes. A former senior 

employee at one of the investigated universities’ licensing offices now holds 

a senior position in a Chinese company where he works on international 

licensing matters. This is not illegal, but it does raise suspicions about how 

university staff could eventually provide insider knowledge to foreign actors 

like the Chinese government, in effect increasing foreign government access 

to American research. The Department urges the higher education community 

to be aware that American professionals possessing experience in regulating 

American institutions’ research and development projects may be recruited 

and hired by the Chinese government (or its intermediaries) to serve the 

Chinese government’s research interests.

106 Cohen, William, et al. “America Must Shape the World’s AI Norms - or Dictators Will.” Defense One, 27 

Feb. 2020, www.defenseone.com/ideas/2020/02/america-must-shape-worlds-ai-norms-or-dictatorswill/163392/.

27
F.2. electron beam lithography research.

Foreign agents routinely target U.S. institutions to obtain cutting-edge 

research. For example, the Chinese government strives to acquire ultraviolet lithography capabilities, a technology nestled within the internationally 

competitive semi-conductor industry. The semi-conductor industry produces 

critical components of technology ranging from fighter jets to smartphones. 

National security risks are posed by American reliance on an insecure Chinese 

supply chain that could be affected by global politics. The United States 

strives to further cultivate and protect existing technology in addition to the 

next generation of capabilities, electron beam lithography, from malicious use 

by foreign governments.

 engages in electron beam lithography research, a subfield in 

the nexus of nanoscience and nanoengineering with critical implications 

for America’s national security interests. The United States government has 

invested considerably in this technology through the United States National 

Nanotechnology Initiative, launched in 2000, by pooling resources across 

agencies such as the Department of Defense, the Department of Health and 

Human Services, the Department of Energy, and the Department of Justice, 

among others.107 Findings have suggested that China is outpacing the United 

States in research that is prioritized for national defense, for example.108–109

 operates a nanoscience research lab while simultaneously 

maintaining agreements with China and other governments interested in the 

same research. This raises obvious concerns that the Chinese Communist Party 

may be strategically positioning Chinese undergraduate and graduate students 

in universities to carry out research of particular commercial and/or military 

interest to the Chinese government. Specifically, the Department cannot 

rule out the possibility agreements with Chinese organizations 

may grant the Chinese Communist Party exceptional access to American 

research facilities.

F.3. /China University of Petroleum.

 and the China University of 

Petroleum entered into a four-year agreement that facilitated academic 

exchanges and researched mutual interests related to the oil and gas 

industry. This agreement organized staff and student exchanges and planned 

cooperative activities related to oil and gas research, including collaboration 

on respectively funded research projects. Although this agreement may 

appear to be mutually advantageous, it arguably demonstrates that China 

is leveraging America’s most capable resources to develop a geopolitically 

significant industry. As an example of China’s geopolitical projects, the Belt 

and Road initiative is expected to be a means for China to access greater 

natural resources, including oil and China’s longstanding battle over the 

disputed Senkaku Islands. It is also seen to be fueled by Chinese desire for 

107 “The Nanotechnology Race between China and USA.” Materials Today, 18 Dec. 2019, www.materialstoday.

com/nanomaterials/comment/the-nanotechnology-race-between-china-and-usa/.

108 Dong, Haiyan, et al. “The Nanotechnology Race between China and the United States.” Nano Today, Elsevier, 

2 March 2016, www.sciencedirect.com/science/article/abs/pii/S1748013216000165.

109 Ibid.

28
access to oil and mineral beds.110–111 Academic research regarding oil and gas 

extraction should not be considered separate from the Chinese government’s 

geopolitical ambitions; however, China’s largest oil companies are stateowned and dominate China’s oil market, so this could cross paths with Chinese 

government endeavors.112

F.4. Spring Breeze Foundation/CP Group.

An agreement between the Spring Breeze Foundation and Georgetown 

University produced a $10 million dollar Center for US-China Dialogue on 

Global Issues. The Spring Breeze Foundation is financed by CP Group, which is 

“a multinational conglomerate based in Thailand that is one of world’s largest 

agribusiness and food companies and is also active in the telecommunications, 

retail, finance and pharmaceuticals sectors,” according to Georgetown 

University.113 CP Group has ties to the Chinese government through multibillion 

dollar agreements.114 Furthermore, CP Group’s gift involves cooperation with 

Tsinghua University, a top-ranked Chinese university with ties to the Chinese 

military. CP Group fellows discuss areas of critical importance to US-China 

relations, according to the agreement.

G. Risks posed by Overseas Operations. 

Institutions’ overseas operations present insider threat risks and a simple means to 

circumvent State Department and Department of Homeland Security visa controls.

G.1. In 2018, higher education ranked 17th out of 17 industries evaluated 

by SecurityScorecard on cybersecurity.

The 2018 Education Cybersecurity Report ranked the higher education sector 

as “the lowest performer in terms of cybersecurity compared to all other 

major industries.”115 To exemplify the consequences of the conduct earning this 

statistic, in 2018, the Department of Justice obtained felony convictions of a 

handful of Iranian hackers who had targeted 144 U.S. universities.116 Institutions 

110 “How Will the Belt and Road Initiative Advance China’s Interests?” ChinaPower Project, 18 Oct. 2019, 

chinapower.csis.org/china-belt-and-road-initiative/.

111 Bosack, Michael Macarthur. “China’s Senkaku Islands Ambition.” The Japan Times, www.japantimes.co.jp/

opinion/2019/06/12/commentary/japan-commentary/chinas-senkaku-islands- ambition/#.XjSQVmhKg2w.

112 Rick, August. “China’s Private Oil Companies Struggle Against SOEs With New Tax Policy From Beijing.” 

Forbes, Forbes Magazine, 12 June 2018, www.forbes.com/sites/augustrick/2018/06/12/chinas- private-oilcompanies-struggle-against-soes-with-new-tax-policy-from-beijing/#226eab9c2a43.

113 “$10M Gift Will Create U.S.-China Initiative on Global Issues at Georgetown.” Georgetown University, 14 Jan. 

2016, www.georgetown.edu/news/10m-gift-will-create-u-s-china-initiative-on-global- issues-at-georgetown/.

114 “Thailand’s CP Group Signs US$7.4b Rail Deal.” The Business Times, 25 Oct. 2019, www.businesstimes.com.

sg/government-economy/thailands-cp-group-signs-us74b-rail-deal. 115 “2018 Education Cybersecurity 

Report.” SecurityScorecard, 2018, securityscorecard.com/resources/2018-education-report.

115 “2018 Education Cybersecurity Report.” SecurityScorecard, 2018, securityscorecard.com/resources/2018-

education-report.

116 Newman, Lily Hay. “The Worst Cybersecurity Breaches of 2018 So Far.” Wired, Conde Nast, 11 July 2018, www.

wired.com/story/2018-worst-hacks-so-far/.

29
heavily invested overseas — such as 

 — heightens the risk that domestically and internationally 

integrated university IT networks could be compromised. The Department’s 

Section 117 investigations further highlighted that institutions operate 

campuses abroad but associated foreign gifts and contracts are not always 

reported properly in compliance with Section 117.

G.2. Doha, Qatar, Campuses for

Overseas facilities jointly operated by 

 and various foreign governments (or other foreign interests) 

could harbor research laboratories and other educational resources that are 

almost entirely unregulated by American law, despite associated national 

security risks. Each of these institutions operates a foreign degree-granting 

campus in Qatar, a known ally of Iran.

The Department has been informed that institutions’ funds are often 

intermingled with foreign funding of these campuses — in this case, Qatari 

funding.117 Complete and transparent compliance with Section 117 reporting 

obligations is exceptionally urgent given the institutions’ undefined accounting 

processes to fund campuses in a politically sensitive region.

Two of these campuses partnered with the Qatar Foundation, which has 

been known to silence viewpoints Qatar opposes. In February 2020, the 

Qatar Foundation, Northwestern University Qatar’s partner organization, 

prevented a Lebanese band with an openly gay lead singer from speaking on 

Northwestern’s Qatar campus. The Qatar Foundation commented, “We also 

place the very highest value on academic freedom and the open exchange of 

knowledge, ideas and points of view in the context of Qatari laws as well as the 

country’s cultural and social customs. This particular event was canceled due 

to the fact that it patently did not correlate with this context.”118 The event had 

to be relocated to Northwestern’s U.S. campus, according to the article, which 

illustrates the power of foreign agents to censor or silence speech and quell 

academic freedom. 

 operates , a degree-granting 

branch campus that is jointly advised by the Qatar Foundation, and it also 

executes a research program. Other contracts include apartment leases in 

Doha, Qatar, to support campus, which houses American 

and international students. also established a degreegranting branch campus in Qatar called . This campus was funded by 

the Qatar Foundation, an influential nonprofit organization that is supported in 

117 Hartle, Terry. [EXTERNAL] Follow up Meeting on Sec 117 Information Systems, to Shelley L. Thompson, 

OMB, 20 Dec. 2019 (“When Section 117 was enacted in 1986, few campuses had widespread international 

activities. Today, as a result of globalization, internationalization is the rule rather than the exception. Indeed, 

some institutions—Georgetown, Yale, and NYU, for example—currently have fully functioning campuses that 

are located in foreign countries where American and foreign funds are almost completely intermingled.”)

(Emphasis added).

118 Cornwell, Alexander. “Qatar Foundation Rejects U.S. University’s Reason for Scrapping Event after AntiGay Backlash.” Reuters, Thomson Reuters, 5 Feb. 2020, www.reuters.com/article/us-qatar- society/qatarfoundation-rejects-u-s-universitys-reason-for-scrapping-event-after-anti-gay-backlash- idUSKBN1ZZ1IA.

30
part by the Qatari government. The campus includes a 

 to study the Middle Eastern region and teach Arabic, funded 

indirectly by the Qatari government. maintained several other 

agreements with Qatar, including a scholarship fund created directly by the 

Qatari government and establishment of the Qatar National Research Fund to 

support American-Qatari research.

Furthermore, the is sponsored by the Qatar 

National Research Fund and, in 2015, cost over $40 million. Part of the funding 

agreement notes how the Qatar National Research Fund particularly endorses 

research “aligned with the Qatar National Research Strategy” and “Qatar 

National Vision 2030,” which both aim to advance Qatari interests.119 Such 

examples illuminate how foreign government agendas could infuse American 

educational programming both at home and abroad.

The Department understands the value of international partnerships and 

placing campuses overseas, but attention should be paid to especially robust 

information technology systems to prevent cybersecurity and other threats. 

The Department is unaware of additional security controls implemented 

to protect U.S. interests on these foreign campuses. Specifically, students 

and other staff have access to universities’ systems, which may have few 

countervailing controls to ensure access to domestic research is secure.

G.3. – exchange agreements with Chinese universities.

 entered into a host of exchange agreements with Chinese 

universities. Notably, one agreement with the Jiangxi Administration College 

provides lectures and seminars for dozens of Chinese government officials 

sent to the United States by the Chinese government. These select Chinese 

government officials were carefully chosen to meet with American government 

officials from the local, state, and federal levels. Through this agreement,

 was facilitating intergovernmental exchange with a 

politically sensitive foreign government.

Any agreement that facilitates cooperation with Chinese citizens will be 

affected by Chinese law. Chinese citizens, through various laws, are obligated 

to serve their government, even – and perhaps especially – when they 

are abroad. For example, Article 7 of the PRC’s 2017 National Intelligence 

Law provides that “All organizations and citizens shall support, assist, and 

cooperate with national intelligence efforts in accordance with the law, and 

shall protect national work secrets they are aware of.”120 Additionally, Article 

77 of the PRC’s 2015 National Security Law provides that “Citizens and 

organizations shall provide the following obligations for safeguarding national 

security: (5) Provide national security authorities, public security authorities, 

and military authorities with needed support and assistance.”121 These laws 

cast wide nets to police individual Chinese citizens and Chinese organizations’ 

119 “About Qatar Foundation.” Qatar Foundation, www.qf.org.qa/about.

120 “China Initiative Conference,” U.S. Department of Justice and Center for Strategic and International Studies. 

6 Feb. 2020, Washington, D.C., https://www.youtube.com/watch?v=M1dtxt82HFE.

121 Ibid.

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allegiance to the Chinese government and its interests. Consequently, it is 

especially relevant that universities are transparent about their agreements 

with China.

IV. DEPARTMENT OF EDUCATION PLANNED ACTIVITIES

1. Use information collection that requires broader reporting of foreign gifts 

and contracts with certifications as part of biannual submissions. An improved 

information collection mechanism was effective for the July 31, 2020, reporting 

deadline. In April 2020, the “Foreign Gifts and Contracts Disclosure” information 

collection request (ICR) was approved, needed to ensure that institutions 

provide sufficient information to meet their statutory reporting requirements. 

The ICR package clarifies that an institution must report the benefit of a gift 

from, or contract with, a foreign source in the covered amount, considered 

alone or in the aggregate, even if it is received through an intermediary. The 

ICR authorizes information collection for public disclosure, including the 

total amount of gifts or contracts attributable to a particular foreign source 

and details about restricted and conditional gifts and contracts. The ICR also 

authorizes the collection of foreign donors’ names and addresses, which is 

necessary for the Department to determine compliance with Section 117. This 

information collection system will improve the quality of information reported to 

the Secretary, enabling more robust enforcement of Section 117.

2. Work with the U.S. Department of Justice regarding potential enforcement 

against specific institutions. The Department of Justice researches foreign 

interference and mitigates its negative consequences in several capacities. 

To provide a broad example, the Department of Justice launched its China 

Initiative led by John Demers, Assistant Attorney General of the National 

Security Division, to tackle the myriad threats specifically pertaining to this 

rising foreign power. This initiative identifies “priority Chinese trade theft cases ... 

[review] investments and licenses in U.S. infrastructure and telecommunications, 

and ... work to counter covert efforts to influence our leaders and the general 

public.”122 A February 2020 conference hosted by the Center for Strategic and 

International Studies showcased the Department of Justice China Initiative and 

cooperation among various organizations ranging from the Federal Bureau 

of Investigation to higher education associations to counter malign foreign 

influence.123 Relatedly, the Department of Education believes that public-private 

sector cooperation coupled with interagency cooperation will fortify oversight 

efforts.

3. Identify accounting and audit best practices to capture all foreign “cash in” 

and all foreign “cash out” in integrated and auditable account(s). To illustrate, 

if an institution were to purchase computers from a foreign company, this 

contract would count as a “cash out” agreement, while a foreign computer 

company donating to an institution would count as a “cash in” agreement. 

122 “Attorney General Jeff Sessions Announces New Initiative to Combat Chinese Economic Espionage.” The 

United States Department of Justice, 7 Nov. 2018, www.justice.gov/opa/speech/attorney-general-jeffsessions-announces-new-initiative-combat-chinese-economic-espionage.

123 “China Initiative Conference,” U.S. Department of Justice and Center for Strategic and International Studies. 

6 Feb. 2020, Washington, D.C., https://www.youtube.com/watch?v=M1dtxt82HFE.

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Current assessments of the twelve investigated universities suggest that “cash 

out” agreements are not fully recorded by university accounting and auditing 

procedures. There are no current requirements for independent, audit-like 

evaluations, so institutions currently self-report their foreign gifts and contracts. 

Based on the Department’s investigations so far, the Department has not 

observed institutions’ implementing internal policies to produce audited reviews 

of foreign gifts and contracts to capture all potentially relevant agreements.

4. Encourage compliance opinions from institutions’ independent auditors as 

part of institutions’ annual audits. This would be in addition to the twice-yearly 

reporting under Section 117. Third-party auditing may appear cumbersome 

to institutions of higher education, particularly ones with fewer resources, 

but third-party auditing would increase compliance. Increasing compliance 

would decrease any additional reporting burdens imposed by Department 

investigations into noncompliant universities. Overall, the Department’s primary 

goal is to increase compliance, but this does not imply a responsibility to instruct 

universities on their reporting mechanisms. Yet, universities may find that, all 

things considered, third-party reporting mechanisms can ease compliance 

burdens. Currently, the Department cannot confirm that the twelve universities 

under investigation are fully using third-party reporting mechanisms.

5. Provide updates to Congress as it reviews Section 117, to support the 

Department’s preliminary recommendations. This report and the Department’s 

letters to the Permanent Subcommittee on Investigations serve as potential 

templates for future Congressional updates.124

124 Rubinstein, Reed. U.S. Department of Education Office of the General Counsel, November 2019, https://

www2.ed.gov/policy/highered/leg/psi-nov27-20 19.pdf.

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V. CONCLUSIONS

In sum, the Department has found that:

• Transparency promotes free inquiry and academic freedom, preserves 

academic integrity, and protects national security.

• Compliant Section 117 reporting requires a significant culture change in the 

higher education industry. Our investigations have identified facts suggesting 

institutions vigorously pursue foreign money, on the one hand, but provide 

generally ineffective or nonexistent oversight of foreign source activities, 

whether on U.S. campuses or on branded foreign campuses, on the other. This 

raises disturbing national security questions, among other issues.

It is not the Department’s statutory mission to police institutions’ entanglements with 

foreign sources; rather, it is our mission to enforce disclosure and alert other federal 

agencies as appropriate. Effective Section 117 enforcement is one part of a collaboration 

between the Department and other federal agencies. The facts we have discovered drive 

home the need for an integrated Federal approach to the national problems posed by the 

theft of intellectual property, espionage, propaganda, and foreign influence operations 

on U.S. campuses. U.S. institutions are technological treasure troves where leading and 

internationally competitive fields, such as nanoscience, are booming. For too long, these 

institutions have provided an unprecedented level of access to foreign governments and 

their instrumentalities in an environment lacking transparency and oversight by the industry, 

the Department, and our partner agencies.

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