The most prestigious board member of Laureate Education has announced his departure from the firm, continuing a rapid exodus of top-level executives at the Clinton-connected company.
Robert Zoellick, a former World Bank president, will leave the company at the end of December, The Daily Caller News Foundation has learned. His resignation follows on the heels of a number of unexpected departures since the company went public last February, as previously reported by TheDCNF. Those departures include the company’s founder and CEO, Douglas Becker, as well as its chief operating officer, chief legal officer, and its chief human resources officer.
The for-profit education company is best known for paying former President Bill Clinton nearly $18 million to serve as the “Honorary Chairman” at Laureate International Universities (LIU), the company’s main corporate entity. LIU also donated up to $5 million to the Clinton Foundation, according to the Clinton Foundation’s website.
The departure of such high-level executives “is very unusual,” according to Aswath Damodaran, a professor of finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation.
“Right after an IPO, the top management departs. It’s not good news,” Damodaran told TheDCNF last October, stressing that executives fleeing for the doors following an IPO is “never a good sign.”
A World Bank entity called the International Finance Corporation awarded a $150 million investment to Laureate in Jan. 2013 during Zoellick’s term. IFC later increased the amount to $200 million. The company announced in Dec. 2013 Zoellick was joining the firm’s board.
When Hillary Clinton was Secretary of State, Laureate’s Becker also received $17 million for another of his organizations called International Youth Foundation. The IYF funds came from the State Department’s Agency for International Development. IYF also collaborated with many Clinton Foundation programs.
Laureate runs for-profit schools, that came under fire during former President Barack Obama’s administration. Unlike American competitors in the for-profit education industry, about 75 percent of the school operations are located overseas in about a dozen countries. Tuition from its international operations constitutes the organization’s largest single source of revenue, according to the company’s SEC 10-Q filing, a quarterly report for the period ending Sept. 30, 2017.
Laureate has been characterized as a classic “pay-to-play” operation by critics that include the company’s hiring of former heads of state and the leaders of international multinational organizations to assist in overseas operations.
The company came under fire for ties to the Clintons and a relationship with their foundation. Sixty-five members of Congress asked the FBI, the Internal Revenue Service and the Federal Trade Center to probe the Clinton Foundation in July 2016 on corruption charges that included a request to specifically examine the foundation’s relationship with Laureate.
After hiring Bill Clinton, Laureate continued its aggressive recruitment of political heavyweights with its decision in 2013 to add Zoellick to the board.
Interested in packing the company with international figures, Laureate also named former Mexican President Ernesto Zedillo its “Presidential Counsellor” in 2015. Zedillo governed Mexico as head of the Mexican political party called the Institutional Revolutionary Party (PRI), that had a monopoly on power for 71 years. The PRI is a full member of the Socialist International.
Laureate’s largest single revenue source comes from Latin America, where the company operates schools in Brazil, Chile, Costa Rica, Honduras, Panama, Peru and Ecuador and Mexico, according to the company’s 10-K quarterly SEC filings.
Laureate did not issue a press release announcing Zoellick’s resignation, but only reported it to the SEC under an 8-K filing that requires companies to announce “material events” affecting a company. Laureate stated Zoellick “did not express any disagreement with the Company,” in the SEC filing dated Dec. 16, but the company did not state the reasons for his resignation.
TheDCNF contacted Laureate, but did not receive any reply.
Zoellick was richly rewarded for his board membership. He received $225,000 in total compensation in 2016, according to a Laureate SEC filing.
Zoellick also was awarded 18,558 Class “A” shares in the company on Jan. 31, the day before the company went public.
Laureate’s stock has performed far below its original estimated initial public offering (IPO) price of $21 per share, later adjusted downward before it went public Feb. 1 at a price of $14 to $17 per share. The company experienced a brief breakout on June 19, hitting a year high of $18.51, but continued its falling streak, hitting a low of $10.53 on Nov. 15, according to NASDAQ.
The company in May informed the SEC of the 40 million shares originally issued as an IPO and 5.4 million shares were never issued. They informed the SEC on May 24, 2017, the company “deregistered” 5.4 million shares.
Kohlberg, Kravis Roberts (KKR), a private equity firm, was one of the largest investors in Laureate. KKR received nearly 30 million Laureate shares below the market price, paying $11.90 per share, according to the company’s SEC filings shortly after it went public.
After Zoellick left the World Bank he became the “non-executive chairman” of AllianceBernstein, a global investment management firm that offers research and investment services “to institutional investors, individuals, and private wealth clients in major world markets.”
Zoellick also serves on the boards of Singapore’s sovereign wealth fund, Rolls Royce and AXA, a French insurance firm, among other companies.
Zoellick joined Laureate’s board in 2013 and also rejoined Goldman Sachs in 2013, this time serving as the chairman of its international advisory board. He previously served as vice chairman of Goldman Sachs.
Zoellick is a Republican and most recently served in a number of roles in former President George W. Bush’s administration, including as a U.S. Trade Representative and as deputy Secretary of State.
He was a close confident of Republican presidential candidate Mitt Romney. Zoellick was a signatory to a March 12, 2016 open letter opposing the President Donald Trump’s candidacy. The letter accused Trump of being “fundamentally dishonest.”
His highest profile job, however, was when he became World Bank President in 2007. He replaced Paul Wolfowitz, who rocked the bank in a sex scandal involving a foreign national who also worked at the bank.
Zoellick did not respond to several DCNF inquiries for comment.
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