The Department of Education has opened an investigation into whether the University of California at Berkeley has properly disclosed its foreign funding.

In its announcement Friday, the ED hinted that UC Berkeley's significant receipt of funds from communist China was at issue, referring to "credible news media reports" from May 2023 and a June 6, 2023, department letter to the university concerning troubling funding allegations.

Allegations

The Daily Beast reported in May 2023 that UC Berkeley failed to declare "a single cent" of the financial support it received from Chinese sources for its joint technology venture with the state-controlled Tsinghua University, including a $220 million investment from the municipal government of Shenzhen to construct a research campus in China.

Under section 117 of the Higher Education Act of 1965, postsecondary institutions receiving federal funding must disclose foreign source gifts and contracts valued at $250,000 or more to the Education Department.

In addition to failing to mention the $220 million investment, Berkeley acknowledged that it also failed to disclose to the American government a $19 million contract it was paid from Tsinghua University in 2016.

According to the Daily Beast, Berkeley researchers gave Chinese communist officials private tours of their "cutting-edge U.S. semiconductor facilities and gave 'priority commercialization rights' for intellectual properties they produced to Chinese government-backed funds."

Just as there were various benefits to the investment on the Chinese side of the equation, Berkeley faculty members also reportedly took full advantage, "extending [their] research capabilities" and earning "consulting fees" for working as research advisers.

'Responses revealed a fundamental misunderstanding.'

Lawmakers subsequently pressed Berkeley and its leadership in 2023 about its joint institute with Tsinghua University and the Shenzhen government in China, citing research security concerns.

The House Select Committee on the Chinese Communist Party noted that the Tsinghua-Berkeley Shenzhen Institute provided the Chinese regime with "easy access to Berkeley research and expertise, which the [People's Republic of China] can then use to its economic, technological, and military advantage."

In addition to flagging security and competition issues with UC Berkeley's arrangement with America's pre-eminent rival, the committee took aim at the university's apparent violation of section 117.

The ED wrote to UC Berkeley in early June 2023, asking that it address the allegations.

According to the department, Berkeley acknowledged in response "having failed to report millions of dollars in foreign government funding, as required by Section 117, and detailed its multiyear effort to cultivate a close relationship with and secure financial commitments from foreign government-controlled entities."

The Department of Education noted that the university's "responses revealed a fundamental misunderstanding regarding its Section 117 reporting obligations."

Enforcement

A September report from the Select Committee on the CCP and the Committee on Education and the Workforce noted that congressional investigators "uncovered significant failures in the reporting of foreign funding by UC Berkeley ... under section 117."

'The Biden-Harris administration turned a blind eye to colleges and universities' legal obligations.'

The problem, according to the report, was not just that certain schools were failing to meet lawful reporting obligations but that there was a lack of enforcement on the part of the relevant authorities.

"Enforcement of foreign gift and contract reporting requirements by the Biden-Harris Department of Education has been an abject failure," said the report. "And the Biden-Harris Department of Education has failed to open a single enforcement action under Section 117 of the Higher Education Act in the last four years, despite widespread evidence of lack of reporting."

President Donald Trump issued an executive order last week directing Education Secretary Linda McMahon to: reverse or undo actions taken by the Biden administration "that permit higher education institutions to maintain improper secrecy regarding their foreign funding"; "take appropriate steps to require universities to more specifically disclose details about foreign funding, including the true source and purpose of the funds"; and hold noncompliant institutions accountable.

Trump noted, "It is the policy of my administration to end the secrecy surrounding foreign funds in American educational institutions, protect the marketplace of ideas from propaganda sponsored by foreign governments, and safeguard America’s students and research from foreign exploitation."

Following through on the president's order, McMahon directed the Education Department's Office of General Counsel to reassume the department's section 117 enforcement functions, which were previously shifted to the ill-equipped Office of Federal Student Aid.

"The Biden-Harris administration turned a blind eye to colleges and universities' legal obligations by deprioritizing oversight and allowing foreign gifts to pour onto American campuses," McMahon said in a statement. "Despite widespread compliance failures, no new section 117 investigations were initiated for four years, and ongoing investigations were closed prematurely."

'We can go after the universities.'

"I have great confidence in my Office of General Counsel to investigate these matters fully, and they will begin by thoroughly examining UC Berkeley's apparent failure to fully and accurately disclose significant funding received from foreign sources," added McMahon.

Dan Mogulof, Berkeley's assistant vice chancellor for executive communications, said in a statement obtained by the New York Post, "Over the course of the last two years, UC Berkeley has been cooperating with federal inquiries regarding [Section] 117 reporting issues, and will continue to do so."

A senior Education Department official told reporters that Berkeley will have "30 days to respond with the records that we requested, and so we hope to have quite a volume of records and we'll be able to verify the degree to which UC-Berkeley is or is not compliant after our examination of those records."

The Treasury Department will reportedly assist with the investigation.

"We're going to have a lot more help this time, which is wonderful, and I think that that will enable us to we can actually under the law, we can go after the universities," said the Education Department official.

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