The Kunshan Sink Hole: Did Vice President Jones label Yuhan as "weak" and then change his tune?

✔ Good day fellow Dukies. FC here.

We'd like to update yesterday's Special Report on Kunshan, which, using top secret briefing papers for Friday's Trustee meeting, estimated Duke University's losses in the first ten years at $100 million minimum, $150 million more likely, and possibly higher.

Hardly what we expected when Trustee chair Dan Blue assured us any losses would be "not substantial."

The Chronicle should have picked up on our figures, even though we were unable to grant the newspaper's request for a copy of the briefing papers. The massive losses -- which will eat up money otherwise available for the Durham campus -- provide the greatest argument against continuing this venture.

Mr. Brodhead owes every stakeholder in this university a thorough measurement of the depth of this sink hole.

Publicly he claims we will "only" need $1.5 to $2 million a year from our general revenues, up from an estimate of $1 million by his global vice president in December. But we now know that Brodhead uses Enron accounting to disguise the losses by counting donations that do not exist; by shuffling money from a profit-making subsidiary of Fuqua to make it seem as though University funds are not in play; and by sending a phantom bill to our partners, hoping they will pay $2 million or so every year for services of administrators who are on the Durham payroll anyway.

At least the briefing papers admit that budget lines like contributions are wild estimates, not based upon any experience. Or as a Deputy Fact Checker put it, we might as well go to Shooters after a long weekend night, take someone feeling no pain, and ask him to throw a dart at numbers we have tacked on the wall.

✔✔✔ Since the Special Report, we have received numbing information about Vice President Jones' appearance before the Academic Council in December. With Shanghai Jiao Tong University bowing out, we desperately needed a new sponsor pronto in order to meet a March deadline set by the Chinese government.

Jones said an urgent call to Trustee Ziqing Gao, Law School '68, who is in charge of all of China's overseas investments, reporting directly to the Premier and State Council. Gao lined up three possible partners.

Jones says one was "top tier," which rules out Wuhan in our judgment. As noted today in the news story and editorial, this school simply does not ring the rankings. Moreover, we rule out Wuhan because Jones indicated this school wanted to join in academic programs, while Wuhan is going to be "sillent."

We rule out another because it is located in the same province as Kunshan.

And the third, ominously, Jones described as a "weak" school "willing to be completely silent." This sure wounds like Wuhan. Silent. Weak.

Jones owes every stakeholder of this university an answer: did we or did we not enter into a partnership with a "weak" university that officials now try to puff up, in order to salvage a signature Brodhead initiative.

Quite frankly, I fear the answer.

✔✔✔ Since FC posted the Special Report on the Chronicle website yesterday, the Durham Herald Sun has quoted Brodhead saying there's been a "clarification" of our deal with the city of Kunshan. That's a clever use of a word by an English professor.

Here is what it means. On capital costs, Kunshan is not paying 100 percent anymore. We agreed to pony up $5.5 million to insure the buildings are up to Duke standards. We agreed to contribute approximately $10 million for furniture. We calculate that at 17 percent of the total.

On continuing operating costs, Brodhead originally told us Kunshan would pay all the operating costs -- and thus assume the losses -- for the first five years. The clarification is that Duke will pay 55 percent of the losses for the first six years. And after that, Kunshan is free to negotiate for Duke to pay 100 percent of the losses -- and rent on the buildings to boot.

✔✔✔ Thank you, Loyal Readers, for your outpouring of e-mail supporting our investigation of the Kunshan steamroller. Duke.Fact.Checker@gmail.com