[Marxism] N.Y.U. Crisis in Abu Dhabi Stretches to Wall Street
lnp3 at panix.com
Tue May 27 11:24:36 MDT 2014
(A remarkably tough article on the NYU-Abu Dhabi connection from Andrew
Ross Sorkin, a notorious shill for the one percent.)
NY Times, May 27 2014
N.Y.U. Crisis in Abu Dhabi Stretches to Wall Street
By ANDREW ROSS SORKIN
Martin Lipton, the superlawyer, has advised hundreds of boards of
directors in the midst of crises. Now, however, Mr. Lipton is grappling
with a board governance crisis of his own.
As chairman of New York University’s board of trustees, Mr. Lipton has
been dealing with revelations that the university’s much-heralded new
campus in Abu Dhabi might have been the product, in part, of rights
abuses of foreign laborers.
Those conditions were detailed in an article in The New York Times last
week that described workers being arrested, beaten and deported for
going on strike; being charged a year’s wages to get their jobs; and
being denied access to their travel documents. After the article
appeared, N.Y.U. apologized to mistreated workers and said it would
Hours after the article was published, Mr. Lipton went into full crisis
mode and sent an email to some members of N.Y.U.’s board, which is
stacked with Wall Street boldface names including Laurence D. Fink of
BlackRock; the hedge fund impresario John A. Paulson; and a Home Depot
founder, Kenneth G. Langone.
Mr. Lipton’s email said that he had been unaware of the reported abuses
and that an independent investigation would be undertaken, according to
people who were briefed on the message.
The university’s president, John Sexton, followed up later in the day
with a memo to the trustees, calling the reports “troubling and
unacceptable” and insisting, “They are out of line with the labor
standards we deliberately set.”
Yet Mr. Sexton took pains to distance the university from the reported
abuses, highlighting the low accident rate at the construction site and
saying that the contractors responsible for the reported problems
weren’t under the university’s control. “It was built with the
construction contractors working for the Abu Dhabi development entity
building it, not directly for N.Y.U. Abu Dhabi itself (unlike the
operational contracts for providing food, transportation, public safety,
etc.),” he wrote.
Mr. Sexton might have been trying to create distance between N.Y.U. and
the contractor, but it is a red herring: The general contractor that
helped oversee the construction of the campus isn’t some fly-by-night
firm outside N.Y.U.’s purview. Quite the opposite. The contractor is run
by a trustee of N.Y.U.’s board: Khaldoon Khalifa Al Mubarak, the chief
executive of the Mubadala Development Company.
It was Mr. Mubarak and others who helped persuade Mr. Sexton and the
rest of the university’s board to build the campus in the first place,
with a $50 million donation from the government of Abu Dhabi. In
addition to running Mubadala, Mr. Mubarak, a Tufts graduate, is chairman
of Abu Dhabi’s governing executive council and is also chairman of the
soccer team Manchester City. He was added to N.Y.U.’s trustee board
after the Abu Dhabi campus plans were announced.
Some faculty members were rankled by Mr. Sexton’s response.
“It was a classic exercise in damage control, meant to distance N.Y.U.
as far as possible from the horrific wrongs inflicted on those workers,
and — therefore — divert attention from the fact that Khaldoon Al
Mubarak is not some faraway rogue operator but an N.Y.U. trustee,” said
Mark Crispin Miller, a professor of culture and communication at N.Y.U.
who has long publicly clashed with Mr. Sexton.
Another N.Y.U. professor, Andrew Ross, put it this way: “In the early
days of the anti-sweatshop movement, Nike and the Gap tried to pass
responsibility for labor violations on to their subcontractors. But
where does the buck stop in this case? Labor standards are fine on
paper. But enforcement is the real test of any protection effort.”
Building a campus in Abu Dhabi was considered a high-risk exercise from
the start. Mr. Sexton and his board wanted to transform the university
into an international education platform with hubs around the globe —
the equivalent, to some degree, of a far-flung multinational
corporation. He was supported in that ambition by a who’s who of
corporate America accustomed to seeking growth abroad — and the travails
it sometimes involves.
Critics argued that doing business in Abu Dhabi for would be too
perilous for the university: It is arguably an oppressive regime, which
has been accused of torturing political prisoners, looking the other way
at abusive labor conditions for migrant workers and discriminating
against homosexuals. Some trustees privately, and some outsiders
publicly, groused about the project.
“By selling a degraded clone of itself to the highest bidder, N.Y.U. is
doing irreversible damage to U.S. universities as a whole. This
frightening love-child of Western multicultural lunacy and Arab oil
money represents a new low,” Abe Greenwald wrote in Commentary magazine
at the time the Abu Dhabi campus was planned.
To its credit, N.Y.U.’s board and its partners established a Statement
of Labor Values intended to raise the standards for workers in Abu
Dhabi. The standards set were praised by outside organizations like
Human Rights Watch and became a model for other organizations, including
the Guggenheim and the Louvre, which are building major projects in the
area. N.Y.U. also rightly hired an outside auditor to monitor worker
Yet it now appears that at least some laborers fell through the cracks
of the standards that had been set. Maybe that is inevitable in a
project of this scale, but it doesn’t appear that the university sought
to investigate the problems until the report by The Times last week.
An N.Y.U. spokesman, John Beckman, told me by email: “John Sexton’s
communication to the N.Y.U. community was not meant to ‘distance’ us,
but to make this point: that there are instances — those involving
worker safety (surely an important labor issue, and one relating
directly to the construction site…) and those involving contracts on the
existing campus (which N.Y.U. Abu Dhabi oversees directly) — where we
have a clearer picture.”
He added: “The troubling instances reported by The Times, which relate
to compliance by contractors and subcontractors on the Saadiyat
construction site, require more investigation; we and our partners have
committed to do that.”
When I raised the issue of Mr. Mubarak’s involvement as both developer
and trustee, the spokesman said, “Mr. Al Mubarak is a respected member
of the N.Y.U. board and his membership is not in question.”
A spokesman for Mr. Mubarak could not be reached.
This is not N.Y.U.’s first governance crisis. While part of the N.Y.U.
faculty objected to the new campus, calling it a distraction or worse,
others have been upset with Mr. Sexton’s other initiatives, which they
say have devalued education at the university, and led to one of the
highest tuitions in the country and soaring debt levels for its
students. They went so far as to approve a vote of “no confidence”
against Mr. Sexton in March 2013. (The vote was 298 to 224, with 47
In the middle of all of this is Mr. Lipton, the chairman of N.Y.U.’s
board for more than a decade and a half, who has made his career as the
top consigliere to corporate boards doing mergers and acquisitions as a
founder of Wachtell, Lipton, Rosen & Katz.
In the corporate world, Mr. Lipton has long championed big ideas and
campaigned against what he called “short-term-ism.” The campus in Abu
Dhabi would be a prime example of the big investments he’s willing to
make. But his approach to corporate governance — which has long been
criticized as protecting the interests of entrenched boards against
hostile takeovers and activists through his invention of the poison pill
— has similarly come under scrutiny at N.Y.U.
His steadfast support of Mr. Sexton, in light of the criticism from the
faculty, has rankled some who say he is simply following his corporate
playbook. A group of university faculty members wrote a public letter
calling Mr. Lipton’s support of Mr. Sexton “an intransigence that is as
threatening to N.Y.U.’s survival as the scandals whose clear impact you
deny.” The letter went on to say that Mr. Lipton’s approval of the
university’s global ambitions were motivated more by the bottom line for
N.Y.U. — which has raised nearly $6 billion during his tenure — than
“Any school that profiteers so avidly is sure to be renowned, not as ‘a
world-class residential research university,’ ” they wrote, “but as a
global clip joint with an academic logo; and yet, like the Gilded Age
inequity at N.Y.U., that sprawling operation has your full support.”
Whatever the outcome of this crisis for N.Y.U., it is a case study that
should be examined for years to come by its students — both in New York
City and Abu Dhabi.
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