[Marxism] N.Y.U. Crisis in Abu Dhabi Stretches to Wall Street

Louis Proyect 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 
investigate.

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 
conditions.

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 
abstaining.)

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 
education.

“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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