Univ. to reconsider controversial investment

UOC members at a sit-in at the Yale Investments Office in 2008. UOC is in agreement with concerns about HEI recently voiced by Brown’s president.
UOC members at a sit-in at the Yale Investments Office in 2008. UOC is in agreement with concerns about HEI recently voiced by Brown’s president. Photo by Nora Caplan-Bricker.

Yale’s Advisory Committee on Investor Responsibility may reevaluate its stance on the University’s investment in HEI Hotels & Resorts in the wake of Brown University president Ruth Simmons’s letter to HEI, in which Simmons expressed concern over allegations that the company violated labor laws.

Almost a year and a half after students at campuses across the country — including Yale’s — began protesting their universities’ investments in the hotel management company, Simmons wrote to HEI CEO Gary Mendell in February, saying Brown may rethink investments in HEI in light of reports that the company intimidated and harassed workers involved in union organizing activities. Simmons’s letter has prompted Yale’s ACIR chair Jonathan Macey to take another look at HEI’s activities, although the ACIR declined to criticize the company this past fall, Macey said. But while student members of the Undergraduate Organizing Committee have urged Yale administrators and the ACIR to reprimand the Connecticut-based company, Macey said the committee is waiting to find concrete evidence that the HEI employees’ claims were true.

Brown’s letter is not the only reason the issue merits more research, Macey said: The National Labor Relations Board’s general counsel decided in October and November 2009 to advance a formal complaint filed by workers against the HEI-operated Sheraton Crystal City hotel in Arlington, Va., with a hearing set for June. Earlier complaints HEI workers had filed with the NLRB were withdrawn or dismissed.

“The fact that a complaint has been filed is interesting, but we need a little bit further information,” Macey said. “The way I see it, [Simmons’s] letter gives this allegation real credibility.”

Macey said he plans to contact the NLRB, HEI and Brown this week, and that the ACIR will discuss any new information at its meeting in early April. If the committee decides to take action, he said, it may engage HEI in a discussion of its labor practices.

At Yale, unlike at Brown, it is the ACIR’s responsibility to send such letters, not the university president’s. If appropriate, the ACIR will bring the issue to the Yale Corporation, the University’s highest governing body, which includes a committee on investor responsibility, Yale spokesman Tom Conroy said.

Yale has previously invested at least $121 million in HEI, according to HEI Securities and Exchange Commission tax forms provided to the News by the UOC in 2008.


Acting on a recommendation from Brown’s Advisory Committee on Corporate Responsibility in Investment Policies — which, like Yale’s ACIR, monitors the university endowment for ethical investment practices — Simmons informed HEI CEO Mendell that the university would consider divesting from HEI if reports of labor violations were substantiated.

“If there were to be any truth to the claims of the union and others that workers at some of your properties have been subjected to intimidation by managers due to their pro-union activities,” Simmons wrote, “this would be a matter of deep concern and contrary to our standards for investing.”

HEI responded to Simmons in a letter saying the allegations against the company are unjustified, HEI spokesman Jess Petitt said, adding that a third-party survey conducted last year showed that 89 percent of the company’s associates were satisfied with working for HEI. Petitt also pointed to the many complaints against HEI he said the NLRB has thrown out.

Brown’s letter is the first public statement of concern from a university administrator since the protests began, according to a Brown Student Labor Alliance press release. Brown sophomore Julian Park, a Brown SLA leader, said that though Simmons was initially reluctant to send the letter, maintaining that she generally only speaks out on education issues, she agreed to sign and send it on ACCRIP’s behalf.

Sarah Kidwell, Brown’s director of news and communications, did not respond to a request for comment.

Louis Putterman, an economics professor and ACCRIP chair at Brown, said ACCRIP based its recommendation on the mounting reports of worker intimidation at HEI, as well as testimonials from employees who said they had been laid off or transferred to other positions after agitating for unionization. The complaints HEI workers filed with the NLRB also factored into the decision, he said.

But both Macey and Putterman cautioned that the current complaints against HEI that are pending before the NLRB, though they have advanced further than previous complaints, may not serve as proof of the allegations against the company. Still, ACCRIP will only consider recommending divestment if more evidence against HEI comes to light — if the NLRB finds HEI at fault at the June hearing, for example, Putterman said.

“The fact that the [NLRB] complaint had been filed was something that we knew about,” Putterman said. “But we don’t really know how to interpret that.”


Before Simmons sent her letter from Brown, the HEI controversy had unfolded along similar lines at Yale. Students on both campuses protested their universities’ investments in the company, the seventh-largest hotel management company in the country.

UOC member Mac Herring ’12 said the UOC plans to approach the Yale administration soon about the University’s investments in HEI. In the past, the UOC has urged the University to take more responsibility for the way it invests its endowment, staging a sit-in at Chief Investment Officer David Swensen’s office in November 2008.

Both the UOC and Brown SLA took their concerns to their respective universities’ investor responsibility committees, with each student group requesting committee members to ask HEI to adopt a unionization policy known as “card check neutrality,” in which the company would recognize the bargaining authority of a union as long as the union provided authorization cards signed by a majority of workers.

Yale’s ACIR declined the UOC’s requests in a letter dated June 25, 2009. But while Brown’s ACCRIP decided not to endorse the card check neutrality policy, the committee eventually agreed to recommend that Simmons write to HEI this past fall, Putterman said.

Brown SLA’s Park praised Simmons’s action, saying he hopes her letter will persuade other universities to criticize HEI as well.

The UOC’s Herring said it is “shameful” that Yale has not acted similarly to Brown, adding that the letter she and other UOC members asked ACIR to send HEI in October was not as strongly worded as the one Simmons wrote.

“We’d like for Yale to send an even stronger statement than Brown by refusing to give HEI more money,” she said. “A letter similar to the one sent by Brown’s president would be a huge step in the right direction.”

Herring said the UOC hopes to renew discussions with ACIR but is also considering contacting Swensen or University President Richard Levin directly.


  • $tudent Activi$m

    Bravo, Brava!
    This is true $tudent activi$m. [sic]


  • Rudy ’73

    Don’t forget that the national campus protest campaign against HEI is organized and fueled by the national union, UNITE HERE. http://www.yaledailynews.com/news/university-news/2008/12/03/news-analysis-union-propels-hei-protests/
    HEI’s main offense is not agreeing to UNITE’s demands for “card-check neutrality”, which effectively eliminates secret ballots in union elections.

    Universities’ and reasonable people’s judgment on HEI should be reserved until a verdict on the complaints has been rendered. Did offenses occur and if so were they committed by knucklehead local managers or as a result of a systematic strategy?

  • Y12

    Finally a chance that Yale will do the right thing…of course it would not be so bold as to be a leader in ethical investing. I urge everyone, however, to continue to watch this closely–the ACIR has feigned movement many times only to drop things when the spotlight is no longer on.

  • Headliner

    Headline is “Univ. to reconsider controversial investment”

    The use of the word “university” implies a figure or body with some official capacity, power, and/or authority to perform said reconsideration, with potential for some change in strategy. Think Swensen or Levin, for example.

    I did not get that from the article.

  • yale2011

    FINALLY, ACIR! I hope the right choice is made.

    Good think you are finally covering this, YDN.

    Nice work, UOC

  • Brown alum

    Brown should look at its own conduct vis-a-vis efforts to organize unions. Presently unionized are staff in Brown libraries, food services, and facilities management, but in other departments staff have been discouraged from (if not bullied about) unionizing.
    Simmons is, I think, in damage-control mode after her much-reported resignation from the Goldman Sachs board. That resignation followed a brilliant op-ed column in the Brown Daily Herald that initiated an “emperor-has-no-clothes” phase in Simmons’s heretofore under-scrutinized administration. May the scrutiny continue.

  • Charles

    While the ACIR has taken a step in the right direction, the question remains as to why Yale must always be second…on a range of policies, we seldom take leadership. Rather we wait until Harvard or Brown or Columbia acts first…

  • Hotel Business

    HEI does NOT practice fair labor. They terminate people for no reason. HEI does not live the values they say on their web site and is NOT a company of integrity.