The Ethical Dilemma of NYU’s Board of Trustees
The Board of Trustees sets the rules for NYU and its community. But are the trustees following their own rules?
October 21, 2019
NYU’s Board of Trustees has the final say on all university decisions. Despite being a mysterious body, largely detached from the day-to-day of university life, the Board’s role and authority remain central to NYU’s functioning. Individual members have received publicity when their high-profile wrongdoings come to light, but often the university fails to take action. Michael Steinhardt, NYU trustee and namesake of the Steinhardt School of Culture, Education and Human Development, was found guilty of sexual harassment in an NYU investigation; despite this, he remains on the Board and his name remains on the school. Steinhardt isn’t the only trustee who has been involved in controversies completely antithetical to what NYU represents, including the Board-created Code of Ethical Conduct. Specifically, trustees Larry Fink, John Paulson, Khaldoon Khalifa Al Mubarak and William Berkley have been complicit in a wide array of abuses and scandals, failing to act “in accordance with the highest professional and community ethical standards.”
The Amazon is burning and an NYU trustee is profiting. Larry Fink is the chairman and CEO of BlackRock, which has investments in companies that have stolen Brazil’s natural resources — from oil to agriculture — contributing to ecocide in the global south. Fink’s wrongdoings aren’t restricted to other countries. BlackRock became one of the largest asset managers in the country in the aftermath of the Great Recession, when it was contracted by the U.S. government to help clean up and manage most of the toxic funds acquired by the government. It’s important to note that Fink is also one of the early advocates of mortgage-backed securities — the same assets that triggered the subprime mortgage crisis.
What makes matters worse is the potential conflict of interest used to determine BlackRock’s contracts, as there was no competitive bidding process for the contracts. Fink also had a close relationship with Timothy Geithner and Henry Paulson, who each served as Secretary of the Treasury in the Obama and Bush administrations, respectively. In addition to his shady financial past, Fink also has investments in the ongoing construction of the southern border wall, making himself complicit in President Trump’s anti-immigrant policies.
Fink isn’t the only trustee with ties to Trump. John Paulson — one of Trump’s most vocal supporters — was an early Wall Street endorsement for Trump and later helped shape his economic policy. Paulson also made a fortune following the recession, which an analyst from his company predicted in 2005. From then until economic collapse, Paulson bet against the housing market, which earned him billions following the recession. Paulson’s method of acquiring his post-recession fortune is suspicious at best. The same analyst that helped formulate Paulson’s investment strategy later testified that Paulson planned to bet against mortgage packages he asked bankers to create. Making millions off of bad policy seems to be Paulson’s overall business strategy, as his wealth has grown by almost $500 million following Trump’s election.
While Paulson’s and Fink’s entanglement with governments has seen their profits skyrocket, no one is more familiar with this than Khaldoon Khalifa Al Mubarak, a businessman from the United Arab Emirates and an NYU trustee. Al Mubarak is the CEO of Mubadala Investment Company, the UAE’s sovereign wealth fund, which means their $500 billion worth of assets remains protected by the state. Beyond this profitable arrangement, Al Mubarak has significant influence in the UAE government. According to the UAE government, Al Mubarak was “instrumental” in the development of NYU Abu Dhabi, which is concerning seeing as nearly a third of workers involved in the construction of the campus faced abuse or were unpaid. Given that NYU Abu Dhabi is fully funded by the UAE government, the university is complicit in the government’s abuses. In a country where human rights abuses occur commonly, Al Mubarak’s ability to make a change and his refusal to do so is particularly revealing — the same must be said of NYU.
The Board’s billionaire Chairman, William Berkley, has his own issues to contend with. He made his fortune from student loans — more specifically, offering students expensive loans from his private company after they had exhausted federal options. As of 2007, the average interest rate on a loan from Berkley’s corporation was 11%, while the interest rate on federal loans was 6.8%. Berkley began profiting from student poverty via his seat on the board of private student loans firm First Marblehead Corporation in 1995, the same year that he joined NYU’s Board. University spokesperson John Beckman said this did not constitute a conflict of interest, and when Berkley was appointed as the Board’s chair, he continued to insist that the university had made the right choice, telling NYU Local, “Let me note that Mr. Berkley has donated many millions of dollars to this University, including for financial aid.” However, First Marblehead spent millions lobbying congress to make it harder for students to get federal loans, and fought against bills H.R. 5715 and S. 2815, which would have made student loans easily accessible during a recession.
In addition, the William R. Berkley Corporation directly insures the oil and gas industries. This introduces another conflict of interest regarding a 2016 University Senate resolution to divest from the fossil fuel industry, which passed and was swiftly rejected by the Board. The Board’s official rejection of the motion was written by Berkley himself. Berkley’s involvement in these industries is, at the very least, morally questionable; that his direct involvement in multiple organizations that work against NYU students is not enough to warrant a conflict of interest is morally unacceptable.
The Board’s collective power at NYU cannot be overstated. According to their website, NYU’s Board is responsible for overseeing major aspects of the university’s administration, including financial health, legal obligations and appointing the president. While our university’s structure is similar to other private universities, trustees have also vetoed multiple resolutions for student representation on the Board, effectively ensuring that the university remains an undemocratic institution.
Pulling back the curtain on just a few members of NYU’s Board reveals the deep contradictions of the university’s code of ethical conduct. In total, there are 83 members of the Board of Trustees, including 27 non-voting members. Those featured in this article represent just under 5% of the entire board. Using the board’s ethical code, highlighted members fail to “respect the rights and dignity of others,” “avoid conflicts of interest” and “conduct business with honesty and integrity.” If the university cannot hold its board members accountable to their own code, how can we dream of accountability from NYU?
A version of this article appeared in the Monday, Oct. 21, 2019 print edition. Email the Editorial Board at [email protected]