The RI State Investment Commission voted to invest $20 million with GEM Realty Capital, despite the company’s claim that the health and safety of employees at the Sofitel Los Angeles Hotel in Los Angeles, one of the many properties owned by the company, is not something they can have any affect on.
GEM Realty describes itself as a real estate investment company that invests in “private-market real estate assets and publicly traded real estate securities”. At the meeting on Wednesday morning, two GEM Realty representatives admitted that there were problems at the Sofitel Los Angeles Hotel, but said that as they are not the majority investor in the enterprise or involved in the day-to-day management of the business, there is little they can do to effect positive change in the way workers are being treated at the properties they invest in.
Treasurer Seth Magaziner lead the questioning of the company reps about the allegations of unsafe and un-sanitary labor conditions at the hotel and Commission member Marcia Reback asked about the use of a firm known for union busting to prevent workers from unionizing. The GEM Realty reps assured the Commission that the union-busting firm was no longer employed by the hotel and that the health and safety issues were in the process of being resolved via the National Labor Relations Board (NLRB).
On April 25 employees filed a complaint with the CA Division of Occupational Safety and Health complaining about the hotel’s failure to provide safety equipment to employees charged with cleaning medical waste from Sofitel Los Angeles Hotel rooms. Many guests receive treatment at a nearby hospital and leave medical waste behind. Though management shows an instructional video every year about the proper disposal of needles and bloodied linens, employees say “the hotel does not provide the safety equipment shown in the video”.
The Sofitel LA Hotel has also drawn “multiple Unfair Labor Practice charges that are currently being investigated by the regional office of the NLRB alleging that since employees raised the health and safety issues, hotel management has responded by threatening and surveilling employees and in one case illegally firing one of the employee leaders,” says Jim Baker coordinator for Unite Here. These case can be accessed here.
Then there’s the class action lawsuit seven employees have brought against the hotel alleging wage theft. Business Wire reports, “Six of the plaintiffs allege being paid less than the minimum wage while working at the Sofitel Los Angeles at Beverly Hills. A former barback, as well as three housekeeping workers, a banquet worker, and a restaurant server, allege that management underpaid or have been underpaying them by up to $5.37 per hour.”
Aside from the allegations of deplorable labor practices, there may be sound financial reasons to avoid investing in GEM Realty, says Sam Bell, executive director of the Rhode Island Progressive Democrats of America, has concerns about the very idea of private equity investments for our pension funds.
“With their high fees, private equity investments are a bad deal for our pension fund,” says Bell, “As Treasurer, Gina Raimondo, who made her fortune in this controversial industry, made a big move into high-fee funds, and that decision continues to drive our pension fund’s poor performance. Seth Magaziner campaigned on a new kind of politics. Expanding private equity investments, while other funds are pulling out of high fee options, would represent a move back to the aggressively pro-Wall St. policies of the previous Treasurer.
“Real estate private equity funds are especially poor choices, given their distinctive record of pushing policies that hurt American families,” says Bell, ” In the case of GEM Realty Capital, it is aggressive violations of workers’ rights that stand out, but across the real estate investment industry in general there is a serious and pervasive culture of immorality.”
Though the GEM Realty reps were asking for a $30 million investment from the state, the board seemed to feel that a $20 million investment was more in line with their investment strategy.
Regional Director Jonathan B. Kreisberg of the National Labor Relations Board (NLRB) out of Boston “issued a Government complaint and notice of hearing against the Renaissance Providence Downtown Hotel and TPG Hospitality, Inc., The Procaccianti Group’s hotel management affiliate. The NLRB Complaint charges the Hotel with multiple unfair labor practices deterring workers from organizing to improve their low wage, low benefit jobs,”