Rider University’s proposed sale of Westminster Choir College to a Chinese-government-owned company may be in trouble as legal opposition mounts. The university has been hit with several lawsuits trying to block the plan, with those involved arguing the sale is illegal and should be sidelined by the state.
Rider has entered into a purchase and sale agreement with Kaiwen Education, a for-profit Chinese company partially owned by the Chinese government, for Westminster Choir College (WCC) by July 1, 2019.
But those who do not want the college sold to a company controlled by an authoritarian government are committed to blocking the sale entirely. There are currently two lawsuits being considered by state courts, one brought by the Westminster Foundation (a group of alumni, donors, and other stakeholders), another by the Princeton Theological Seminary. There is also an arbitration case being taken up by the Rider chapter of the American Association of University Professors (AAUP), the faculty union, which entered its third day of hearings this past Friday. The state superior court will hear arguments in the Westminster Foundation’s case this Friday.
“It looks like this is going to fail, because Rider isn’t cooperating with the state. I don’t see how it can pass,” said Bruce Afran, a public-interest lawyer representing the plaintiffs challenging the sale. He said one of the biggest snags is Rider’s failure to deliver documents to the state attorney general’s office that would allow the Chinese buyer to apply for a license to give out degrees in New Jersey. “There’s simply no way New Jersey law will allow a religious music college to be taken over by a corporation owned by a foreign government that suppresses freedom of religion.”
Kristine Brown, a representative from Rider, said the university will not comment on pending litigation but “responses to the attorney general are in process.”
The attorney general’s office had no comment beyond the matter is under review.
Westminster in a word
Westminster Choir College is a world-renowned conservatory boasting distinguished alumni. Yannick Nézet-Séguin, the music director of the Metropolitan Opera, studied there as did Donald Nally, the conductor of a Grammy-nominated chamber choir in Philadelphia. It was founded in 1920 in Ohio and relocated to Princeton by 1932, where it has since expanded its curriculum to include music-teacher training, vocal and instrumental performance, sacred music, and research on connecting music to STEM education.
“This school has been around for almost a century. It’s a one-of-a-kind boutique, niche, academic institution. There’s only one in the world and this is it,” said Constance Fee, president of the Westminster Foundation and Westminster alumna. “Once it’s gone, it’s gone.”
Over the years, the small college struggled to remain solvent, and in the early 1990s, it merged with nearby Rider. The partnership continued for nearly 26 years, until the university’s current president, Greg Dell’Omo, announced in 2016 that Rider was seeking a buyer for Westminster.
The day the music died
Then, on October 31, 2017, Dell’Omo emailed layoff notices to the entire teaching staff of Westminster, saying Rider was anticipating selling the college by spring 2018. The new owner would be a Chinese company called Kaiwen Education, which was offering $56 million — $40 million for the purchase and an additional $16 million investment in the school’s infrastructure and programs. The $40 million sale would also give Kaiwen control over Westminster’s $20 million endowment.
The legal challenges started soon after. After receiving the layoff notices, AAUP representatives, according to Jeff Halpern, the chief grievance officer for AAUP, immediately sought arbitration hearings, which were scheduled for May 2018. Just before the arbitration date, however, the administration rescinded the layoff notices.
“It had become apparent that they were not going to be able to close the deal, and the arbitration became null and void,” Halpern said.
Second round of layoffs
A year after the first layoff notices went out, the university again issued layoff notices — in October 2018. But there was a difference; no one would be fired immediately, but come August everyone would lose their jobs.
Joel Phillips, another officer with the AAUP and music composition professor at Westminster, said faculty were told “the buyer would issue offers of employment comparable to what we currently enjoy,” but they were not given any further details.
Those layoff notices are the basis of the current arbitration hearings, which will be decided by the end of February, at the earliest, Philips said. He is optimistic the arbitrator will find in the faculty’s favor. If he does, it could derail the entire sale.
“We think he’ll find for us, which means the administration will have to rescind the layoffs, and it will make them rethink the whole idea of selling because they would still have to pay us no matter what.”
The Westminster Foundation lawsuit
Meanwhile, two lawsuits were also brought against the proposed sale — one by the Westminster Foundation and another by the Princeton Theological Seminary.
The Westminster Foundation’s complaint alleges that under U.S. and New Jersey nonprofit law, Rider University has “no power to sell out Westminster to a commercial or Chinese government-controlled entity with no experience in higher education or professional musical training.”
“It’s illegal to take a private college that’s a charity and turn it over into the hands of a commercial corporation,” Afran said. “This is an illegal sale and it will be the destruction of an American nonprofit college.”
The complaint notes that Kaiwen, which was previously a construction company known as Jiangsu Zhongtai Bridge Steel Structure Co., is controlled by the Badachu Holdings Group, which on its website touts itself as “a large state-controlled Beijing-headquartered enterprise.” The company entered the education business in 2016, opening the Beijing Kaiwen Academy. It promptly renamed itself — in the middle of negotiations with Rider — and began trading as Kaiwen in December 2017. Kaiwen currently operates two private schools in Beijing serving grades K-12.
Though Kaiwen did establish a nonprofit in New Jersey called the Westminster Choir College Acquisition Corporation (WCCAC) to handle the sale, Afran says the nonprofit is a “sham” and “the reality is Westminster is going to be part and parcel of a commercial Chinese business.”
“Not only will Westminster come under the direct control of the Chinese government, but its endowment will be transferred to the books of Beijing Kaiwen, a violation of IRS regulations that require charitable endowments to be controlled by nonprofit organizations,” the complaint reads.
The Princeton Theological lawsuit
At the same time, the Princeton Theological Seminary filed suit against Rider saying the sale would violate the conditions set by the original owner who donated the land Westminster is built on.
In the 1930s, Sophia Strong Taylor donated property in Princeton to the Choir College naming Princeton Seminary as a steward. The gift moved forward with the stipulation that if Westminster ever ceased to operate as a choir college, ownership of the land would shift to Princeton Theological Seminary.
When Rider merged with Westminster, Princeton Theological Seminary entered into a legal agreement that outlined the understanding that Rider would serve Westminster’s mission.
Both lawsuits are claiming that the proposed sale would constitute a failure to protect this mission. And, as Phillips, Afran, and Halpern all said, by adding the millions gained through the sale to Rider’s general fund, the university would be moving money around in a potentially illegal fashion.
“What (Dell’Omo) is trying to do is essentially money laundering,” Phillips said. “He wants to sell us and convert our assets that are untouchable because they are charitable gifts into cash. It’s parallel to what they do in the underworld. They take money that you’re not supposed to have access to, and they run it through a third party. Then Rider washes its hands of us and has assets that are now liquid.”
Rider on schedule to sell
Despite the legal uproar, Rider spokesperson Kristine Brown said they are still targeting June 30 to complete the sale and that it will be in the best interest of Westminster.
“Rider has stated from the beginning of this process that it can no longer afford to support Westminster Choir College, and WCC will be better served with an entity that can substantially invest in the choir college’s future,” Brown wrote in an email. “This will assist Rider in achieving a bright future for itself as well.”
Indeed, the purchase agreement requires Kaiwen to maintain the school as is for five years in Princeton before making any major changes. Brown also noted that the agreement includes “key terms regarding employment and comparable benefits to existing Westminster full-time faculty and priority adjuncts, as well as full- and part-time Westminster staff.”
Rider president Dell’Omo and Westminster Dean Marshall Onofrio wrote in a joint letter to the Rider community this past August that “although the financial proposal was not the highest offer” they received, “it was determined through due diligence that Kaiwen had the greatest chance of completing this transaction and operating Westminster successfully into the future.”
The high cost of selling WCC
But as the legal challenges press on, the costs are beginning to pile up. According to an AAUP report, Rider’s administration has already paid almost $1 million to consulting firm Price Waterhouse Cooper to negotiate the deal, while additional legal costs to defend lawsuits “have no doubt already run into the hundreds of thousands.” By their calculations, if the sale were to go through at this point, Rider would have to relinquish the $20 million endowment, plus $8 million to the Theological Seminary as the lawsuit demands, an additional $8 million to repay loans Rider borrowed using the Princeton property as collateral, and more than $1 million in legal fees. That would leave only $3 million in proceeds of the $40 million sale price.
What’s more, when the sale was announced, Westminster’s enrollment took a major hit, according to Constance Fee, the president of the Westminster Foundation. Many students and professors left, uncertain of their school’s future. Despite the challenges, Fee said she is confident that the Westminster Foundation has a strong case and the college will continue its tradition as a well-respected American conservatory.
“It’s not over, and we are fighting tooth and nail,” she said. “We’re standing our ground and until we see something in a legal document that says otherwise, we are going to block this sale.”