TIAA: a global American invades Scotland

It may yet be Edinburgh’s most intriguing Fringe show.

Venue: a Scottish courtroom rather than a theatre or church hall. Curtain raiser: American developer Nuveen’s petition for a last-minute judicial review in which it had sought to scupper a proposal for a new music and performing arts centre in historic St Andrew Square. (It has since dropped its legal action following a settlement.)

Cue Edinburgh Festival director Fergus Linehan, who declared Nuveen’s action ‘sickening.’ Yet this plot is complex. For one thing, the concert hall’s charitable promoter, Impact Scotland, has handed Nuveen a tactical advantage by commissioning ‘starchitect’ Sir David Chipperfield, whose concrete and glass icon will soar over Sir William Chamber’s 1779 Royal Bank of Scotland. Maybe not such a clever move in a UNESCO World Heritage Site.

Other parties felt decidedly queasy when they heard Sir David explain to a star-struck council committee in the Dean of Guild courtroom that concrete was a beautiful material ideally suited to an 18^th century classical city. Eight of fourteen councillors on the committee were persuaded.

The sub-plot is this: Edinburgh architect Simon Laird came up with the concert hall idea, and local practice Richard Murphy made the competition short list. Unlike the Chipperfield icon, the Murphy scheme wouldn’t have hovered over the square like an alien spacecraft – and many feel he should have won the commission.

As with any great Shakespearean drama, it is the principal protagonist who commands our attention. In the court papers Nuveen’s address is Bishopsgate, London, though it is a 100%-owned subsidiary of US pension giant TIAA of 8500 Andrew Carnegie Boulevard, Charlotte, North Carolina. 

TIAA’s pedigree

Founded by that same revered philanthropist in 1918 to provide pensions for American professors and teachers, TIAA was stripped of its non-profit status by Congress in 1997 and is now described by one sceptical US professor of political science, James W Russell, as more akin to a retirement savings account broker playing in the commercial marketplace. After acquiring Nuveen in 2014, TIAA had more than $1 trillion under management, much of it invested in overseas real estate. In 2013 it bought 60% of Henderson Global Investments (HGI), developers of Edinburgh’s St James Quarter, neighbour to the proposed concert hall site. It upped its stake to 100% in 2015, though has since transferred much of the Edinburgh project’s equity to joint venture partner, Dutch pension fund manager APG. 

TIAA’s board has included many A-listers in the US power nexus. Chief ethics officer until 2016, Janice Innis-Thompson, a one-time associate of former Attorney General the late Janet Reno, is now chief compliance officer for Samsung US. TIAA senior counsel George W Madison took on the top legal job in the Treasury Department in the wake of the 2008 crash, while somehow, over the next three years, banking almost $3 million in TIAA remuneration while doing no work for it. CEO of TIAA’s Nuveen subsidiary until 2017 was Robert Leary, Executive Vice President of AIG Financial Products from 1995 until 2007, after which point AIG losses from credit default swaps helped both to trigger that same 2008 crisis and inspire the film The Big Short. 

TIAA’s CEO, former McKinsey partner Roger W Ferguson, was appointed deputy to US Federal Reserve Chairman Alan Greenspan by Bill Clinton in 2006. Described by some as ‘Greenspan’s Rambo Deregulator’, he is a director of Google parent, Alphabet. 

Bearing in mind that corporate ethics and PR are often indistinguishable, the following Ferguson statement is noteworthy:

Our Code of Business Conduct embodies the high ethical standards that are the foundation for our values, our brand and our reputation – it embraces the core principle of “doing the right thing.” – The Ethics Program embraces all of our values — putting the customer first, valuing our people, acting with integrity, delivering excellence, taking personal accountability and operating as one team.  – By holding ourselves to the highest standards of conduct and integrity, we can continue to make a difference for those who make a difference in the world. 

Some are sceptical. Former S.E.C. enforcement lawyer Edward Siedle, who has acted as a TIAA whistleblower, claims its ‘longstanding reputation as a low-cost provider doing well for educators and not driven by profit seems to be challenged by the revelations about how it’s doing business today’ while Indiana-based English professor Rebecca Dyer and others campaigned against TIAA’s interests in the gun trade after the 2012 slaughter of  20 children and 6 adults at Sandyhook School by a lone gunman with an AR-15 semi-automatic rifle.

Attempts to ‘do the right thing’ in Britain include a 2014 bid to develop London’s Smithfield Market. Conservative Minister Eric Pickles became an unlikely folk hero when he backed a 5000 signature petition along with such British ‘national treasures’ as writers Alan Bennett and Jeanette Winterson and actress Kirstin Scott-Thomas.

Edinburgh ahoy

The pension goliath then headed to Edinburgh, a city which turned out to be a soft touch for a global investor in search of a profit. Not only would TIAA have the benefit of developing the 1960s St James Centre which new subsidiary HGI had acquired in 2006, but it would also – and admittedly this bit is hard to believe – receive a £61.4 million Scottish Government subsidy hailed by First Minister Nicola Sturgeon as an ‘innovative funding model, which will see the Scottish Government work in partnership with City of Edinburgh Council and private developers TIAA Henderson Real Estate.’

If subsidizing a rich US corporation amounted to an abuse of Scottish revenues, arguably it is even more serious that the government and local council forfeited their impartiality as planning authorities by buying into TIAA’s deal. They may even have breached EU State Aid rules which can normally only be set aside under the ‘Market Economy Investor Principle’ in an area of deprivation, which hardly describes Edinburgh’s golden square mile of banking, insurance and investment houses. 

Unsurprisingly, when TIAA sought planning consent for a 210-room ‘copper spiral’ hotel with a shopping mall, upmarket housing, and restaurants the council waved its partner’s plans through, despite officials recommending refusal and opposition from heritage bodies. A second application added 20 metres to the building’s height to accommodate more restaurants. Again, it was approved. The council further greased potential profitability by agreeing that the mandatory element of affordable housing could be outside the city centre, enabling the developer to market its apartments to rich investors. 

Finally, when TIAA wanted cheap limestone cladding instead of Edinburgh’s traditional sandstone, the council capitulated. The plea came from a director of TIAA contractor, O’Rourke, who failed to disclose his firm’s role in the Bavarian limestone quarrying industry while claiming that there was insufficient sandstone in Britain for his needs, an alleged ‘fact’ disputed by sandstone suppliers, who were conveniently ignored.

A pattern of behaviour?

The question arising here is possibly an awkward one. If the information supplied to the council was inaccurate and misleading, and a pursuit of ‘unjust enrichment’, might those supplying it have committed an offence? If so, could any such alleged transgression, at least in theory, trigger, say, the US RICO statutes, or the 1998 Foreign Corrupt Practices Act, to the extent that US-headquartered companies operating in an extra-territorial jurisdiction are subject to such legal provisions? This may be unlikely, since it is usually necessary to establish a pattern of behaviour, rather than a single event, to precipitate an action at law, but it is a point of sufficient interest to the Office of Investor Education and Advocacy of the Washington DC-based Securities and Exchange Commission to warrant the matter being registered on its searchable database.

With the city and the Scottish Government in thrall to their US corporate partner, it wasn’t long before TIAA was intervening in other planning cases. In 2016 it objected to a planned film studio in another local authority area six miles away. The Pentland Studios scheme proposed six separate sound stages and a 100,000 sq. ft. creative industries hub promising 1600 jobs, but on the pretext that it might at some future date add a retail component TIAA’s Nuveen subsidiary objected. Although the film studio project had initially been backed by Scottish ministers, it was ultimately turned down.

TIAA was not the only objector to the film studio scheme, but its success in that case seems to have emboldened it where the proposed concert hall was concerned. At this point we enter a world of civic surrealism in which Nuveen, the perpetrator of an aggressively a-contextual modernist hotel in a UNESCO world heritage site, claims that the new concert hall threatens its heritage setting. This may be true, yet in terms of scale and visual intrusiveness TIAA’s ‘copper spiral hotel’ will have a much more disruptive effect. Described by writer Candia McWilliam as resembling ‘something which the people of Edinburgh are enjoined to pick up after their dogs’, TIAA’s copper-clad modernist skyline breaker, curiously reminiscent of the blue spiral logo on its Nuveen website, is widely referred to by local inhabitants as ‘The Golden Turd.’

TIAA’s urban muscle-flexing is unlikely to be simply the result of a compromised city council and Scottish government indulgence. The mall in its St James investment was initially promoted as Edinburgh’s answer to Milan’s Galleria Vittorio Emanuele II. Given the worldwide difficulties of the retail sector it would be reasonable to conclude that TIAA and its subsidiaries will do whatever it takes to protect an investment which, with shares in shopping centre owner INTU properties having recently nose-dived, most analysts would now rank at the top end of the high risk category.  

Goodbye Princes Street

With development comes displacement. Eager to attract tenants to its mall Nuveen has been wooing retailers in neighbouring Princes Street, already reeling from the loss of major anchor department stores, as well as several luxury brand names. 

Edinburgh councillors now appear to accept that the opening of an American pension fund’s state-subsidised shopping mall will devastate Princes Street’s retail outlets. Thirteen stores have been named as likely casualties, with more anticipated. The Scottish government’s £61.4m present to TIAA has turned out to be a catastrophic act of civic self-harm. 

The official response to this looming disaster carries a whiff of panic. A public consultation has been launched on plans to repurpose Princes Street as a ‘food and drink experience’ – this at a time when the casual dining sector is collapsing, and a new chain-dominated ‘culinary quarter’ in St Andrews Square is challenging established city restaurants. TIAA also hopes to accommodate around 32 catering outlets in its own development. The banality of rebranding Edinburgh’s premier shopping street as a ‘food and drink experience’ would be laughable, were it not so desperate.

How is this possible? Political myopia and the cult of deal-making at real estate fairs like Cannes-based MIPIM (Le marché international des professionnels de l’immobilier) are clearly factors, though council chiefs cling to the illusion that the alliance it made there with its St James developer has been beneficial, rather than the disaster it is turning out to be. Council leader Adam McVey defends his 2019 participation, claiming “MIPIM is Europe’s top opportunity to us to promote development and investment opportunities to a global audience of more than 20,000 investors, developers and cities.”

Another view might be that MIPIM is global capitalism’s top opportunity to schmooze local authority politicians with a view to doing deals. Why else would Nuveen plan to send 30 of its senior executives to Cannes in 2020? If a modicum of hyperbole underlies the satirical magazine Private Eye’s description of the MIPIM junket as a ‘property booze ‘n hooker fest’, the description of The Guardian’s Aditya Chakrabortty is perhaps not so wide of the mark.

It’s a jaunt so lavish as to be almost comic – where big money developers invite town hall executives for secret discussions aboard private yachts, and whose regulars boast that they get through more champagne than all the liggers at the film festival. Suitably oiled-up, local officials open talks with multinational developers to sell council housing estates and other sites.

End of Part One. Tomorrow David Black takes a critical look at the tourist trap Edinburgh has set itself. Part Two: Edinburgh boards a runaway train

---

Further reading: George Rosie, The Tangled History of Edinburgh St James 

Update of 03/02/2020: Legal action dropped in exchange for smaller concert hall.