Hotel Union Launches Website Highlighting Investment Practices of the Washington State Investment Board; Criticizes Private Equity Investments Supporting Privatization.

Business Editors

WASHINGTON--(BUSINESS WIRE)--Oct. 16, 2002

Today, the Hotel Employees and Restaurant Employees International Union (HERE) announced the launch of a new website - www.WSIBmonitor.org -- highlighting the investment practices of the Washington State Investment Board (WSIB), a state agency managing over $44 billion in retirement assets of Washington state workers and teachers.

"Our website is designed to educate retirees and contributing employees about some of WSIB's investment practices," said Chris Bohner, a senior research analyst at HERE. "The website also provides basic information on the fund's investments that WSIB doesn't make widely available to its members," added Bohner.

The website also includes the release of a new study linking WSIB with the privatization of public sector jobs. A review of documents obtained from WSIB reveals that the agency has a record of investing in private equity funds that are financing school and prison privatization, and the outsourcing of public employee jobs. A copy of the report is available on the website.

"We were shocked to learn that private equity funds that have received investments from WSIB have financed the leaders in the school privatization movement, including KinderCare, Channel One, Edison Schools, Nobel Learning, and Chancellor Beacon Academies," said Bohner. In addition, WSIB is connected through its private equity investments to Student Transportation of America, a company that brags about its "proven success in the privatization of the multi-billion dollar public sector school transportation market," and Avalon Correctional, a major private prison company.

"It doesn't make economic sense for WSIB to support private equity funds that are pushing the privatization of public jobs and schools, when state employees are part of WSIB's funding base," said Bohner.

The report also found that companies associated with Kolhberg, Kravis & Roberts (KKR) -- WSIB's largest private equity manager with over $3.3 billion of WSIB assets - have expressed anti-union sentiments towards public sector unions. KinderCare, controlled by KKR and invested in by WSIB, warns its investors of the "adverse" impact of unionization efforts by AFSCME and SEIU.

Beacon Academies, a strategic partner of KinderCare, warns that the American Federation of Teachers and the National Education Association could "adversely impact" the company. In October, 2002, the Wall Street Journal reported that WSIB and the Oregon Investment Council are considering an investment of $1 billion to buy a minority stake in KKR. "It seems ironic that KKR is asking for more money from union members that contribute to WSIB, while at the same time a KKR-controlled company is openly hostile to unions," added Bohner.

WSIBmonitor.org will also provide information on WSIB's investments, board agendas and minutes, and other documents to help retirees and members evaluate the fund's investment practices. "We believe public institutions work best in the sunshine," said Bohner. "But WSIB provides very little investment information on its website," Bohner added.

The Hotel Employees and Restaurant Employees International Union represents over 300,000 workers in the hospitality industry, including thousands of working families in Washington.