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Amity Group aborts plan to buy 2 US colleges after questions of credibility

Praneta Jha | Updated on: 10 February 2017, 1:45 IST

While the Indian government is itching to throw open the country for foreign universities to set up campuses despite political opposition, India's leading private varsity Amity University has been forced to cancel its plan to buy two private colleges in the United States.

Amity was in the process of acquiring the New England Institute of Art (NEIA) in Massachusetts and its sister school, the Art Institute of New York, both facing closure by parent company Education Management Corp due to financial trouble. The proposed deal was being scrutinised by the Massachusetts Department of Higher Education.

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Stiff opposition

But Amity has withdrawn the proposal, Education Management Corp announced on 1 November, following stiff opposition from Massachusetts Attorney General (AG) Maura Healey to the acquisition, reportsInside Higher Ed, a US-based independent news website covering higher education.

The AG had questioned Amity's credibility, raising doubts that an "unlicensed foreign corporation" could provide quality education to students in the US.

The two for-profit colleges are in the process of shutting down due to massive fall in revenues

"Students who invested their time and hard-earned money into this school deserve the education they were promised by NEIA, not (to be) handed over to an unlicensed foreign corporation with no history of teaching art students in the United States," said Healey in a press statement in September.

A tainted image?

At the time of filing this story, Savita Mehta, vice-president of corporate communication at Amity Group, was yet to respond to an email sent by Catch regarding the aborted purchase.

But Amity University's chancellor Aseem Chauhan told Inside Higher Ed that the university had not been given a chance to "properly introduce" itself, "defend" itself or "to project the correct picture".

"We did not see it as worthwhile to continue pursuing the transaction in this environment," Chauhan explained to Inside Higher Ed, referring to the negative press Amity had attracted following criticism by the Massachusetts AG.

The two for-profit colleges are in the process of shutting down due to massive fall in revenues. The stock value of Education Management Corp had dropped by over 90% in the past year, as the Attorney General wrote in a letter to the Massachusetts higher education department in September, saying students would be better served if the NEIA was shut down rather than taken over by the Ritnand Balved Education Foundation, the umbrella body for all Amity institutions.

The AG raised doubts on whether an 'unlicensed foreign corporation' could provide quality education

In July, Amity and NEIA had jointly written to the Massachusetts Department of Higher Education regarding the "anticipated acquisition" of the two colleges by Ritnand Balved Education Foundation.

The Massachusetts department wrote back to the NEIA president in September, "raising a series of specific questions about the proposed sale and seeking additional information about Amity and the Ritnand Balved Education Foundation," to quote Inside Higher Ed.

A questionable track record

Ashok Chauhan, the founding president of Amity University and father of the varsity's current chancellor Atul Chauhan, who is also the current president of the Foundation, founded the Ritnand Balved Foundation. Ashok Chauhan's other son Aseem Chauhan is the additional president of the Foundation.

The Massachusetts AG had also criticised Amity's "track record", pointing out that Ashok Chauhan had been charged with fraud in Germany in the 1990s, according to Inside Higher Ed.

Amity has already bought a 170-acre campus in Long Island, New York, for $22 million in September. The campus belonged to St John's University, which is moving to a smaller campus. But the private Indian university is yet to gain approval to start a college at the site.

Amity has already opened campuses in China, London, Abu Dhabi, Dubai, Mauritius, Romania, Singapore and South Africa.

Edited by Aleesha Matharu

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First published: 3 November 2016, 5:46 IST