Monday, February 26, 2007
Private equity: asset strippers of the world unite.....
New Labour is strapped for cash but that doesn’t stop them from taking the cash off private equity tycoons. So step forward Sir Ronald Cohen who is one of Gordon Brown’s closest political allies. During the past couple of months private equity groups have been in the media. The trade union GMB has been waging a campaign exposing the grubby dealings of your average private equity tycoon indulging in asset stripping and demanding that Brown impose tighter tax rules. I mean, even Will Hutton is complaining about the lack of corporate accountability with private equity.
It is not just Sir Ron Cohen, New Labour have been receiving money from hedge-fund manager Nigel Doughty. But hey, it has never stopped New Labour taking cash from dodgy geezers who engage in asset stripping and screwing workers' rights before.
Now step forward prospective deputy leader Peter Hain who hasn’t got a problem with money being donated by asset strippers. “I think that it is right that we accept donations from people who want to contribute”.
While Paul Kenny (GMB) argues: “Only in the last few weeks has the GMB campaigning put names and faces to the multi-millionaire elite who run the private equity industry and made clear what they do”.
Have no illusions private equity is nothing more than asset stripping and tax evasion. So no wonder it is littered with millionaires. A £10bn private equity consortium is bidding for Sainsburys. They borrow heavily and their interest payments can be set against profits for tax purposes. But the borrowings must be repaid. To do this and to reward themselves for “risk” the private equity investors must act like a plague of locusts. Sainsburys is said to be a target as its property holdings could be sold at an undervalue to separate companies which then charge Jamie Oliver’s favourite corporate capitalists very high rents.
To pay for this Sainsburys will have to become “efficient”; that is the company will need to slash staff numbers, raid the pension fund etc etc. That is what will happen to whichever bit of the private sector, and soon public sector as well, which pays your wages is targeted by the private investors.
Currently, private equity is not allowed, for example, to buy social housing but don’t despair… New Labour may relax the rules.
Apollo, is a property services group specialising in refurbishing social housing, schools and hospitals is being targeted by private equity groups. Its order book exceeds £500m. It also means that private equity groups get a foothold in the public sector.
If this happens then the public sector will be raided, asset stripped and private equity groups will make astronomical profits on the backs of the working class.