Socialist Worker

Unions sceptical of Walker review of private equity

Issue No. 2060

“The industry has come to be seen as needlessly secretive, feeding suspicion and in some quarters close to hostility,” said Sir David Walker at the launch of a review on the private equity industry.

The Walker review was set up by the British Private Equity and Venture Capital Association.

Trade unions responded with scepticism to the launch the review.

Jack Dromey, deputy general secretary the T&G section of the Unite union, said the paper was “quiet on workers rights to the point of Trappism.”

Walker’s proposal for more communication with staff was, said Dromey, so vague it was almost meaningless.

“The consultation by Sir David Walker should not mean private equity prepares vats of whitewash to cover up the way workers are treated in these leveraged buy-outs,” he said.

“Private equiteers should not be able to exploit the loophole in share transfers, operate in secret and keep workers in the dark.

“Workers should be fully informed and consulted on the plans for their futures before a takeover and their terms and conditions protected on transfer. They should be able to apply for a blocking injunction if private equity doesn’t come clean.”

The GMB union says private equity owners will have to be stripped of their limited liability privileges, be forced to pay tax like the rest of us, and no longer be able to offset interest payments against corporation tax.

Paul Kenny, GMB general secretary said, “Sir David is obviously a well intentioned person who has been forced to conclude that there is a yawning transparency and accountability gap to be filled. He proposes a voluntary code for the “provisional wing” of capitalism, as he thinks it is too much to ask the multi millionaire elite who run this industry to conform to the “burdens” of complying with the reporting requirements of “the official wing” on the Stock Exchange.

So the “two wings” model is now canonised as official City policy as to the reporting regimes that should apply to the owners of joint stock companies enjoying the precious limited liability privileges conferred on them by Parliament. Where does this model leave GMB members employed by AA/SAGA now saddled with £4.8 billion of debts as the ‘masters of the universe’ head for the door taking £2 billion of this borrowed money with them?

“Each of the 11,000 employees has to support borrowings to the tune of £400,000 per person and interest payments at £30,000 per employee is double what they get in wages. If the AA/SAGA goes belly up the multi millionaire elite who creamed off this dough will not be liable for one penny piece of unfunded pension fund liabilities.

“It is clear that the “provisional wing” intend to keep on doing what they were doing before they were rudely interrupted by GMB members. I do not think Parliament will continue to buy this “two wings” model and that the provisional wing will have to be stripped of their limited liability privileges, be forced to pay tax like the rest of us, and no longer be able to offset interest payments against corporation tax.

“Sir David’s conclusion that external scrutiny by trades unions like GMB will continue is correct – as Andrew Goodsell the new boss of AA/SAGA, who countermanded an agreement on re-recognising GMB between GMB and Damon Buffini, is about to find out.”

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Tue 17 Jul 2007, 19:46 BST
Issue No. 2060
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