Trade unions have condemned the final recommendations of Sir David Walker’s review of disclosure by private equity firms.
City banker Walker said the private equity industry must open itself up to wider scrutiny and supply more detailed information about how it finances deals to combat criticism that it acted against the public interest.
He proposed a voluntary code of self-regulation. It will apply to listed companies bought by private equity for more than £300m and unlisted companies bought for more than £500m.
The review was commissioned by the British Venture Capital Association (BVCA) following criticism of private equity companies focusing purely on profits and cutting jobs as part of deals. The takeover of the AA by private equity firm Permira, resulting in thousands of job losses, has been heralded by unions as the chief example of this occuring.
Unions said the government must now make clear that if the voluntary code failed to bite statutory regulation would soon follow.
TUC general secretary Brendan Barber said: “This review has only covered one small part of the public’s concerns on private equity. The issues of jobs, treatment of employees, debt, tax and the wider economic impact of private equity were not even part of the remit. Wider action is needed to ensure that private equity becomes a trustworthy and responsible player within the UK economy.”
Jack Dromey, Unite deputy general secretary, said the report was a diversion as it walked away from the key issues in the private equity debate.
“It didn’t take Mystic Meg to predict that Sir David would offer the merest spat on transparency and fail absolutely to address the real concerns of workers faced by private equity takeovers,” he said.
Yesterday the BVCA announced that a a monitoring body will be set up to review implementation of the guidelines.
Chief executive Simon Walker said: “The BVCA understands the importance of the private equity industry being more transparent. This is why we have established an independent monitoring group to police the guidelines Sir David Walker will set out.”