Walker goes down like a lead balloon

If the private equity industry was hoping that all those nasty critics would leave it alone now the Walker report has been published, it's come in for a very rude awakening. Most of the constituencies that the transparency review was intended to placate - the unions, the politicians and even the media - have already started laying into it. And it’s only 24 hours old.

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Last Updated: 31 Aug 2010

The major criticism appears to be that it doesn’t go far enough. Walker’s insistence that the guidelines should be voluntary (to maintain flexibility) has not gone down well, with most of private equity’s opponents unconvinced that the industry can be relied upon to police itself. Nor has his refusal to recommend that firms should disclose details of their fees and partner salaries.

First up to the plate was TUC firebrand Brendan Barber, who reckons there’s a danger that the report ‘will prove toothless’. It was ‘plainly wrong’ that firms should not have to disclose fees, he insisted, while ‘allowing the paymasters of private equity to remain in the shadows’ was also a big mistake. ‘This review has only covered one small part of the public's concerns on private equity,’ he scoffed. ‘The issues of jobs, treatment of employees, debt, tax and the wider economic impact of private equity were not even part of the remit.’

The GMB’s Paul Kenny was equally scathing, saying it was ‘madness even to contemplate’ a voluntary code. ‘These are the people who brought us the Northern Rock fiasco and their reckless and heedless pursuit of multi-million bonuses could spill over into a recession,’ was his somewhat far-fetched conclusion.

Pleasing the unions was always pretty unlikely. But it doesn’t seem to have appeased the politicians either. John McFall MP, the chairman of the Treasury Select Committee, told the Telegraph today that the report was a ‘failure’ and ‘needs to go further’. He wants compliance to be compulsory for all BVCA members, and believes they should be forced to disclose the same level of information as public companies – including remuneration details.

And the media response has also been underwhelming. The Telegraph’s view was typical of many, saying that the new code ‘sounded like the stable door slamming after the horse had bolted’, while the Times suggested it was ‘hardly a crackdown… Even some in the industry itself think the code has not gone far enough.’

During the recent controversy, the industry has been publicly pinning its hopes on the Walker report to provide the ultimate riposte to its critics. Judging by the reaction so far, it might have to think again.

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