Open the box
“There is a big black box at the center of the global financial system and nobody knows what is inside”, was the description given by John Monks, General Secretary of the European Trade Union Confederation at the Global Unions meeting at the OECD, Paris, 16 March.
Participants heard that the world’s financial markets are awash with funds for cheap loans. Whether it has arisen from the recycling of American debt, particularly through Asia and China or from the petro-dollars from the high price of oil, it has to find a home.
OECD experts, Academics and Trade Union representatives put forward differing explanations. But it was generally agreed that the self image of private equity companies as white knights who rescue ailing enterprises from oblivion bears little resemblance to reality. In the words of one expert, buy-outs by private equity has become a “mania”. A bubble has been created which could burst with unforeseenable results.
The example of Quantas was cited as a case of a well run, well performing company taken over to give obscenely high rewards to a small group of people.
Philip Bowyer, Deputy General Secretary of UNI Global Union, said private equity targets which employ our members in Commerce in Australia, South Africa or the UK could be added to the list of companies targetted for simple and massive asset stripping.
The trade union group at OECD, TUAC is calling for the G8 to set up a task force on hedge funds and private equity.
We want them to open the black box by requiring greater transparency and regulation of private equity activities. Tax systems must be reformed to prevent unfair exploitation of tax relief on deliberately created debt.
Philip Bowyer insisted that UNI will continue to pursue dialogue with private equity companies. They should agree to respect our rights to recognition, union organisation and collective bargaining.